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CPA Vs 2020 CMA: Which Accounting Designation is Right for You?

What is a CPA?

Certified Public Accountants commonly known as CPAs are individuals who are licensed to practice public accounting duties. Anyone from a taxing, accounting consultancy to a business adviser or auditor can be qualified to be a CPA.

Similar to CMAs, CPAs have to pass rigorous testing standards and fulfill several prerequisites to even resister for the test.

The skill set of a CMA and CPA differentiates them from one another. CMAs are trained to be strategic and forward-thinking partners in business, while CPAs are mostly focused on taxation, auditing, and the day-to-day accounting activities.

CPAs can be involved in public accounting, tax accounting, internal auditing, forensic accounting or financial planning.

What is a CMA?

CMA stands for Certified Management Accountant. This certificate is earned by someone who has an extraordinary knowledge about finance and accountancy.

The Institute of Management Accountants (IMA), are responsible to offer this degree. They are the ones who test, administer and decide who has the capability to be a CMA.

The IMA works with the ICMA which also stands for Institute of Certified Management Accountants to help with the program registrations. ICMA is the main body who is responsible for any alterations in the examination pattern.

The job of the CMA is to analyse the data and gauge if a decision can affect the financial status of the company positively. CMAs perform special methodical financial analysis based on facts and figures to come to a proper decision.

Some common career paths for CMAs include designations like Cost Accountant, Corporate Controller, Risk Manager, Staff and Sr. accountant, Chief Financial Officer (CFO), Accounting Manager, or VP of Finance.

CMA vs CPA Exam

If you are wondering how to get a CMA certification, you will need a CMA exam passing score. This exams longs for you to prepare for this exam in advance, as the test is far from easy. With the right tools and will to do more, Certified Management Accountant course prior to test may help you. You can also know how to pass the CMA exam on your first attempt.

To appear for these exams and be a CMA/CPA, you are required to meet several other prerequisites. We have answered numerous CMA multiple choice questions covering various topics.

These exams are quite challenging. Pass rate for CMA is only 40% for the 1st Part and 50% for the 2nd Part.

These are not the only aspects that differentiate these two fields from each other. There is more under the surface. Let’s unveil them.

First and foremost, we will discuss the CMA exam structure.

The Exam consists of two parts:

Part One: Financial Planning, Performance and Analytics

Part Two: Strategic Financial Management

Let us learn about them in detail.

CMA Exam: Part One

There are a few upcoming changes in the CMA exam in 2020. These changes are made after analysing the work CMAs outside the classroom.

Part one will consist of 6 competencies including:

Cost Management 15%

Internal Controls 15%

Technology and Analytics 15%

External Financial Reporting Decisions 15%

Planning, Budgeting, and Forecasting 20%

Performance Management 20%

It becomes evident that based on these changes the ICMA ( The Institute responsible for developing the exam) have a veto power on analytic skills like data reporting and critical decision making.

This change does not convey the unimportance of Internal Auditing, rather conveys that the IMA wants CMAs to focus more on the management of controls.

CMA Exam: Part Two

Changes not only took place in the first part, but were made in the second part of the CMA Exam 2020 too. Part Two will also cover the 6 following competencies:

Risk Management 10%

Investment Decisions 10%

Professional Ethics 15%

Financial Statement Analysis 20%

Corporate Finance 20%

Decision Analysis 25%

CPA Exam

Unlike CMA, CPA Exam consists of 4 parts;

BEC: Business Environment & Concepts

FAR: Financial Accounting & Reporting

AUD: Audit & Attestation

REG: Regulation

Let us understand the relevance of each one.

Business Environment and Concepts (BEC)

BEC is a deep dive into the Business Environment. This environment may include Government, Finance Sector, Technology Sector, Competitors etc. The main focus of this part is macro and microeconomics, which is broken down in the below mentioned competencies:

17–27% Corporate Governance

17–27% Economic Concepts and Analysis

11–21% Financial Management

15–25% Information Technology

15–25% Operations Management

Financial Accounting and Reporting (FAR)

This section of the exam also known as FAR, is the most extensive section covering the most amounts of competencies. This section analyses the ability of a test taker in the field of Finance. This section includes:

25–35% Standard-Setting, Financial Reporting, and Conceptual Framework

30–40% Financial Statement Accounts

20–30% Transactions

5–15% Local and State Governments

Auditing (AUD)

As stated in the title this section is easy to guess. It covers auditing and assurance services and tests your knowledge on the below mentioned competencies:

15–25% Professional Responsibilities, Ethics and General Principles

20–30% Assessing Risk and Developing a Planned Response

30–40% Performing Further Procedures and Obtaining Evidence

15–25% Reporting and Forming Conclusions

Regulation (REG)

REG is the unique exam section, among all, that does not focus explicitly on accounting topics. It covers the following, as mentioned below:

10–20% Ethics, Professional Responsibilities, and Federal Tax Procedures

10–20% Business Law

12–22% Property Transaction Federal Taxation

15–25% Individual Federal Taxation

28–38% Entity Federal Taxation

Cost of CMA and CPA Exam

Just like any exam, CMA Exam also has a onetime registration fee of $250. It takes place during designated CMA testing windows each year. Each part of the CMA costs $415. In a case of academic excellence, the registration fee is as low as $188 and each exam part will cost only $311.

You also have to purchase an IMA membership which can range anywhere from $39 to $220 annually.

Most candidates opt to invest in review courses; such as the one provided by CMA Exam Academy.

Prices of review courses can range from $699 per course to nearly $2000 depending on the style and quality.

To add to the cost, there are also post-secondary schooling and continued education fees that add up to the cost of this certification.

Again, not including your post-secondary education, the overall CMA exam cost on totaling can be of $1550 to $3000.

Now coming to CPA exams.

The average cost of a standard CPA review course ranges from $1000-$3000 USD. If you are good at studying, depending on your state of residence, this amount can vary from $50-$200.

$193.45 is the cost for each exam part as mentioned before. The total will land up to be $773.80.

Apart from the exam fees, a registration fees is also charged from you. Depending on your state, the fee can be about $50-$200. In totality of all the four sections, this can cost $177-252 to you.

Other costs include your bachelor’s degree, Continued Education course fees, licensing and additional CPA exam prep fees, in some cases.

All in all, the cost of becoming a CPA (not including your degree) can be anywhere from $3000-$5000.

CMA vs CPA Requirements

As stated before, you must fulfill several requirements to become a CMA or CPA.

To become a CMA, you must have a 4 year bachelor’s degree in any field from a certified university or college, or have a related professional certificate.

You must also obtain two continuous years of work experience in management accounting or financial management.

Even after getting the Certified Management Accounting certification, you will be required to complete 30 hours of Continued Education every year. To become a CPA you must earn a 4 year bachelor’s degree in accounting and have at least 150 credit hours of additional coursework. The basic requirement for all states is that students maintain 40 hours of Continuing Education per year.

Salary of a CMA vs CPA

The second most common question asked to me is the salary difference between a CMA and CPA. The amount of money you get paid will determine if all these efforts will be worth your time; both mentally and financially.

According to the most recent CMA Salary Survey conducted by the IMA, respondents holding a CMA certification reported a 31% higher median total compensation than those holding neither certification and a CPA earns only 22% higher than the non-certified peers.

On average, those holding their CMA certification earn $113,000 while certified CPAs earn $105,903.

If you take a look at the table below you can see that CMAs consistently earn more than their CPA counterparts at nearly every age range.

Which Designation is Right for You?

Deciding on a designation is ultimately a personal choice. Consider your personal interests. Do you like number crunching, auditing and taxation or the more strategic and analytical aspects of managerial accounting?

Some questions that you have to ask yourself are, “if earning a competitive salary is your goal” or “If you want to have a globally recognized designation?” “How much do you want to invest in your finance and accounting career both mentally and financially?”

Answering all of these questions can help lead you to the designation right for you.

I am forever thankful that I added the CMA designation to my resume because it has allowed me to earn more money, get respect from my peers and opened so many doors for my career.

If you are leaning towards becoming a CMA then be sure to check out my comparison of the best CMA review courses.

I hope to help you pass the CMA exam on your first attempt and guide you towards a new and exciting career path.

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