We’ve got a bowl of alphabet soup when it comes to accounting certifications: CPA, CFA, CMA, CIA, CAIA, FRM, CFP… Which is the best? Does it make sense to get more than one? Here is my analysis.
|Focus & Recognition|
|Focus||Public + general accounting||Finance + investment||Management accounting||Internal audit||Alternative investment|
|Need bachelor degree?|
|Need specific courses?|
|# exam days per year||4 testing windows (9 months)||1-2 times a year||4 testing windows (6 months)||Year round||2 times a year|
|Total exam hours||14 (16 in 4/2017)||18||8||6.5||8|
|Latest pass rates||48-51%||43% / 46% / 54%||35% / 50%||40%||66% / 67%|
This Video summarizes the Various Accounting Certifications
If you don’t feel like watching the video, here is the text version:
Accounting Certification of Choice: Certified Public Accountant (CPA)
The first question is: which certification is the most useful?
You can try this Grandma / Neighbor Test: Ask your grandma and neighbors and see if they know what CPA, CFA and all the likes stand for. In my case, my grandma heard of CPA only. My neighbors know about CPA and CFA. He heard of CMA but isn’t quite sure what it stands for.
If you take your own test, you will likely find that the CPA designation is the widely recognized. It is likely the top accounting qualification in terms of prestige.
This is partly because of its longest history, and the fact that CPA exam covers many types of work including financial accounting, management accounting, corporate finance and strategic planning, audit, general business and US taxation. It is generally perceived to be The Accounting Certification of choice.
Also, CPA is the only qualification that has a statutory right to do something special, that is, signing audit reports and issuing audit opinions. Because of this, CPAs are also the most regulated.
The CPA designation in the US is granted by each of the US states instead of by a federal government agency. The prerequisites, rules and regulation of each state is quite different.
There is a general guideline known as the “3E” that most state boards follow these days. It requires 5 years of higher education, minimum number of accounting and business credit hours, passing of a uniform exam and verified relevant experience. This education requirement is the highest among all finance and accounting certification.
CMA: Certified Management Accountant Certification
CMA is almost like a “subset” of CPA as it focuses on management accounting. In fact, management accounting is not emphasized in the CPA exam. CMA has its value-add by specializing in cost accounting, financial analysis and strategic planning.
The US CMA Program is administered by the Institute of Management Accountants (IMA). There are many CMA equivalent around the world, such as the CIMA in the UK, CMA Canada (now part of CPA Canada) and ICWAI (now ICAI) in India. The competition for candidates is a reason why the US CMA certification is not as popular as it should be.
CMA is not necessarily useful for public accountants. However, if you aim to work in corporates in the future, particularly in Fortune 500 and companies with manufacturing facilities requiring cost and inventory management, then this particular accounting certification can help you land a good job.
The eligibility requirement is a lot more flexible: A bachelor degree in virtually any universities around the world is sufficient to get you qualified. There are two parts instead of four parts of the exam. You need to fulfill two years of relevant experience requirement.
CIA: Certified Internal Auditor Certification
CIA is the designation for internal auditors. There are many opportunities for internal auditors and compliance professionals, and this particular accounting certification is the most relevant.
Internal audit is important for all companies but it is a specialized niche. If you are not interested in internal auditing, don’t get the CIA certification.
You can get more information on CIA exam in this website.
CFA: Chartered Financial Analyst Designation
CFA is the most popular title to get in the investment community. It is now a must-have for security analysts and asset managers. It is also the most international accounting / finance designation.
The CFA’s popularity has shot up since AMIR (now known as the CFA Institute) reached out internationally 10 years ago. Today, China has the highest number of CFA applicants. CFA charterholderes are well represented around the world.
CFA’s scope is narrower than that of a CPA because it covers finance and investment only. An auditor or financial accountant may not want to get the CFA title.
Having said that, those who look for a more well-rounded skill beyond accounting, or those aspire to become a CFO or senior finance professionals, will definitely find the designation useful. The barrier of entry for the CFA program is lower than that of the CPA. Many candidates with non-finance background are therefore attracted to take the exam.
CIA: Chartered Alternative Investment Analyst Certification
This is the new kid on the block: The CAIA Association was established in 2002, but has since grown rapidly with 8,000+ charterholders given the proliferation of alternative investment products. This is a very specialized designation that helps you stand out among the CFAs in the investment community. If your work involves alternative investment, the study program makes sense for you.
There has been a fair amount of overlap between CFA and CAIA in terms of exam content. However, CAIA has since moved further away from the standard portfolio management topics to better distinguish itself. There are two levels of the exam. You need to have either a bachelor degree or 4 years of experience to get qualified, similar to the requirements for CFA.
Which is the Easiest Accounting Certification?
I’ve got lots of questions on which is the easiest accounting certification. While the exam difficulty does vary, I wouldn’t pick a designation based on this criteria. You should instead choose the one that adds the most value to your career.
Try to avoid short cuts and short-term gains. It is much better to plan and benefit long-term.
Should I Get One, Two or More Designations?
It really depends on your career path and how you want to specialize. If you can get qualified, getting the CPA title is a good idea because it is prestigious and versatile. Getting one additional title can help distinguish yourself further.
However, I would advise against getting, say a CMA and CFA because they lead to completely different paths. It wastes money, time and effort, and recruiters are confused as to what you want to do. Getting a CPA and CFA, CPA and CMA, CPA and CIA or CFA and CAIA make more sense in my opinion.
I am Thinking about an MBA. What’s Your Opinion?
How about the Other Accounting Certification?
There are numerous accounting certification that you can get as an accounting and finance professional. The ones I listed above is the leader in their respected fields. There are always tier 2 and tier 3 titles that you can get but I think the cost of getting them may exceed the benefits.
Having said that, I am always open for new ideas from my readers. You are most welcome to share your thoughts in the comment section below.
Now, go back up to click on the links and explore the various accounting certifications. See you there!