CMA vs CPA: Which Accounting Designation is Right for You?

cpa-vs-cma

I have been a CMA for several years now and one of the most common questions I get asked is “What’s better – CMA vs CPA?”

Unsurprising, there is a lot of confusion about the difference between the two financial and accounting designations; more and more as the CMA rises in popularity.

So what is the difference between a CPA and a CMA and how will this affect your decision to choose a designation right for you?

Let’s break it down.

What is a CMA (Certified Management Accountant)?

What is CMA?

CMA stands for Certified Management Accountant and refers to a certification that is earned by someone who has obtained a unique financial accounting and strategic management skill-set.

The CMA designation is offered by the Institute of Management Accountants (IMA), who is responsible for testing and administering the CMA designation.

The IMA works with the ICMA – Institute of Certified Management Accountants – to process exam registrations, but in terms of exam development, the ICMA is responsible for any changes to the CMA certification requirements.

Some of the most common CMA tasks include analyzing and deciphering data to initiate financial improvement in businesses. Unlike CPAs, they do not simply crunch numbers to review, but they actually identify the strategy behind business decisions based on their financial analysis.

Some of the most common career paths for those with a CMA designation include Cost Accountant, Corporate Controller, Risk Manager, Staff and Sr. accountant, Chief Financial Officer (CFO), Accounting Manager, and VP of Finance.

GET MY FREE 3-PART CMA EXAM VIDEO COURSE

I have read and agreed to your Privacy Policy.

What is a CPA (Certified Public Accountant)?

Certified Public Accountants (CPA) are individuals who are licensed to practice public accounting duties. This can be anyone from a tax or accounting consultant to a business advisor or auditor.

Just like CMAs, to earn their designation they must pass rigorous testing and fulfill several prerequisites.

As far as differences go, it’s pretty clear that the biggest difference between CMA vs CPA is the particular skills they possess. CMAs are more strategic and forward-thinking partners in business, while CPAs are mostly focused on taxation, auditing, and the day-to-day accounting activities.

Some common career paths for CPAs include public accounting, tax accounting, internal auditing, forensic accounting or financial planner.

CMA vs CPA Exam

cma-vs-cpa-exam

If you’re interested in exploring how to get your CMA certification, you’ll need a CMA exam passing score. And to do that, you’ll need to study and prepare in advance, as the test is far from easy. (Although with the right tools, knowledge, and CMA exam study materials, — which you can get by taking a Certified Management Accountant course prior to taking the test — you can learn ahead of time how to pass the CMA exam on your first attempt.)

To become a CMA or CPA you first must complete several exams in addition to meeting several other prerequisites (which we will get to shortly). There are numerous  CMA multiple choice questions covering various topics.

These exams are quite challenging: the CMA pass rate is only 40% for Part 1, and 50% for Part 2.

There are some rather large differences between the CPA and CMA exams and this may very well impact your decision to move forward with one designation over the other.

First and foremost, the CMA exam is made up of two parts:

  • Part One: Financial Planning, Performance and Analytics
  • Part Two: Strategic Financial Management

CMA Exam: Part One

There are a number of upcoming CMA exam changes in 2020, which are based on the evolution of CMAs in the real world.

Part One will now consist of 6 competencies including:

  1. Cost Management – 15%
  2. Internal Controls – 15%
  3. Technology and Analytics – 15%
  4. External Financial Reporting Decisions – 15%
  5. Planning, Budgeting, and Forecasting – 20%
  6. Performance Management – 20%

It is fairly clear that based on these changes the ICMA ( the institute responsible for developing the exam) are playing a greater importance on analytic skills like data reporting and critical decision making.

What is most noticeable about this change is the removal of Internal Auditing. This isn’t to say that Internal Auditing is not useful, rather that the IMA wants CMAs to focus more on the management of controls rather than the auditing side of things.

Here’s how the changes in 2020 compare to the current CMA exam format:

CMA-exam-part-1-changes

CMA Exam: Part Two

There were quite a few changes that took place for Part 2 of the CMA Exam as they prepare for the 2020. Like its counterpart, Part Two will cover the following 6 competencies:

  1. Risk Management – 10%
  2. Investment Decisions – 10%
  3. Professional Ethics – 15%
  4. Financial Statement Analysis – 20%
  5. Corporate Finance – 20%
  6. Decision Analysis – 25%

Here’s how the changes in 2020 compare to the current CMA exam format:

cma-exam-part-two-changes

CPA Exam

The biggest difference between CPA and CMA exams is that the CPA exam is a 4 part exam.

The CPA exam is made up of 4 learning foundations including:

BEC: Business Environment & Concepts
FAR: Financial Accounting & Reporting
AUD: Audit & Attestation
REG: Regulation

Business Environment and Concepts (BEC)

BEC is a deep dive into the environment that a business operates in. Its core topics include macro and microeconomics broken down into the following 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)

FAR is the most extensive section of the exam and covers the most amount of competencies, including:

  • 25–35% – Standard-Setting, Conceptual Framework, and Financial Reporting
  • 30–40% – Financial Statement Accounts
  • 20–30% – Transactions
  • 5–15% – Local and State Governments

Auditing (AUD)

As you likely guessed from the title, AUD covers auditing and assurance services. It tests your knowledge on the following 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% – Forming Conclusions and Reporting

Regulation (REG)

REG is the only exam section that does not cover accounting topics explicitly. Instead it covers the following:

  • 10–20% – Professional Responsibilities, Ethics, and Federal Tax Procedures
  • 10–20% – Business Law
  • 12–22% – Property Transaction Federal Taxation
  • 15–25% – Individual Federal Taxation
  • 28–38% – Entity Federal Taxation

The Cost to Take the CMA Exam vs the CPA Exam

cpa-exam-cost-vs-cma-exam-cost

There are several variables that will affect the cost of earning your accounting designation of choice.

To give you a better idea, here is a generic breakdown.

CMA Exam Cost

Just like the CPA exam, the CMA exam has a registration fee. This is a $250 one time fee that allows you to register for the exam, which takes place during designated CMA testing windows each year.

Each part of the exam costs $415.

The exam fee and registration may vary depending on your status as a student or academic. In this case the registration fee is as low as $188, while each exam part costs only $311.

Purchasing an IMA membership is also a must and this can range anywhere from $39 annually, to $220 annually.

Similar to the CPA, most candidates choose to invest in a CMA review course; such as CMA Exam Academy.

Depending on the style and quality of review courses, prices can range from $699 per course to nearly $2000.

Again, there are also post secondary school fees and continued education fees that will bulk up the overall cost as well.

When added up, the overall CMA exam cost (again, not including your post-secondary education) can be in the ballpark of $1550 to well over $3000.

CPA Exam Cost

The average cost of a CPA review course is anywhere between $1000-$3000 USD. Once you have studied and are ready to take the exam you will have to pay a one time fee that allows you to register for the exam. Depending on your state, this can vary from $50-$200.

Each exam part costs $193.45. To complete all four, it will cost you $773.80.

On top of your exam fees you are also charged registration fees. Again, this varies by state, but more often than not you will be charge per section or can pay a lump sum and save by registering for all 4 sections at one. This can cost you anywhere from $177-252 for all four sections.

Other costs include your bachelor degree, licensing, Continued Education course fees, and for many, additional cpa exam prep fees.

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

CMA vs CPA Requirements

CMA vs CPA Requirements

In order to become either a CMA or CPA there are several requirements you must fulfil.

In terms of education, to become a CMA you must have a 4 year bachelor’s degree in any field from an accredited university or college, or have a related professional certificate.

In addition to your education, you must obtain two continuous years of work experience in management accounting or financial management.

Even after you obtain your Certified Management Accounting certification, you will be required to complete 30 hours of Continuing 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. While some requirements vary from state to state, all states require that CPAs pass the CPA exam and maintain 40 hours of Continuing Education per year.

CMA vs CPA Salary

CMA-vs-CPA-salary

Perhaps one of the most common questions about the two designations is, what is the difference between a CMA salary versus a CPA salary?

And if I’m being honest this is a pretty fair consideration since you want to make sure that earning your certification is going to be worth your time; both mentally and financially.

According to the most recent CMA Salary Survey conducted by the IMA, it was found that respondents holding a CMA certification reported a 31% higher median total compensation than those holding neither certification.

Respondents holding only a CPA earn only 22% higher median total compensation than their 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.

median-cma-salary-by-age-and-certification

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? If the latter, opt for the CMA designation.

Do you want to earn a competitive salary and 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 can help you pass the CMA exam on your first attempt and guide you towards a new and exciting career path.

Share the love!

2 Comments on “CMA vs CPA: Which Accounting Designation is Right for You?”

  1. Hi Mr Nathan,

    Thank you for enlightening us over comparison of CMA vs CPA. Also would like to know how exemptions are set for either professionals to gain the other?

    Thank You,
    Best Regards,
    Dileep

    1. Hi Dileep,

      It’s my pleasure! That’s a great question by the way. There are currently no exemptions between the CPA license and the CMA certificate. If you have any other questions, post them here 🙂 Thanks, Nathan

Leave a Reply

Your email address will not be published. Required fields are marked *