Finding the right financial professional can be difficult. Even once you’ve narrowed down your options, you’re faced with another problem: should you hire a certified management accountant (CMA) or certified public accountant (CPA) to help run your business?
Let’s take a look.
What is a Certified Public Accountant (CPA)?
A certified public accountant (CPA) is a licensed accountant who can practice public accounting duties, like auditing, taxation, and other daily payroll activities. To become certified, they must pass a 4-part exam issued by the American Institute of Certified Public Accountants (AICPA).
What is a Certified Management Accountant (CMA)?
A certified management accountant (CMA) is someone who is certified to practice corporate financial accounting and business management. To become certified, they must pass a 2-part exam issued by the Institute of Management Accountants (IMA), which isn’t American specific.
5 Key Differences Between a CPA and CMA
The CPA license is the most popular accounting certification, but that doesn’t mean you should overlook a CMA-certified professional.
Here are the key differences between a CPA and a CMA.
1. CPA vs. CMA: Concentration
A CPA works primarily with businesses and individuals, whereas a CMA focuses explicitly on corporate accounting and performance management. A CPA and CMA can handle the same accounting duties, but a CMA looks more at financial statements, taxes, and regulations.
2. CPA vs. CMA: Growth Opportunities
Since a CPA certification is more recognized by employers in the US, a CPA is more likely to get hired for a job than a CMA. CMA’s are typically hired for high-level positions, like corporate controller, CFO, or IRS agent, whereas CPAs attract general positions, like tax accountant.
Keep in mind that some employers will hire a CMA for certain CPA positions, but employers usually prefer to hire a general accountant over a specialist. While a CPA gives a candidate a competitive advantage, a CMA can help them transition into a more senior position faster.
3. CPA vs. CMA: Exam Requirements
To take the CPA exam, a candidate will need a 4-year bachelor’s degree in an accounting field and 30 extra college credit hours. In some states, they’ll need additional work experience. After they get their license, they need to maintain 40 hours of continuing education each year.
For the CMA exam, a candidate needs a bachelor’s degree and 2 years of work experience. After getting the license, they must maintain 30 hours of continuing education each year.
Typically, an accountant who’s looking to pursue the CPA certification will get a master’s degree, as they’re approximately 0-6 credit hours off from getting a master’s in accounting. If the CPA you’re hiring has a master’s degree, you’ll likely pay more to hire them on as an accountant.
4. CPA vs. CMA: Exam Difficulty
The CPA exam pass rate changes each quarter, but the BEC and REG sections have a high pass rate of 55% or higher, whereas the AUD and FAR section pass rates hover below 50%. The pass rate for every section combined is 46-54% depending on the year or test season.
The CMA exam pass rate is much lower than the CPA. According to the latest data, 36.25% of students passed Part 1, whereas 50.5% passed Part 2. The collective pass rate is 43% globally.
While it looks like the CMA exam is harder on paper, it’s more likely that a person writing the test isn’t familiar with general accounting procedures. While you need an accounting-related degree to take the CPA exam, the CMA exam will accept any 4-year bachelor’s degree in any field.
5. CPA vs. CMA: Salary Differences
A CPA can make $70,000 per year but may earn as high as $120,000 on average.
A CMA can make $66,000 per year but may earn as high as $95,000 on average.
The amount a person will make as a CPA or CMA will vary based on their location. While CMAs are less expensive to hire, always consider their experience before placing them in senior roles.