CPA vs. CMA Certificate | What Are The Differences and How To Choose

the third criteria for me is uh owning a practice so early on in my career as i began working in accounting i have met and i've had mentors who are cpas who have their own practice and i've always looked up to them and i admire the lifestyle of having their own practice deciding their own hours taking on clients when they want to and rejecting even sometimes the clients and so the flexibility with that is that you can start your own practice with a cpa versus a cma most of the time it means you're going to be working for a big corporation [Music] if i get one dollar for every time one of you guys asked me in the comment section below my preference between the cpa and the cma certificate i'll be a very rich man by now oh wait i do get a dollar every time one of you guys ask me a question in the comment section below only in the sense that my videos reach more audience so please go ahead and feel free if you have any question at all as relates to finance or accounting go ahead and leave it in the comment section below so today's video is on cpa versus cma license what are the differences as well as what's best for you for your own career based on what i've seen in the last 10 years as a practicing cpa in new york city so this video is going to be three parts the first part is going to cover the differences between a cpa and a cma so we'll go over differences such as the location in terms of geography which one covers more geography between a cpa and a cma certificate and then we'll talk about where which area of accounting can you work with either one of the two certificates and then the flexibility one of the two gives you more flexibility than the other we'll talk about that and then we'll talk about the education requirements so we have education experience and examination requirements we'll talk about those and we'll talk about the pass rate for the cpa and the cma and then we'll cover the career trajectory the career path what what is the career of the normal or the expected career trajectory for a cpa versus a cma and then we'll talk about the average salary at the end that's the first part of the video and then the second part of the video is going to be covering quickly the topics of the examination because exam is a big part of the certificate so we'll talk about which what are the topics you can expect to see on the exam and then at the end of the video this is the most important part of this video is the four criteria that i'm going to advise you on on how to select between a cpa and a cma certificate so we'll talk about criteria such as personality what personality type are you talk about moving around are you expecting to be moving around globally and then we'll talk about whether you have dreams of having your own practice that's different right and then we'll talk about what is the end goal for you what are you expected to be expecting to be at the future for example if you want to be a cfo at some point which one of the two certificates is right for you so this is gonna be at the end of the video so this is the topic of today's video and stick around [Music] all right let's talk about the location or the geography coverage uh the difference between a cpa and a cma so a cpa stands for certified public accountant while a cma stands for certified management accountant the cpa license is issued by the state board of accountancy in the place where you live right so it's very local in nature it's the state where you are located versus cma is issued by the institute of management accountants and this is basically a global organization so here's the difference between the two the cma is recognized globally while the cpa although you're recognized as someone who knows a lot about accounting you're someone who's an expert however it's not recognized and outside of the us and in many cases some states doesn't even recognize the cpa license issued by another state so in many cases when you work for in public accounting especially you work for one cpa firm if you move to another state in many cases you have to seek the cpa equivalent or cva cpa certificate in that state that you're moving to so in terms of geography coverage you get much more with a cma cmas recognized globally so this is the first difference the second difference here is going to be on the area of accounting you're going to be working in so basically when you get a cpa license most of the time you're going to be working for a cpa firm or a public accounting firm and the type of work is either going to be tax or audit in some cases consulting but most of the time is going to be either tax or audit and the reason why these cpa firms want their employees to become cpas is that that allows them to be able to sign off on tax returns and sign off on audit reports right so this is the advantage of becoming a cpa after a few years of working in public accounting a lot of cpas such as myself will leave the public accounting practice and go work for private companies right and so when i left i became an accountant at a private company and then i worked my way up and then i became a controller and so most of my time is going to be spent on accounting research making sure the financial statements are correct and compliant with us gab and so a lot of the time is spent on the financial statements preparation and research into the accounting standards and making sure that we're following them so this is for a cpa certificate for a cma you're going to be working for private companies as opposed to public accounting firms you're going to be working directly for the private companies or sometimes it could be publicly traded companies uh you're going to be working with management so you're going to be in the decision-making process you're working most of the time in the fp a or financial planning and analysis and so this is the difference here the area of accounting you're going to be working in cpa most of the time is public accounting while for a cma you're going to be working directly for the company itself okay the third difference here is going to be about flexibility so with a cpa the flexibility factor that i'm going to talk about here is that you're going to be able one day if you want to to start your own practice so if you have a cpa you have an easy way after working for a number of years for a public accounting firm to start your own practice begin getting some clients smaller clients at first and then as you grow the firm you can hire a few other associates and then begin to grow the firm so the flexibility factor for a cpa is that you can start your own practice right if this is the kind of thing you want so this is a big factor um if you get a cma the flexibility factor here is that it's global in nature so with a cma you can obtain it in the us for example and then work in europe or somewhere else with the same cma certificate right so the flexibility is different for a cpa versus cma so you got to see which one is important for you think down the line what kind of thing you want to be doing and if this flexibility factor for starting a practice is important to you like it is for me for example then it is it is a good choice for you to become a cpa all right let's talk about the process of becoming a cpa or a cma there are certain qualifications and requirements you're going to have to meet before you can even begin the process so for a cpa you need the education requirement is to have either a bachelor's or a master's degree in accounting or a related field so uh the thing is you're gonna have to meet a certain number of hours of study in accounting so you need to have a certain minimum number of credits in accounting you need to check in the state where you're located to find out on their website what is the minimum number of uh credits in accounting and so most of the time this is only met by either uh taking your bachelor's in accounting or maybe if you're gonna do your major in a different field maybe finance or business administration then you'll do your master's in accounting after that so you can have all the required credits for the exam while for uh the cma that what's required here is a bachelor degree you don't really specify what major you need to be in or how many hours you need to have in accounting or finance or whatever you have it's just a bachelor's degree that's the requirement for a cma now for the experience requirements we are required to have a threshold of experience so for cpa license you need to have one or two years of experience depending on the state you're in some states required requires one year of experience some states require two years of experience working under the supervision of a cpa and this sometimes can get tricky because you really need to hunt down and track down your previous boss or maybe your current boss and have them sign off on your experience paperwork uh this can get tricky sometimes but doable but you don't need this experience to sit for the exam you can get your bachelor's degree sit for the exam and then later on you can get your work experience for a cma it's a two year experience but it looks like you need the two years of experience before you can even sit for the exam right so this is a little bit different between cpa and cma cma looks like you need to get the two years of experience first before you can sit now for the exam itself for the cpa so for a cpa the exam is four parts right each one is about four hours so this is about 16 hours of examination and the window that you got to complete this in is 18 months a year and a half meaning if you take one part and then you fail to take the rest of it so if you succeed in one part of the four and then you don't take the rest of it within 18 months you lose that part right which doesn't sound fair but that's the way it works and it happened to me before where i've passed two sections of it and then waited too long and then those expired so i had to retake him again so this sucks try to avoid that uh in terms of the cma certificate uh you got two parts there's only four hours each one so eight hours total examination and you get three years to finish them so that's double the time for the cpa certificate to get much longer time frame to finish up your examination for the cma but maybe now you're thinking that the cma certificate exam is a little bit easier because it's only two parts versus four parts of accounting but then when you look at the pass rate the pass rate for the exam for a cpa is 50 or 51 but then for the cma is 45 percent so a lot more people fail that exam for the cma so the pass rate is important it just indicates the cma exam it's not an easy one to pass it's a little bit more difficult it looks like than the cpa exam in terms of difference in the earning power between a cpa and a cma let's look at the average salary so for a cpa with a couple of years of experience we're looking at about seventy thousand dollars a year in earning while with a cma was two years of experience is ninety thousand dollars a year so that's twenty thousand more than a cpa and the reason is cpas focus more their work focuses more on compliance what i mean by that is that if you're a cpa you're either working in tax which is complying with the tax regulations or if you're working in audit you're doing an audit to comply with the requirements of the sec or whatever other entity is regulating the industry while for a cma your work is mostly strategic rather than compliance right so strategic means that you're working either in fp a or a certain managerial position that's focusing on budgeting forecasting driving the business and so uh by definition this adds a little bit more value to the business than just compliance i'm not trying to put the value down of a cpa because i'm a cpa myself and we are extremely valuable for companies but i'm just saying that the cma does a little bit more strategic type work and that usually commands a little bit more pay than a cpa if you have an accounting job interview coming up soon i highly recommend looking into my night before the accounting interview guide i'll leave a link in the description below but it's a comprehensive guide for all levels of accounting from junior to manager to prepare you for the night before your accounting job interview all right part two of this video will focus on the areas you can expect to see on the exams for a cpa and a cma so for a cpa you can expect to see these four topics far reg bsc audit far stands for financial accounting and reporting uh reg is regulation so this is mostly taxes uh bac is i think stands for business economics concepts uh so this is gonna be more like economics and then audit obviously is audit so these are the four topics of the cpa examination in terms of the cma you can expect to see the topics such as external financial reporting decisions uh planning budgeting and forecasting performance management cost accounting internal controls corporate finance decision analysis risk management and investment decisions now part three or the final part of this video and i hope this is the part that you all stuck around for which is how to decide which one to choose between a cpa and a cma so let me tell you the criteria that was important to me when i chose which career trajectory to take and then you can decide for yourself so the first one is personality type and so in my situation uh i tend to be more introverted than extroverted uh and so i believe and i feel like if you're more introverted um a cpa certificate is gonna be more suited for you because a career trajectory for a cpa involves working with less or a smaller group of people than with a cma cma is more strategic in nature you're going to be working with management you're going to be working with all kind of people around the company in terms of forecasting sales forecasting costs um and so cma is going to be working with with larger groups of people and so the first criteria for me is personality type which is in my case introverted therefore i looked at a cpa certificate okay now the second criteria is moving around so if you expect to be moving around in the future like we said at the beginning of the video a cma certificate is recognized globally while cpa is local in nature cpa is issued by the state board where you are where you live and so it's more local with a cma if you're expecting in the future to be going from europe to the us or from u.s to europe or apac or what have you you should be looking at a cma instead okay now the third criteria for me is owning a practice so early on in my career as i began working in accounting i have met and i've had mentors who are cpas who have their own practice and i've always looked up to them and i admire the lifestyle of having their own practice deciding their own hours taking on clients when they want to and rejecting even sometimes the clients and so the flexibility with that is that you can start your own practice with a cpa versus a cma most of the time it means you're going to be working for a big corporation right so this here the dreams if you want to have your own practice i highly highly recommend a cpa certificate rather than a cma okay factor number four criteria number four here is looking at the future so i highly encourage you to look at the end goal for yourself what do you want to become at the end of your career or toward the end of your career so for example if you want to become a cfo or a chief financial officer you're most likely want to become a cma or a certified management accountant because with a cma the type of work you're going to be doing is strategic finance with budgeting forecasting looking at sales forecasts and things like that that's the kind of work experience that's going to get you faster to becoming as cfo while if your future if you want to become in the future is for example like me having your own practice as a cpa then obviously a cpa license is going to be much more suited for you so look at your end goal start from the end and work your way backward that's going to give you a much easier way to decide between a cpa and a cma but at the end i'll say this don't overthink it because deciding between a cpa and a cma certificate is almost like deciding between driving a mercedes or a bmw right with either one of them you'll succeed you'll do really well with either one of them if you put in the hours you put on the work uh you put in you pay your dues and learning the actual field so don't spend too much time don't get into analysis paralysis and analyzing and overthinking the two think like i said between start from the end and work backwards what you want to be in the future and then think of which one of them will give you the right work experience to become that that you want to be in the future but just don't spend too much time in thinking and spend more time in doing and actually getting the qualifications getting the work experience and getting all the things that will get you in the right career trajectory if you like this video give us a big thumbs up and i'll see you in the next video you

Channel: The Financial Controller

Views: 89,576

Keywords: CPA vs. CMA, certified public accountant, certified management Accountant

Id: MWEnI-PJoU0

Length: 16min 3sec (963 seconds)

Published: Sun Jun 20 2021