There have been recent discussions about the
I would like to hear thoughts about senior financial professionals who hold other relevant professional certifications other than the M.B.A. or CPA, such as the CMA or CFM to name a couple. Both the CMA and CFM are sponsored by the IMA and stand for a standard of technical excellence in the
Your thoughts on this would be appreciated.
Let me toss a bomb in the discussion :). I would venture that from a CFO's perspective and much of the perspective of senior finance and accounting execs in the U.S., the CPA has great value as a hiring credential and the CMA and CFM has markedly less value. And I mean a lot less value. I am not taking anything away from the professionals who hold those certifications, I am simply saying that the "value", the perceived value or even the "brand" value of having the CPA is simply far, far higher in the U.S.. That is also not to say that those familiar with the CMA/CFM would not value them, but they are simply way behind the CPA in terms of credibility and brand value. Please, no one take this personally, just my take and my experience.
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No offense taken by the last comment. Mark just hit on the real issue which is "perceived value" vs. real value. This is the core issue that many CMA's and CFM's run into when competing against CPA's for CFO/Controller roles. Trust me on this since I have been there many times. Mark is correct regarding the "perception" of value of the various credentials. I would argue this is mainly the case because of the lack of visibility and knowledge that is out there among decision makers regarding the CMA and CFM credentials. I cannot tell you how many times I have been asked what these credentials are about. Its really a numbers game because there are far more CPA's than holders of these other certifications for obvious reasons due to the public accounting path that many accounting majors follow. However, if the decision makers actually do the research regarding the content of the exams and the rigor involved in the certification process it is my view the perception can start to change. The IMA in there marketing and promotion of the credentials can also play an important role here. I truly understand the perception argument and it is real. However, if you peel back the content, and rigor of what it takes to achieve all of these credentials (i.e. CPA, CMA, CFM) you will find that they are all very close. But I agree this is not the "perception" out there.
I agree with Mark's assessment. It appears to me that some of these employers believe that unless you have a CPA you don't have a clue what a debit and a credit is. I have worked as a Controller for a public company and filed 10Ks and 10Qs for may years and I have a CMA and a CFM but when it comes to applying for a position I get automatically excluded from the top applicants because I don't have a CPA.
Markus this is great input and are a perfect example to continue this discussion. Do you agree that this perception should be changed? You mentioned you are the Controller of a public company and file SEC reporting and have a CMA and CFM. Does it not make you feel frustration when you are excluded from positions because you do not have a CPA but have work every bit as hard to achieve the CMA and CFM credentials and are as capable?
To help settle this debate lets hear from folks who have both credentials (i.e. CPA and CMA or CFM). The folks who have CPA's will bring their bias to the debate and the folks who have the CMA and CFM have their bias. To be bring more objectivity to the debate lets hear from folks who have both credentials to compare and contrast. I know your out there!
Everywhere in the world - the subject seems to be a favorite debate. In India, it is CA vs. ICWA the equivalent of CPA & CMA qualifications. Even though the syllabus and experience requirements are equal, because of Government patronage and employers' preferences make CA/CPA more attractive. Being pioneering qualifications, they have advantage of being early entrants to the field. Moreover, CPA/CA guys would have already occupied top positions in Finance and naturally they prefer to appoint the guys of their own ilk. In addition, the employers are more influenced by External reporting requirements because of the hype surrounding the same AND they think that CPA/CA would be of better bet.
CMA/ICWA are great qualifications to acquire because they lay emphasis on three pillars - Performance, Strategy and Management. They are more useful and fit to organizations internally. CPA/CA are on the other hand are more fit for external reporting requirements.
CMAs all over the world need to create a brand equity and shall work in that direction.
I have come in late on this discussion, but I believe it is extremely important for hiring managers to know the similarities and the distinctions. I have both the CPA and the CMA. I acquired my CMA in Canada in 1995. In Canada, obtaining a CMA is just not an academic exercise of passing an exam. Yes you do have to pass an exam called an "Entrance Exam". Following that you enter the "Professional Program" for 2 years and at the end of it write another comprehensive exams. Part of the requirement for being in the the program is to be working full-time in industry where the concepts learned could be applied at the workplace. The learning process combines formal and non-formal means. Once a month, there is required reading and submission of course work and every 3 months you meet with your course mates over the weekend in a hotel to go over the required readings with an instructor. You will also be required to participate in team work and do individual or group presentations. The program I went through concentrated on advanced management concepts, such as leadership, business-government relationship, change management, operations and project management, etc and specialized cost accounting areas such as ABC/ABM, special purpose costing for electricity, oil & gas, etc. In effect it is an MBA program. This is a rigorous program and I wish finance professionals aspiring to senior management will go through this. In fact this is why the CMA designation in Canada has courted engineers and other non-accounting professionals to obtain that credential.
I obtained my CPA certification in 2001 upon moving to the States in the late '90's, because I quickly found out that the public perception of the CPA far outweighed the CMA. Whereas the distinction is known in Canada, and therefore most Controllers and many CFO's are CMA's, over here in the U.S. it is not the case. Part of the reason is that the CMA society has not done a good job with the brand. Secondly instead of the CMA certification competing with the CPA, it rather competes with the MBA.
I humbly disagree with those who say that certification does not matter. It does, not because I have one or two, but because in my experience working with those who don't have, there is a marked difference. One of the things I have found to my dismay here in the U.S is that many accounting graduates take the minimum accounting courses necessary to graduate. The reason lies in the over concentration on GPA scores, which non-accounting courses help boost. I have worked with a number of these graduates and they lack the understanding of certain accounting concepts as they face them. No wonder, the CPA pass rate was in the low 20 percentage rate and precipitated the change to a post-graduate level candidate. In fact many CMA's in Canada have the CPA designation as well. Not only that, but the CMA society in Canada is professionally affiliated with the AICPA here in the States. As I write, the CA (equivalent of the CPA) in Canada are in merger talks with the CMA's in Canada. The distinction has blurred to the point that each is encroaching in the other's area of expertise. CMA's can now audit and be in public practice.
Yes experience matters but it can only take you so far as the same things you've mastered is presented to you. The certification comes in handy when you are no longer in the comfort zone created through experience. In as much as the public perception rates the CPA over the CMA, it would do those with a CMA certification to go for the CPA as well. After all each designation has its strength. I have worked with a Controller with a CPA with public practice experience who did not quite get the complexities in variance analysis and costing. I have dealt with a few CPA's in industry who should have stayed in public practice. There is certainly a difference between looking over the work of an accountant to pronounce whether the figures presented were fairly stated and actually knowing how to produce those numbers. I have also worked with CMA's who did not quite understand the mindset of the auditor coming to audit the books and therefore contributed in no small way to lengthen the audit.
In all honesty, I treasure my CMA more than I do my CPA, because of how much I have relied on that training. I remember how in the 90'S a large company I worked for hinted that they were going to implement value management(EVM), none of my CPA colleagues knew about it. To this day if you talk about ABC/ABM, most CPA's in industry know it exists but they don't know what each stands for.
Like I have always explained to my non-accountant friends, the CMA has an analytical (mathematical) mind suitable for industry's growth, while the CPA has the mind of a lawyer, dealing with precedence and rule-based concepts, suitable in explaining things to the government and investors.
I agree, Mark. Companies have placed a much higher brand value on the CPA in the marketplace -today- than the CMA and CFM. And particularly when combined with an MBA.
A key point is that one must sell to the customer (and we are not the customer for our own services). As such, to be CFO, VP-Finance, Controller, etc. one must get in the door -- which is often controlled by non-finance types in HR or Operations.
For better or for worse, many of the "gatekeepers" place more value on the CPA credential than on CMA/CFM. While it's true that many Fortune 50 CFO's don't have any certifications, it's also true that many firms use CPA certification to quickly winnow the number of candidates and/or ensure some level of competence in technical accounting (something they don't know how to test during the interview).
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You're absolutely right, Ray. It's not about what you think will sell, it's what the customer will buy. If you're not a CPA but want to compete for the CPA roles, you "must" have a strong network ... and even then it's a difficult challenge. However, it's virtually impossible to pass the first screen of a posted position that mandates a CPA credential.
I have been a CPA (active) since 1977 and have an MBA. The accounting profession has been around for over 100 years and has numerous governing bodies, pronouncements, regulations and guidelines to protect investors when it comes to how to prepare and present fair and representative financial statements that are recognized through the modern financial world.
In addition to financials, taxes, SOX, internal controls, external audits, etc. the CPA is recognized as having developed all of those skills through high quality training and hands-on experience. I know, because I've been there and done it. My training was with the best in the world (BIG 4 - KPMG) and my experience with them and the experience I've gained in private industry has geared me towards being able to deal with business issues and their solution from many diverse angles. If someone can tell me that there are BIG 4 CMA or CFA firms with international presence that qualify one to be able to transition into the Controllership or CFO roles within a company and do both at the same time (if necessary), please advise.
I see many people who have MBA designations or MBA, CMA and CFA credentials and I applaud them for their hard work and dedication to their goals. But, I agree with the fact that not only there a perceived value but a real value to having a CPA for most companies.
I have both my CPA and my CMA (and CFM as well) and believe that both are very valuable over the course of an accountant's career. That said, they are mirror images as to how they provide the value.
In my opinion, the CPA provides an accountant value mostly because it opens doors and provides career opportunities. I think without it, it will be far harder for an accountant to rise to a senior finance level. On the flip side, I do not use very much of stuff I learned on the CPA exam on a daily (probably yearly basis).
The CMA certification to me is the opposite. As several here have commented, it is not really a door opener (hopefully this changes over time). However, the CMA provides a great deal of skills that a senior finance person would use every day. To me, the CMA exam is comparable with graduate level financial management courses - both in difficulty as well as value.
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Kevin, this is what I was seeking for commentary. You can bring a level of objectivity to the discussion since you hold both the CPA and CMA/CFM credentials. You gave the CPA its just due but also elaborated on the merits of the CMA/CFM which are much less known out there by many decision makers for CFO/Controller jobs. I think an excellent point was the practical value of CMA/CFM on a daily basis vs. the CPA. That being said there is still the bias out there that may never go away regarding the "BIG 4 CPA" based on other commentary. Not only do you need a CPA in some job descriptions must haves but some state that it must be from a "BIG 4" firm. By selecting this criteria the hiring organization has just eliminated countless qualified people for the CFO/Controller role. Not only eliminating CMA/CFM types but other qualified CPA's who are not from the "BIG 4". A classic case of tunnel vision to the highest degree.
These comments were extremely helpful as I have 2 former co-workers who asked this very question before going on to study and sit for the CMA. (which they just recently passed). Now, I am in the process of deciding which one to take and these comments have given me a great deal to think about. I think the key that I hear is; I will be faced with proving to potential employers that my CMA is equivalent in terms of value to a CPA so if I am prepared to fight through the "gatekeeper" to prove my CMA is equal in value, then I can go that route. Although, I don't think the IMA is going to change perception overnight, I think for me as a Controller, I am willing to take that chance. I thank you again for all the comments to the burning question I have had for some time now.
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Tricia I am pleased you found all these comments helpful regarding the various opinions on these certifications. I believe you have hit the key point of all this. If you choose to obtain the CMA (as I have) you will have to fight through the "gatekeeper" to prove the value. Please keep in mind this is in "perception" only. The truth is (and I am concerned about the truth not perception here), that the CMA/CFM has real day to day practical value that can be important in a CFO/Controller role. Once we can get "gatekeepers" to understand this (and it will be a challenge at times) perceptions will begin to change. I also plan to communicate more frequently with the IMA how holders of the CMA/CFM can best strategize together and start to change perceptions. One of the most frustrating things for people is to work so hard to obtain these credentials (every bit as hard as the CPA credential) and to not be given its just due and recognition in the work place. I am very pleased to hear you are making the courageous decision to take that chance on the CMA.
This is an interesting topic and I am certain that things have changed in the thirty years since I sat for both the CPA and the CMA exams. At that time the CMA was not widely held and was actually a certification hosted by the National Association of Accountants. The CPA exam was a much more difficult exam to prepare for because all four parts had to be taken at the same time. Calculators were forbidden and the exam touched theory, practice, law and audit. The CMA allowed calculators, one did not have to sit for all exam parts simultaneously and you could take it piecemeal. The CMA included Internal/External Accounting and Reporting, Information Systems, Organizational Behavior and Business Finance/Economics. It touched areas that the CPA exam did not touch and vice versa. If one were to measure the subject areas of the exams one would have to say the CMA is more useful than the CPA for a CFO or Controller. But if one were to measure the preparation required to pass the exams you could come away providing more significance to the CPA back in 1978 and 1979.
As with college degrees and the name of the school we attended these things are only an indicator of our knowledge of a subject as of a particular point in time. Both have CPE requirements but there is no test. One need only show up to gain that credit. Just as it is not true that every MBA from Harvard is identical in knowledge and ability nor that any Harvard graduate is better than a graduate from Georgia Tech or from New Mexico State, every CPA and every CMA are not identical in knowledge or ability.
People provide too much credence to the CPA, the CMA, the MBA, etc. I have all three and yes, they do open doors that I am certain would not be opened without those credentials but if I were faced with a hire decision for a CFO with all other things being equal; one had only the CPA and the other had only the CMA; I'd still have to find some other means to differentiate between them because that only opened the door. It did not tell me anything currently relevant about the person or how the person might fit the needs or the culture of my organization.
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Ron, you make some interesting points comparing and contrasting the two credentials (CPA and CMA). You certainly come from a basis of knowledge since you have both credentials along with an MBA. Your final point about being faced with a hiring decision for a CFO if you had a candidate that had a CPA and the other person a CMA I found quite interesting. I would say this about that. The individual that has the CPA credential was required to do so if he/she took a public accounting path since without a CPA the public accounting experience is not complete and would not have much credibility. Whereas the individual that chose to go the CMA route did so on their own ambition and initiative without having it be a "requirement" in their place of work. There is no question both credentials show great initiative and ambition. In an ideal world (and I understand we do not live in one) I would like to see the hiring criteria for CFO/Controller jobs ask for either/or the CPA and CMA. As it stands today many of these CFO/Controller job criteria only ask for the CPA as a certification credential. As I stated in other previous discussion points this is mainly due to the lack if visibility and knowledge of the CMA/CFM credential. This is mainly a branding and promotional issue and many individuals can help in this area such as current CMA's, candidates for the CMA and of course the IMA which is the governing body. This credential has only been around since 1972 whereas the AICPA has been around much longer than that.
As time as shown, it's all about the money. In my personal opinion, if you want to survive alive, you need CPA Certification along with Treasury Certification.
OK, so we have had over 1157 plus reads on this discussion with some great commentary by many people on this topic. So here is the burning question that I would like to throw out there. Would the majority of folks out there in CFO/Controller roles (or decision makers that can hire for these roles) be opposed to adding the CMA/CFM as a hiring requirement if the CPA is also listed as a must have? So in other words the wording would be "CPA and/or CMA or CFM required". Would anyone have an issue with this? If this were the case then at least the CMA/CFM types could at least get a turn at bat so to speak to make their case for the position (assuming they also had the relevant work experience). Then may the best qualified candidate get the job. I would appreciate your thoughts on this.
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I agree that the credential (CPA,CMA,CFM)is important, for all of the reasons outlined. I suggest that whether a CMA or CFM is an appropriate substitute for a CPA depends upon the job requirements. If it is a private company with a need for very strong internal management reporting, an experienced CMA might be a better fit, than a CPA.
Obviously a position in a publicly traded company in financial services would have different requirements.
First, my short-sighted answer is that while credentials often do not supersede experience, credentials can be critical in getting opportunities to amass that experience.
Second, my bigger picture response is that we, as a profession, need to consider the impact of globalization on credentials and experience. For instance, will the CPA designation remain as prominent worldwide once IFRS takes effect? Or, will the CA become the generally accepted and dominant certification? And if so, will we have any level of reciprocity or will additional testing be required? Will the ACCA sneak in there as state accountancy boards are now starting to recognize it?
Well, those are questions that warrant their own discussion, likely under another banner. Back to the topic at hand. My CPA credential has undoubtedly opened doors for me that would not have been available without it. Did it mean I was better equipped to do a job? Not necessarily. Does it mean that someone else perceived me as better qualified? Without question.
Recognize that when posting required vs. preferred, your candidate pool automatically self selects to a degree and you do not see the entire talent pool. This may or may not be desirable to you. Plenty of talented, capable people have elected not to take the CPA exam, just like plenty of talented CPAs decided not to pursue an MBA.
I agree with one of the more recent comments by John S. that stated the job requirements should dictate the type of credential. Just to expand on this point, I would also suggest that there are many CMA/CFM types that have solid publicly traded company backgrounds (i.e. SEC Reporting). This is all a matter of the type of experience one was able to obtain in the work place which could also have an element of good fortune depending on what company you are working and the assignments you receive. Please keep in mind that part of the CMA exam covers also financial accounting and SEC reporting requirements. This knowledge coupled with the experience in the work place should make them as competitive as a CPA with similar experience for these type of roles. However, once again "perception" rules and many people are not aware of this. The bottom line for me is that I would like to see equal footing for both credentials. Of course the work experience should always be the overriding factor to any credential. So if the work experience is the key there is no compelling reason why both credentials cannot be listed as part of the preferred job requirements. I am actually not in favor of them being a "must have" for either credential. The "preferred" commentary I believe says it all since it gives an edge to those individuals who have gone the extra mile to obtain these rigorous certifications. In other words, if the experience is the similar among some candidates the professional certification could be the piece that puts you over the top.
I don't think any designation is more important for a CPA/CMA/CFM than an MBA. And any of these designations is almost worthless without that, or at least 10 years of operational business experience. And tax work and auditing is not business experience.
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I totally agree, James. Regardless of the CPA or CMA, the MBA - from a top-rated school - adds much value. Right now, the perception is that a CPA CFO with operational experience and an MBA is a high-value target. I don't see that changing anytime in the near future.
I saw a comment way, way at the beginning by someone who said the CPA is associated with "operational" experience. I've not experienced that to be the case with any of my clients. Rather, it is their record of contributions within the operations environment that positions them as bringing that experience to the table.
One last thought - there are only two ways to overcome the CPA vs. anything else or nothing issue is competing for that next opportunity. The first is with a solid record of value. The second is through networking ... with senior executives, board members, and third parties who service those companies. It will never be overcome through playing the posted position game and being forced to deal with gatekeepers whose sole job is to screen you out of the process.
I have cleared the CPA(USA) exams in May 2010 from New Hampshire Board. I reside and work in India (Bank of America) and earlier was working with American Express. as per New Hampshire state board of accountancy i am supposed to work for 1 year ( 1500 hrs) in a public accounting firm and under CPA to earn the CPA designation. but since i am in India and no firm in USA will sponsor me for the training. how should i go about it ? secondly is there any state board to whom i can transfer my passed papers and who do not have experience requirement stipulations ? and who can give me CPA designation ? since i am working in banking industry i do not need the public firm experience at this stage of my career.
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Vikas,
I have a CPA license in Tennessee, but I've never worked in public accounting. The requirements are 150 hours of university credits and one year experience in addition to passing the CPA exam. The experience can be in public accounting, industry, government, banking, etc. The experience must be at a professional level, but it does not have to include public accounting. I have 20+ years management accounting experience but have never worked a day in public accounting. I believe that if the CPA certification is going to serve non-public accountants i.e. management accounts, then they can't exclude all experience except public accounting from qualifying experience. I have earned the CMA, CFM, CPA, CTP, CFE, and FCPA certs to date. I don't care much for certification programs that require that you have specific practice in specific settings. It's all about professional development! Best of luck to you and do check out the Tennessee State Board of Accountancy.
The discussion has moved afar from CPA/CMA to Certification to no-Certification to Experience.
Several members have, IMHO correctly designated any certification as a minimum knowledge base, who has past a series of exams. Passing exams may prove you have book knowledge, but not that you know how to apply it. It may also prove you are an excellent test taker, but have no knowledge outside that test taking.
Employment related to the certifications is proof that you worked, not that you a) did a good job or b) really learned anything (though the assumption is that you did). See Vikas entry.
Doing public accounting is not doing managerial accounting. They are two separate animals that diverge at graduation from college and the career choice made by the new "accountant".
What makes a good CFO? Certifications, no. Experience and relevant experience, yes. Anyone can debit and credit. Anyone can lookup a FASB and apply it. You learn that getting your BS degree. Can anyone do tax, sure. SOX, yup. Do it well, absolutely - but it takes time to learn your craft.
CFO's or those who have chosen managerial accounting (MA) have spent the time to learn their craft (and like anything and everything else, there are good MA's and bad MA's). But what they have learned is different from what a public accountant (PA) has learned.
These are two different animals at opposite sides of the spectrum. So saying that a CFO needs a CPA is wrong and is as wrong as requiring a CMA for the same job.
It takes looking at someones experience in business to determine along with other factors whether or not they will be successful in YOUR business. A fancy certification is not proof of success.
By the way, in New York State (and I only speak based on the laws in NYS) the only difference between a CPA and any other accountant is that the CPA can sign an external audit or review. Since it is unethical to sign an audit if there is a fiduciary relationship between the CPA (auditor) and the client company, then having a CPA as your CFO does nothing for the company, except give you a CFO with a unusable (albeit possibly bankable) title.
Fair or not, the CMA certification is not recognized on nearly the same basis as the CPA certification. To prove this simply go to Monster.com and enter in any major City in any part of the country and search "CPA" and "CMA." Whether it is San Francisco, Dallas, Chicago or Miami the response rate will be about fifty to one (if not more) in favor of the CPA. Further, ask anyone in your accounting department; or management in general, to explain what a CMA is and you will probably get a blank stare. In my twelve years of experience I have only come across two CMAs.
This is no knock on the IMA or CMA certification. There are stiff requirements in attaining the credential; taking the CMA is a major undertaking and passing the exam is a definite professional achievement. However, at this time it is not nearly as well known as the CPA.
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Your observation is correct and has been for at least the 20 years I've known about the CMA.
So we have established that right or wrong a CPA after your name has greater marketing value in the job market, I am curious as to thoughts on the root causes of that difference. I will throw out two to start.
1. CPA designation simply has greater name recognition due to being around longer or even maybe better marketing by AICPA to the non-accountants.
2. Access to CPA designation is controlled by government entities. Even though both exams are developed by private organizations the CMA is totally controlled by one organization while state agencies control access and maintenance of the CPA credential.
Would like to hear others thoughts or ideas on root causes for the difference.
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The CPA designation is older, a governmental license and while what a CPA (legally) is a mystery, its what lay people know.
In fact the average person doesn't know their are differences between accountants, bookkeepers, auditors, CPA's, CFO's etc with the exception that the CPA is 'special' and does taxes.
There's another reason that the CPA has marketing panache, Wray: undergraduate accounting majors are brainwashed by their CPA-holding professors to believe that public accounting is the way, the truth, and the life. Worse, most accounting curricula are skewed towards courses that help qualify students to sit for the CPA exams; management accounting gets pretty short shrift at most schools. It's kind of the stepchild in accounting education. A similar thing happens in marketing departments of most business schools: industrial marketing is the ugly duckling, while consumer marketing is all the rage.
In June of each year, Strategic Finance, which is the monthly publication of the Institute of Management Accountants (which sponsors the CMA), publishes an annual salary survey that regresses annual compensation on an array of independent variables. Those include whether or not one is a CPA, whether or not one is a CMA, whether or not one has a graduate degree, how many years of experience one has, whether one is male or female (yes, there is a compensation difference), and several other variables.
In the current survey, which came out in June and which is available at http://www.imanet.org/PDFs/Public/SF/2012_06/06_2012_salary_survey.pdf, one can skip to the last page and see the regression coefficients. The results say that having the CPA is worth an extra $10,193 in annual pay, while having the CMA is worth $11,126. That's rather curious because, as recently as the survey published in June 2004, the CPA added $19,750 to one's pay, while the CMA added just $7,525. And, having both credentials was worth $14,912, which led to the curious conclusion that a CPA who got the CMA took a pay cut of over $4,800, on average. Go figure.
This topic has been quite popular with the Proformative community; for those interested, here are a few related Proformative content links:
CPA vs. CMA for Job Hunting
CPA CFO vs. Non-CPA CFO
How has the CMA degree changed your career?
I am an CFO with a CPA and a MBA. Getting a 4.0 for my MBA was relatively easy. However, passing the CPA test was very difficult and you can't cheat. So it is true that a CPA is in a different league.
As one who held the CMA for about 15 years before ditching it in disgust and as one who was a CFO before he became, years later, a CPA, I'd like to weigh in on this one. For years, I said that the CMA exam was much, much harder than the CPA exam. And I believed that to be true. A few years ago, however, the Institute of Management Accountants (IMA) reportedly decided that it needed more certificate-holders, so it eliminated two of the four tests required to become a CMA. That trashed the designation for me, so I gave it up without a thought and have not regretted it. There is an epidemic of 'alphabet soup' out there, and those behind the CMA decided, as the American Institute of CPAs did long ago, that they would rather have an annuity stream of revenue than an organization that looks out for the interests of employers and the American public.
I respectfully disagree that the CPA exam is a hard test. It's not. There's a lot of it, but difficult, it's not. Over 20 years ago, before I sat for the CPA exam, the woman who is now my wife asked, after she learned about my background after we met (I'd been an internal auditor, a Controller, and a CFO by then), why I wasn't a CPA. I told her that I'd hired and fired CPAs and CPA firms and that the CPA certificate was, in my view, "the most overrated designation on the planet." She then said, "Well, if it's so over-rated, wouldn't it be a good thing to have?" I looked at her and said, "You know, I've never met anyone as smart as you." (And I haven't.) And she quickly said, "Besides, look around you at all the CPAs you know in this city. I mean, how tough can that test be?" Bingo. She was right again.
A couple of years later, I held a CPA certificate. I'm glad I have it, of course. But, of the three designations that I hold (plus an MBA), the CPA is listed last on my business card because it is the least significant AND it was the easiest of the three credentials to get. As a former CFO who occasionally serves as a part-time CFO for a client in between Chief Financial Officers, I hasten to add that I can tell you that a CPA certificate comes in handy these days because the CFO must now know a whole lot more about the ins and outs of the esoterica of financial accounting than CFOs had to know back when I was one (in the early 1980s). Back then, I had a Controller to wrestle w/accounting trivia. As the CFO, I had to look into the future, not the past, which is the direction in which most of the accountants I've met in a career spanning nearly four decades would much rather look. But nowadays, accounting has gotten so insanely and ridiculously complicated that a CFO had better have a CPA certificate, if only to have a 'hammer' over his/her head that mandates 40 hours of CPE every year so that the individual will have a higher probability of keeping her/his knowledge current. That goes in spades for the CFOs of public companies, who have to sign that SOX-mandated 'certification' every quarter. Given the high stakes in that arena, I wouldn't want to leave my future career in the hands of a Controller who might not have my best interests at heart. . .or know what s/he needs to know. So, in that context, the CPA certificate is a good thing to have.
The sad fact is that most CPAs know precious little about finance. Oh, sure, they can amortize a loan and bond discounts. Yeah, some can help clients with personal financial planning. Big deal. But ask most of them how to go about getting a handle on the cost of capital for a non-public company, and you'll see some real ignorance come to the fore. Ask them how to validate a DCF forecast by constructing pro-forma balance sheets (which is the only sure way that I know of to give the lie to 'hockey-stick' financial projections), and you won't hear much. Ask them how to design a chart of accounts that comes even remotely close to being able to spit out a Statement of Cash Flows on the "direct basis," and you'll probably get the 1,000-mile stare in the four-foot room.
This doesn't make CPAs bad people. On balance, most are not. Most have integrity. But their skills and their knowledge tend to be extremely limited where important topics in finance are concerned. If you want a designation that has real heft in finance, either get an M.S. in finance from a top-flight school or try sitting for the Chartered Financial Analyst exams. I know a whole bunch of CPAs who failed Level I of the CFA tests, much less Levels II and III. And Level I is disproportionately about 'FSA' (fin'l statement analysis). I'm told that about 12% of candidates for the CFA designation are CPAs, but only about 5% of the holders of the CFA charter are CPAs.
I also know a CPA with a Ph.D. in finance who couldn't pass Level II, and threw in the towel after failing it the first time he took it (you can take Levels II and III only annually, while Level I is offered semi-annually). The attrition rate of those who enroll in the CFA regimen is sky-high--81% don't finish. As the proud holder of a CFA certificate, I can tell you that the CPA exam was a walk in the park compared to the CFA curriculum. The CPA tests are to the CFA exams as heartburn is to a heart attack. Unlike the CPA exam, where you have to know a little about a lot, completing the CFA regimen demands that you know a whole lot about a whole lot: There are nearly 3,000 pages of reading for EACH level of the CFA exam.
In addition, the CFA Institute has a level of transparency that the AICPA should have, but instead can only hallucinate about. For starters, voting in CFA Institute elections is electronic. If the AICPA ever made voting that easy, those at the top of that organization would be terrified of what might happen to their jobs. Before I pulled my rip cord and bailed out of the AICPA, I taught CPE courses for it for several years. Invariably I'd ask each class, "How many of you here have ever gotten a ballot to vote in an AICPA election?" Not a single hand ever went up. The AICPA leadership is about as transparent as the leadership is in, say, North Korea.
I mean, think about the AICPA: It now offers "credentials" without testing. Check out the "CFF" (Certified in Financial Forensics), which, for a couple of years as I recall, was given to any existing CPA whose application and credit card could pass muster; no testing required. That was such a rip-roaring financial success that the AICPA recently came out with the "CGMA" (Chartered Global Management Accountant), yet another 'designation' available to incumbent CPAs without a test. I think this kind of behavior by the AICPA is a scandal and an outrage, and that is why I happily shredded up my AICPA dues-renewal invoice when I learned I had passed Level III of the CFA exam.
The CFA Institute does something else that the AICPA has never done and, I'll bet, would never do: It publishes an annual 'proxy statement.' Yep, it discloses the pay and perks of its five most highly paid employees. If most members of the AICPA knew that its CEO pulls down about $1.4 million annually (according to its IRS Form 990), they'd have a stroke. And if you go to www.guidestar.org and pull up some of those 990s, you'll see that not very long ago--before it got into the no-test credentialing business--AICPA had a balance sheet that would have gotten it shuttered by the Comptroller of the Currency if it had been a bank. How an outfit with the kind of monopoly that AICPA has could get into a near-death financial experience, however, is just further evidence of how much finance most CPAs don't know.
Unfortunately, I'm publishing this comment anonymously because I know people CPA toadies who are just chicken-you-know-what enough to try to create political problems for me professionally, and I'm not going to give them that option. It pains me because I'm a Marine who welcomes a brawl, esp. when it's worth fighting. I'm going after the AICPA in a different way, however, and, for that reason, I'm going to remain anonymous. If I'm successful, though, and AICPA finally becomes the public scandal it has long deserved to be, rest assured that I'll be 'out of the anonymity closet' so fast it'll make Barry Melancon's head swim.
Getting a CMA would underline your career and experience with a designation that evidences current knowledge of accounting principles and application of those principles. Echoing some of the above comments, all other things being equal experience wise- a CPA, CFM or CMA could tip the balance in the holders favor.
I believe people should understand what certification they should get into. The CPA exam deals with more conservative issues related to money and see the use of money as a whole. In fact, when I was prepping for the CPA exam years ago one of the trainers told me that CPAs are conservative in nature. If your an American CPA candidate and you study the section on the differences between GAAP and IFRS, you might be wondering why we don't use the IFRS because it seems more logical. And taxes is not logical but Congress just passes the rules and you have to interpret it for your company/client. I think the key to being a successful CPA is being passionate about the topics you are learning as opposed to the math or logic. I think that the CMA exam is more scientific and rational and probably more liberal. It seems that both part 1 and part 2 which deals with managerial accounting and finance seem more logical. I plan on taking the CMA exam because it seems to make the most sense. I don't recommend that people take both however.
Hello All,
I am a Computer Engineer with MBA in Marketing and HR. I have been working in It industry from last 7 yrs as Business Analyst. I would like to get into Strategy, M&A.
Please guide which certification I should do...CPA, CMA, or any other which will help me to get into Strategy..
1
Hi Hetal, if you try to find your way to M&A Strategy you should probably take an practice related certification like IM&A or M&AP.
Sorry, but I missed your post to me from three years ago. Can I still be of help to you in variance analysis. This is of critical importance in manufacturing environments. Let me give you a quick example of getting to the "root cause". I worked for a firm that converted their factory from convention to JIT work cells. Suddenly the tooling cost went through the roof and no one knew why. So I went to one of the cells and asked what they were doing differently. The answer was nothing, that before they ran a job they went to the tool crib and withdrew the required tooling and returned it after the job was completed. So I went to the tool crib and asked the same question. There answer was also "nothing." They would issue the tooling for the job, receive the tooling back in after the job completed, sharpen the tooling and put it on the shelf to await the next job. Therein lay the cure. In the conventional factory a job may be 10,000 units of production. In the new environment, the job may be for 100 units. We changed the driver for the activity "sharpen tool" to number of units produced rather than job completed and the problem was solved. I have found that you must ask a series of five questions to get to the root cause of a production variance. Do you need input on dealing with Purchase Price Variance or how to control variances before they become a period end surprise? Just let me know.
BTW, I am a CMA with an MBA and forty years experience in manufacturing accounting and have been out of work for almost two years now because I am "overqualified." That just blows my mind.
