This page is designed to give information about certain designations in the professions of accounting and finance, specifically:
The following is a brief discussion of the CPA,CMA,and CFM designations. In the competitive world of the 21st Century, while a degree and experience are useful, some sort of professional designation is essential in most fields of endeavor. Three of the major designations in the fields of accounting and finance are discussed here. All three of these involve "exam on demand," a concept which is discusssed more fully following the discussion of the basic certifications.
The Certified Public Accountant designation dates from the end of the 19th Century. It is a designation granted by the various states and administered by the state boards of public accountancy. Recipients must meet certain basic requirements which differ from state to state and must pass rigorous exams set and administered by the American Institute of CPAs (AICPAs). "Public accounting" refers to holding oneself out to perform work in the fields of accounting, taxation, finance, etc. for the general public and the CPA designation is a prerequisite to the practice of public accounting in some states and, even in those states that do not limit the practice of public accounting to CPAs, is considered significant to the practice of public accounting. In addition to the public practice of accounting engaged in by many CPAs, there are a great number of CPAs employed in industry, government, not for profit organizations and other places where accounting, financial and related skills and knowledge are important. At the dawn of the 21st Century, there were over 400,000 CPAs in the United States.
Many other countries have a designation and a well-established public accounting profession similar to that in the United States. Most British Commonwealth countries, for example, have what are referred to as "CAs" (Chartered Accountants).
Each state sets its own requirements to obtain the CPA designation. In general, no state requires that candidates be a resident of that state or a citizen of the United States; a resident of Maryland or Ghana could, for example, attempt to get the CPA designation from Alaska. All states require candidates to pass a rigorous exam set and administered by the American Institute of CPAs and all states impose certain educational pre-requisites to sitting for the CPA exam. These educational requirements differ from state to state but most states require that candidates have at least 150 semester hours of college work; this is usually the equivalent of an undergraduate degree plus one year of graduate study. (A few - e.g. Virginia - will still let candidates take the CPA exam on the basis of 120 semester hours, basically a four-year college degree.) In general, the states require that certain courses be included in those 120 or 150 semester hours. In particular, most states require that the undergraduate degree amount to a major in accounting with, perhaps, 30 hours of accounting and related subjects.
To get more information about the CPA exam, to determine whether you meet the educational requirements for your state, and (for most states) to obtain the form to apply to take the exam visit CPAschool.com.
Candidates from other countries must get their educational qualifications evaluated by an outside service such as FACS (the Foreign Academic Credential Service) or Joseph Silny Associates.
All candidates for the CPA must pass a rigorous set of four exams which are administered by the AICPAs in cooperation with the various state boards of accounting. As of the year 2004 these exams were "on demand" - see below.
To hold oneself out to the public as being a practitioner of public accounting, many states impose two basic requirements: that one obtain the CPA designation; and that one document a certain level of experience. Many candidates want the CPA designation merely for the purpose of dressing up their resume or business card and have no intent to practice public accounting. Those who want to go on to the practice of public accounting often have to prove to the state board of public accountancy that they have had two years experience in public accounting or equivalent.
For more information about the profession and the CPA designation, visit the homepage of the American Institute of CPAs. The AICPAs is a national organization for CPAs. All the states have a comparable professional association and you might find it instructive to visit the homepage of the Greater Washington Society of CPAs. This organization which draws its membership from CPAs in Washington, DC and from the surrounding Maryland and Virginia suburbs is to the AICPAs what a state is to the nation.
The CMA is to management accounting as the CPA is to public accounting. The CPA in public practice may be the auditor of a corporation or the tax preparer for a corporation or individual. The CMA is likely instead to be the controller, or chief financial officer of a corporation or trade association and as such may administer the accounting and finance functions, prepare corporate tax and regulatory filings, provide financial advice to top management, implement decision-making and information-processing systems, etc.
The CMA exam is set and administered by the Institute of Certified Management Accountants (ICMA) a branch of the Institute of Management Accountants (IMA) a leading world organization in the management accounting and financial professions. As of the year 2000, there are approximately 30,000 CMAs. Bear in mind that the CMA has only been in existence since 1972 which accounts for why its numbers are small compared to those for the CPA. When you tell your Uncle George that you have just become a CPA, he will know what that is. When you tell him you have just become a CMA, he may think it stands for Certified Medical Assistant. However, the CMA, thanks in part to the high quality and rigor of its exam, is every bit as well known and every bit as prestigious as the CPA among those in the top ranks of accounting and finance.
You can qualify to sit for the CMA exam with a four-year degree in any field including architecture or anthropology. Realistically, however, one should not apply to take the CMA exam unless one has had at least six semester hours of college accounting and it would be useful to have at least two or three courses from the following: economics, finance, management and statistics. While the educational requirements to sit for the CMA are somewhat less rigid than those for the CPA, nobody should tackle this exam with the thought that it is an easier exam than the CPA. Climbers respect Everest not only because it is there, but also because it is tall. Likewise, accountants value the CMA because it is there and because it is difficult and demanding. It is the Mount Everest of Accounting.
The exam is also "on demand;" see below. The exam has four parts. Part Two of the CMA is similar to the Financial Accounting and Reporting part of the CPA and accordingly CPAs who wish to become CMAs may waive taking that particular exam. Candidates who depend on degrees from other countries to sit for the CMA exam must get their educational qualifications evaluated by an organization such as the World Education Service.
For more information about the CMA visit CMAschool.com. Many publishers and organizations offer materials to help the candidate prepare for the CMA exam. In addition, some IMA chapters offer coaching programs to help candidates prepare for this exam.
The CFM exam is also granted by the ICMA which sets and administers the exam. It is a four-part exam but three of its parts are the same as three parts of the CMA; accordingly, persons who are CMAs are only required to take one additional exam, CFM2, Corporate Financial Management. The first CFM exam was in 1996 and as of the year 2000, there are less than 5,000 CFMs. The CFM designation is rapidly gaining recognition and prestige, however, and it is likely to increase in numbers rapidly.
Further information about the CFM can also be had by visiting CMAschool.com.
There are several other fine designations in finance (e.g. CFP, CFA, etc.). To a considerable extent, these other designations stress personal financial planning. The CFM is oriented toward financial planning from the perspective of a large organization such as a trade association or corporation.
Most professions now require that members keep up to date with changes in the profession by engaging in educational activities often referred to as "CPE" or "Continuing Professional Education." This is true of the CPA, CMA and CFM. While there are minor differences in the requirements - for example, CPAs in "public practice" generally require more hours of CPE per year than those not in practice - most states and the Institute of Management Accountants generally require professionals to obtain 30 or 40 hours of CPE per year. These hours may be obtained through taking courses offered by state societies of CPAs, through the Institute of Management Accountants and its various local organizations and through a variety of educational institutions. CPE can also be obtained by taking courses on the internet and by correspondence. In general, persons with one professional designation (say the CPA) may obtain CPE hours by preparing for some other professional designation (such as the CMA or CFM).
If you would like four (4) hours of free CPE, go to our site for an interactive tutorial on the rapidly expanding world of derivatives. When you've finished reading the pages and responding to the various questions, you come to a page with a quiz consisting of 10 multiple choice questions. If you answer seven (7) or more of those questions correctly, you can print out a CPE slip for your records. Warning: to get the full treatment at that site, you will need a browser that can handle JavaScript. Among the browsers that can handle JavaScript are Netscape Navigator 2 (and higher), MS Internet explorer 3 and higher, Opera 3.21 and higher. Try it, you'll like it!
All three of the professional designations described above require passing an exam which is now known as an exam "on demand." This designation - "on demand" - means that after being accepted to take the exam, you schedule an appointment at a "learning center" at a time that is convenient to you. You go in and, spending a few hours in front of a devicel like the one at which you are now seated, you answer a long list of objective-type questions. When you are through, the device may tell you (CMA and CFM exams), assuming you have put in the appropriate preparation time, "Congratulations, you passed" or, if you haven't put in the time, "Better luck next time." On the CPA exam, instead of being informed immediately of your success or failure on the exam, there is a delay after which you are notified by mail by your appropriate state board of accountancy whether you passed.
GO FOR IT! All three designations are worth getting. You can enroll in outstanding courses for these exams by visiting CPAschool.com.
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