Completing a certification and gaining a credential has been one of the finest ways for accounting and professionals to boost their expertise and knowledge and in turn get an opportunity for a good career path and increase their pay scale. There are various such credentials which one could choose, subject to the area of finance/accounting one would want to focus on. It is very important to choose your credential carefully as each one of them are unique and provide certain benefits, if not it won’t count.
But here the question won’t be which one of them would be better. It is more like which one would be better for you. Achieving these credentials won’t guarantee any success in the respective careers they lead to. Hence the most important thing would be to decide what you want to be and what you want to do. This seems to be easy but in reality when you would sit down deciding about it, it would get difficult to verbalize why you chose to take up that as your career.
In this article CPA vs CFA, we would be focusing on two best known and highly significant credentials viz. Certified Public Accountant (CFA) and Chartered Financial Analyst (CFA) which are applicable under various job functions in finance industry which would help you choose the right one. Although the decision to take up the credential is highly dependent upon the choice of direction you want to give your career.
May it be any certification there are three most basic requirements to obtain them which include completing the educational requirements, experience requirements and clearing all the levels of the exam.
Read along to find out the difference between these two certifications CPA vs. CFA in terms of exam details, requirements and career.
Certified Public Accountant (CPA)
- CPA has been so far the most known credential in accounting and finance world.
- A CPA license is legally essential in order to do specific jobs, such as public accounting i.e. independent auditing.
- It permits you to charge for accounting services you provide to the public.
- CPA is quite useful when it comes to the corporate but essentially it is valuable in the public sector.
- For many people they see a CPA as someone who prepares tax returns, but CPA’s do much more than that and also one does not require a CPA license in order to prepare the same.
Chartered Financial Analyst (CFA)
- CFA could be one of the hardest credential to be obtained and specifically focused on the investment banking process.
- It was introduced in the year 1963 and it is considered to be one of the highest designations in the finance domain.
- It is a credential that certifies its holder competent and honest. This reputation in the business world is recognized in many countries of the world.
- The CFA degree is not a legal requirement in order to work as a financial analyst but it is a good way to crack some of the most important jobs.
- In order to get the best jobs in an investment bank you either require an MBA from on the top institutes or the second best option would be to have CFA designation and good relevant experience.
|Control||It is controlled by the American Institute of Certified Public Accountants, the governing body of CPAs in United States||The CFA is a charter issued by the CFA Institute, United States|
|Exam structure||In order to obtain the credential there are four parts to the exam||In order to obtain the credential, there are three parts to the exam|
|Mode of exam||It is a 14-hour, computerized exam for all the parts together||The duration of the exam is six hours for each part and is paper pencil based|
|Exam Window||The window is of two months period and there are four such windows during the year (Jan-Feb, Apr-May, Jul-Aug, Oct-Nov)||There are exam windows are that the Part 1 exam is offered twice in a year in the month of June and December, whereas the part 2 and 3 are offered only once in the month of June|
|Educational obligation||Educational obligations forms a major requirement||According to the guidelines by the institute you need to prepare for at least 300 hours for each of the three levels|
|Exam subjects||The exam consists of the following sections:
||The exams consist of the following sections:
|Syllabus structure||The four parts of the exam test the subject matter independently||The three parts of the exam do not test subject matter independently. The CFA constructs each exam covering many of the same subjects such as ethics and financial analysis but just at broader and deeper levels. The first exam tests the candidates broad financial principles, the second is a more intensive test on financial analysis and accounting, and the third exam is broadly based on portfolio management and decision making|
|Pass percentage||Pass rates for the exams are usually 50% or just slightly lower than it and the exam are only taken in English||The pass percentage is less than 45-50% on an average for all three parts and in case of you not passing the second or third exam you will have to wait for a year to attempt it again|
CPA vs CFA Requirements
|Educational Requirements||The educational criteria/requirement also varies by state, but typically, in order to appear for the CPA exam, applicants should have a bachelor’s degree along with 120 semester hours||When it comes to the educational requirements for the CFA credential you would require only a bachelor’s degree.
Even in case you do not have one this condition can be satisfied if you have 4 years of professional experience
|Additional educational requirements||Additional educational requirements generally comprise of 24 to 30 semester hours in accounting, earned through a graduate or bachelor’s degree in business. Many students also pursue a master’s degree in order to complete the educational requirements||Not required|
|Work Experience||As far as the work experience is concerned it would vary across states but mostly they require to have completed at least 1-2 years working directly for the CPA||CFA would require a four years professional experience in related field that has a direct role to play with the investment banking process. Furthermore they need to be the members of the CFA institute|
|Overall Requirements||To obtain the CPA certification, applicants must clear the Uniform CPA Exam, gain applicable work experience and meet additional educational requirements||To obtain the CFA certification, applicants must clear the CFA exam and gain applicable work experience|
CPA vs CFA Career
- Accounting as a career choice is an in demand field and will continue to be. According to the U.S. Bureau of Labor Statistics, employment in this filed is predicted to grow 18% between 2006 and 2016.
- Once a CPA within this area of public accounting, you could work for any sized firm, from a large CPA firm to a small local accounting firm.
- At the firm you could work on any of these varied fields such as audit, tax and management consulting. If you want to work for any business corporate you could choose a field in financial accounting and reporting, management accounting, financial analysis, and treasury/cash management, hedge funds, etc. On the other side at the government end you could work for either at the federal, state or local level. There are also various opportunities available for non-profit organizations.
- There are various career opportunities after having earned this certification which includes financial analyst, treasurers, financial advisers, research analysts, traders, private bankers, portfolio managers, investment banking analysts to name some.
- This charter provides you with international recognition and imparts skills that are highly acknowledged.
- Since CFA provides the skills to a candidate required at the professional place, most of companies use CFA degrees as one of the parameters in order to shortlist the candidates for the interview.
- Moreover, these jobs are considered to more lucrative than other finance jobs.
In all we could say that each of these certifications are relatively unique and focused on specific areas of finance and accounting and cater to a specific purpose. One should choose their credential keeping into mind the cost-benefit analysis for them. Pursue your passion irrespective of the risks as whichever credential you choose it requires good amount of dedication, discipline and hard work for it to be earned and be successful. All the best!
CPA vs CFA Infographics
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