The business world is dynamic and ever changing, and the competition for jobs is strong. One way professionals can stand out from the crowd and demonstrate their expertise, skills, and experience is through professional certification. For accounting and finance professionals in the United States, two of the most relevant certifications are the CMA® (Certified Management Accountant) and CPA (Certified Public Accountant). CMA CPA
In 2007, we proposed a 10-step process that would enable undergraduate accounting students to prepare for and pass the CMA and CPA exams within nine months after graduation, giving them a significant advantage when beginning their career. We published an updated nine-step program in 2010 after the exams’ administering bodies—ICMA® (Institute of Certified Management Accountants), the division of IMA® (Institute of Management Accountants) that administers the CMA exam, and the American Institute of Certified Public Accountants (AICPA), which administers the CPA exam—made changes to the respective exams. The revised process outlined how students could pass the CMAexam while still in school and pass the CPA exam within six months after graduation.
It’s time for another update. Both the ICMA and AICPA continue to work to ensure that their relevant and rigorous professional examination and certification processes keep pace with the increased expectations and role expansions placed on today’s and tomorrow’s accounting and finance professionals. The ICMA, for instance, recently approved and implemented changes in select content coverage and topical weighting of the two-part CMA exam (see Figure 1). These changes, which became effective January 1, 2015, are the stimulus and motivation for this article. CMA CPA
In 2014, the AICPA’s Board of Examiners issued an “Invitation to Comment” that solicited feedback from accounting professionals and educators regarding possible changes to the Uniform CPA exam to maintain its relevance to practice. It’s anticipated that the AICPA will release an exposure draft of its recommended changes to the CPA exam in September 2015. The target date for the implementation of the final changes is 2017. Thus, the changes made to the CPA exam that were effective January 1, 2011, are still current today.
One of the clearest indicators of the benefits of holding both the CMA and CPA certifications is the financial gain. Each year, the IMA SALARY SURVEYconsistently shows the added financial benefit of holding an accounting certification. The results of “IMA’s Global SALARY SURVEY, published in the March 2015 issue of Strategic Finance, show that CMAs had a median salary that’s 59% higher than non-CMAs, and their total compensation is 63% higher. In the U.S. report based on that survey, “IMA 2014 Salary Survey: United States” (available online at salary_survey), those with either certification (CMA or CPA) report a higher median salary and total compensation than their noncertified counterparts. The survey data shows that respondents in the U.S. who hold both the CMA and CPA certifications had the highest salary and compensation amounts. For example, their median total compensation ($132,000) was higher than those with just the CMA ($128,500), the CPA ($123,250), or neither ($93,750). It’s clear that achieving the distinction of dual certification translates into higher average annual salary.
In our previous articles, we’ve noted that the CPA is the credential generally associated with accounting in the U.S., but increasingly more accounting students seek advice concerning careers outside public accounting. According to the U.S. Bureau of Labor Statistics, approximately 75% of the 1.275 million accountants and auditors in the U.S. work in management accounting and academic roles. As noted in IMA’s U.S.SALARY SURVEY report, “requirements for obtaining the CMA and CPA emphasize different skill sets, and, in any given year, the market may demand more or less of the corresponding skill sets. It is clear that both the CMA and the CPA continue to provide professional and financial value.”
We emphatically advise our accounting students to distinguish themselves and become more marketable to prospective employers. One viable way for them to achieve distinction is to earn both the CMA and CPA credentials. This demonstrates that they have the varied skills and expertise needed in the constantly evolving industry, regardless of whether they end up in public accounting or in industry.
Our updated nine-step approach is designed to show students (and accounting educators) that dual certification is very attainable. Specifically, we outline a method for students to efficiently prepare for both exams during a time when they are in the best position to do so—while they’re still students.
We limit our discussion of dual certification to the CPA and CMA exams for several reasons:
- Both permit candidates to take one section (part) at a time.
- Both are computer-based and use Prometric testing sites. Thus, the mode of assessment is very similar.
- Both exams allow for flexible scheduling (see Table 1).
- Neither requires qualifying work experience to sit for the exam. Both do require qualifying work experience to earn the designation.
Both are strongly endorsed inside and outside their respective industries.
Although the CPA exam is uniform across all licensing jurisdictions, each state board mandates the specific education requirements needed to be eligible to sit for the exam. The CMA is an international designation, and the ICMA establishes the requirements needed to sit for the CMA exam. Passing the CMA exam doesn’t lead to licensure in a state as the CPA does.
In most jurisdictions, the state boards require at least a bachelor’s degree to sit for the CPA exam. All licensing jurisdictions have adopted a 150-hour credit requirement (i.e., the equivalent of a master’s degree) to obtain the CPA license. In most cases, however, candidates may still sit for the exam after completing their undergraduate degree provided that they have completed the requisite number of accounting and other business-related credits.
The ICMA doesn’t specify any number of accounting and/or business credits to sit for the CMA exam. The educational requirement that ultimately must be fulfilled to earn the CMA designation is a bachelor’s degree, in any area, from an accredited college or university. The ICMA requires that the education requirements be fulfilled within seven years of completing the CMA exam, but they aren’t required to be completed at the time a candidate sits for the CMA exam. (Students who are registered for at least six credits per semester during the academic year, however, are eligible to pay a lower fee to take the exam.)
The major difference in the requirements to sit for the CPA and CMA exams is that CPA candidates must complete at least their bachelor’s degree before they can take the exam. Therefore, students can take the CMA exam while still in school and then complete the CPA exam after graduation. This enables them to efficiently streamline the process to prepare for both exams.
THE NINE-STEP APPROACH
Table 2 summarizes the current content areas tested on each exam. A candidate must pass a total of six parts to earn both designations (see Table 3 for the format of each part).
We recommend our nine-step plan to students who are serious about obtaining professional certification but who may or may not end up pursuing a career in public accounting. Our recommendations are based on the assumptions detailed below and are applied to a student candidate who is an undergraduate accounting major attending a college/university that has a two-semester academic year. Accordingly, the student candidate will:
- Take one exam part at a time to keep the workload manageable and to increase the chance for success on that particular part.
- Use some form of CMA and CPA review preparation program and materials (such as a review course, software, etc.) in addition to coursework.
- Take additional finance credits or consider a minor in finance.
- Complete the CMA exam while still a student.
Table 4 demonstrates the alignment in content areas between the CMA and CPA exams. The table allows a candidate to easily follow our recommended strategy for sequencing coursework and related CMA and CPA exam parts. It’s important to note the significant overlap in content areas (but not necessarily breadth and depth of topical coverage within these areas) on Parts 1 and 2 of the CMA exam and the Business Environment and Concepts (BEC), Auditing and Attestation (AUD), and Financial Accounting and Reporting (FAR) sections of the CPA exam.
The CMA exam has increased its emphasis on the application, analysis, synthesis, and evaluation of advanced finance topics. Thus, a student who pursues a minor in finance or at least takes additional credits beyond the traditional required corporate finance course will be better prepared for this exam. Granted these are essential skills for both exams, but it’s particularly helpful for the two parts of the CMA exam, where all concepts are tested up to an advanced level (Level C). CMA CPA
The levels tested on the CMA exam are an introductory knowledge and comprehension (Level A), application and analysis (Level B), and a detailed comprehension of and ability to synthesize the essentials of a topic, evaluate it, and make recommendations (Level C). Level C topic areas may also contain requirements at Levels A or B. Since most undergraduate accounting curricula include free electives, taking additional coursework in finance should be feasible. These additional finance credits can also help the student meet the 150-credit-hour requirement for the CPA exam.
Our updated plan is outlined below and summarized in Table 5:
- Over the course of the student’s junior year, he or she completes the intermediate accounting sequence (usually two courses), corporate finance, an information systems course, operations management, and, if possible, a relevant finance elective. We expect that most accounting majors will have completed coursework in economics, quantitative methods (statistics), and business ethics by the end of their junior year.
The CMA exam assumes that a candidate has knowledge in business economics, time-value of money concepts, and basic statistics. (And the BEC section of the CPA exam specifically tests economics and time-value of money concepts.) The totality of this coursework covers the majority of the topics tested on Part 2 of the CMA exam and is invaluable in preparing for that part of the exam.
- Once the second semester of the junior year is complete, the student uses CMA review program materials to prepare intensively for CMA Exam Part 2, “Financial Decision Making.” The student should take this part of the exam in late May or June and recharge during the months of July and August.
- During the first semester of the student’s senior year, the student completes cost/advanced managerial accounting, auditing, and the undergraduate business capstone course, if available. Typically, capstone courses require application and integration skills (i.e., Level C) to examine strategic planning, performance, and control issues. These are invaluable in preparing for CMA Exam Part 1, “Financial Reporting, Planning, Performance, and Control.”
If such a capstone course isn’t required or available, the student should look for a case course in finance as an elective. Courses that use a case-study approach usually require high levels of integration and application. At this point, the student has completed three years of college in an accounting program and should have a solid foundation in most of the topics tested in Part 1 of the CMA exam.
- Over the winter break (January), the student uses CMA review program materials to study for Part 1 of the CMA exam, with the plan to sit for this section in late January or early February of the spring semester. We recommend this timing because it’s early in the spring semester and very likely before major course assignments are due. If the student plans on doing an internship in the spring semester, we suggest that the student request that it begin in late January.
If successful up to this point, the student will have completed the CMA exam prior to graduation in May or June. This is quite an accomplishment and should serve as further motivation to aggressively pursue the CPA exam. It’s also a tremendous confidence builder because the student now knows he or she can pass a rigorous professional examination.
Obviously, the total amount of study time needed to pass these two parts varies by candidate. Based on our prescribed timing of the coursework, most of the topics covered in the courses taken are quickly reviewed and reinforced with the CMA review program materials. As a result, we expect the total study time to be less than what it would be if these two parts are taken after graduation.
- During the second semester of the student’s senior year, the student should schedule tax, business law, and advanced financial accounting courses. If this isn’t possible, the advanced and/or tax course should be taken in the first semester of the senior year. Ideally, the student should take two tax courses during senior year: one that covers individual taxation and one that covers business entities. If available, one tax course could be taken per semester. Although not common, a second auditing course also would be useful.
- The student/candidate graduates with an undergraduate degree in May (and the CMA exam completed) and relaxes for a week or two. Upon graduation, candidates should immediately apply for parts BEC and REG of the CPA exam.
- In June, the candidate uses the CPA review program materials to prepare for the BEC section of the CPA exam. Because the candidate has recently studied for the CMA exam, the preparation time for BEC is considerably shortened since strategic planning, operations management, information systems, and financial management (representing 56%-72% of the BEC section) were covered and tested when preparing for the CMA exam. The candidate schedules the BEC section of the CPA exam in early July.
- For the remainder of July and early August, the candidate uses the CPA review program material for the Regulation (REG) section. If the tax course(s) and business law course were completed in the last semester, 85%-90% of the content tested on the REG section will be relatively fresh in the candidate’s mind, reducing the amount of study time needed. The candidate takes the REG section at the end of August.
- While the recommended steps have been quite challenging up to this point, the real test of the candidate’s dedication, motivation, and commitment is now at hand—particularly if the individual’s career has started with a full-time job in the fall after graduation.
To capitalize on the fact that the candidate completed the auditing and advanced financial accounting courses during senior year, September and early October should be used to prepare for the AUD and FAR sections of the CPA exam simultaneously. There is synergy gained when studying for AUD and FAR together because audit issues such as analytical procedures, which involve ratio analysis and an understanding of financial statement preparation U.S. Generally Accepted Accounting Principles (GAAP)), are tested on both AUD and FAR. And with the new emphasis on external financial reporting in Part 1 of the CMA exam, the candidate will have reviewed and been tested on many of the intermediate accounting topics tested in the FAR section, while many of the analytics and financial ratios covered in the AUD section were tested in Part 2 of the CMA exam. CMA CPA
The candidate schedules AUD in late October and FAR in late November. This strategy affords an additional month to review the material on the FAR section. This timing is also desirable because it’s before calendar year-end corporate closings and the public accounting “busy season.” If successful, the May accounting graduate will complete both exams by late November, six months after graduation!
LET’S DOUBLE UP!
We recognize that this nine-step plan is extremely ambitious and may not appeal to all accounting students. But it’s a viable choice for those students who are highly motivated and dedicated, such as honors students, and it may also attract students planning to go straight through to graduate school. Students majoring in accounting and taking additional coursework in finance are ideal candidates. Because individuals following this plan take one section at a time, either as a student or shortly thereafter, they increase the probability of success by capitalizing on the timing of their coursework, their test-taking ability, and their experience.
Academic institutions should consider providing incentives to their “best and brightest” by offering to underwrite the exam costs. IMA offers a substantial discount for students taking the CMA exam, and it also awards scholarships to outstanding accounting students, thereby reducing their out-of-pocket tuition costs and making a CMA review program more affordable. If the institution underwrites the exam or CMA review cost for the student, its investment has a triple future “payoff” or return on this investment. First, improved success rates on professional exams are direct evidence for undergraduate accounting programs with outcome-based assessment criteria. Second, students are more likely to endorse accounting programs where they received goodwill. Finally, those students who successfully follow our plan have passed the CMA exam before they start their employment (or graduate studies), making them more valuable to their employer. That, in turn, leads to higher demand for the institution’s accounting graduates!