Get Your CMA and CPA With This 10-Step Plan
By Joseph M. Hargadon, CMA, CPA, and Lori R. Fuller, CPA.
April 2007 When someone learns you are in the accounting profession, invariably the next question almost always seems to be, "Are you a CPA?" The designation of Certified Public Accountant is undoubtedly the most widely recognized credential associated with accountants.We, like most of our accounting colleagues at other educational institutions, strongly encourage our students to become CPAs. Because of the accounting scandals in recent years and the passage of the Sarbanes-Oxley Act (SOX), the demand for quality accounting services and qualified accountants has increased. Accounting certification is one key measure of expertise, professionalism, and quality.
Accounting certification also pays off quite well financially. In the most recent salary survey of members of the Institute of Management Accountants (IMA), published in the June 2006 issue of Strategic Finance, Karl Reichardt and David Schroeder reported a significant difference in earnings power with certification. Individuals who hold the CPA and/or CMA (Certified Management Accountant) designation earn more, on average, than their noncertified counterparts. This finding remained statistically significant across age range and gender. Also, respondents holding both the CPA and CMA certifications reported greater average annual salary ($104,547) than those holding only one credential: CPA ($103,287) or CMA ($97,509). Respondents who had neither certification reported an average yearly salary of $76,316.
Given the escalating challenge of balancing a career in public accounting with personal and family commitments and expectations, we find more students requesting advice about career paths and options outside the public accounting sector.While acknowledging the validity of student concerns regarding a public accounting career, we continue to remind our students of the recognition and respect afforded the CPA credential both in public practice and private industry. Further, we strongly encourage them to make themselves more marketable to employers within both fields. One way to accomplish this goal is to pursue dual accounting certification.
By earning both the CPA and CMA credentials, a candidate signals to the market his/her deep commitment to professionalism and ethics, advanced motivation and dedication to continuing professional education, and a broad expertise in accounting and related business topics. Furthermore, as we just mentioned, it translates into higher average annual compensation.
So what's the best way for students to seek certification? We'll outline a 10-step streamlined approach that accounting educators can recommend to students to encourage them to pursue both the CPA and CMA credentials. Specifically, we describe a method for students to efficiently prepare for both exams at the time that they are in the best position to do so—while they are still students. We limit our discussion to the CPA and CMA exams for several reasons:
EDUCATIONAL REQUIREMENTS OF THE EXAMS
At present, the state boards of accountancy and the ICMA don't require candidates to have relevant work experience to sit for the CPA and CMA exams, respectively. Although the CPA exam is uniform across all jurisdictions, each state board mandates the specific educational 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 does not lead to licensure in a state as the CPA does.
In most jurisdictions, the state board requires at least a bachelor's degree to sit for the CPA exam. Although the majority of states have adopted a 150-hour credit requirement (i.e., the equivalent of a master's degree) to obtain the CPA license, in many cases candidates may still sit for the exam after completing their undergraduate degree, provided they've completed the requisite number of accounting and other business-related credits. The ICMA does not specify any number of accounting and/or business credits to sit for the CMA examination. The educational requirements that ultimately must be fulfilled to earn the CMA designation are:
Furthermore, the ICMA requires that the education requirements be fulfilled within seven years of completing the CMA examination. They are not required to be completed at the time the candidate sits for the CMA exam.
The major difference (aside from the content areas tested on each exam and the type of work experience required to earn the certification) in the educational requirements to sit for the CPA and CMA exams is that CPA candidates must earn at least their bachelor's degree to sit for the CPA exam. CMA candidates need not earn their degree to be eligible to sit for that exam. Accordingly, CMA candidates can sit for the CMA exam while they are still an undergraduate student. Generally, CPA candidates can't sit as undergraduate students. This factor streamlines the process of efficiently preparing for both exams.
THE 10-STEP APPROACH
Table 1, Panel A summarizes the content areas tested on each exam. It's important to note that the ICMA recognizes that successful completion of the CPA examination (U.S.) clearly demonstrates a candidate's competence and knowledge in the area of business analysis (Part 1 of the CMA exam). Accordingly, the ICMA Board of Regents grants such candidates credit for Part 1. Therefore, a candidate who decides to prepare for both exams should strive to complete the CPA examination first because this reduces the total number of parts needed to be completed to earn both designations from eight to seven.
We recommend our 10-step plan to our 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 a typical undergraduate accounting major attending a college/university that has a two-semester academic year. Accordingly, the student candidate will:
The plan is outlined next, summarized in Table 2:
LET'S GET STARTED
We recognize that this 10-step plan is extremely ambitious and may not appeal to all students. But it's a viable choice for those who are highly motivated and dedicated (e.g., honors students) and may attract students planning to go straight through to graduate school.What's most important is that candidates are more likely to increase their success since they are taking only one section at a time while as a student or shortly after graduation, so they capitalize on their test-taking ability and experience.
Academic institutions should also consider providing incentive to their "best and brightest" by offering to underwrite the exam costs. For example, the CMA exam offers a substantial discount for students who take the exam. This institutional support could "pay off" in that improved success rates on the exam are often cited as outcome-based assessment criteria for undergraduate accounting programs.
JOSEPH M. HARGADON, Ph.D., CMA, CPA, is an associate professor of accounting at Widener University in Chester, Pa. You can reach him at (610) 499-4280 or email@example.com.
LORI R. FULLER, Ph.D., CPA, is an assistant professor of accounting at Widener University. You can reach her at (610) 499-1171 or firstname.lastname@example.org Strategic Finance, a publication of the Institute of Management Accountants (IMA). Used with permission.