Finance professionals are often known to pursue professional qualifications in order to advance further in their careers.
The Certified Public Accountant (CPA) and Chartered Financial Analyst (CFA) designations are arguably two of the most prestigious titles in their respective fields. But what are the differences between them, and which is better, let’s find out, shall we?
CPA or CFA: An Overview
You cannot compare the CFA and CPA titles in the form of apple-to-apple because they represent different qualifications in two different sub-sectors within the general accounting and finance field, so they are probably more like apples and oranges.
CPA is for accounting, while CFA is for finance.
CPA is often considered as the “black-belt” in accounting. It is originally a designation meant for public accountants, but even tax accountants, non-public accountants, and finance professionals seek the CPA title so as to prove their number-crunching expertise. Additionally, the CPA license holder has statutory rights to sign an audit report, which makes the title unique.
On the other hand, CFA is considered the gold standard in finance and investment. For those who are looking for jobs as equity analysts, fund managers, and professionals in asset management or hedge fund houses, the CFA is the best designation you can get.
CPA or CFA: Application & Qualification
There is no centralized body for CPA, and each state has differing CPA exams and licensing requirements, and the CPA license is granted by each of the 55 states or jurisdictions in the USA.
International candidates are often confused about the complicated application process.
For US CPA, candidates must have a minimum of 120 credits for some states with each academic year equivalent to 30 credits. Some states require 150 credits. This means you must have a 4-year bachelor’s degree and preferably a master’s degree in order to fulfill the 150 credit hours, which is equivalent to 5 years of a college education.
CFA is a designation that is granted by the CFA Institute, a global non-profit organization. Although the Institute is based in the US, there are three regional offices and 200 local chapters across the globe. Candidates apply through the Institute, and the application is relatively simple.
As long as the candidate has a bachelor’s degree or four years of practical work experience, the person can take the exam. The candidate can take the exam even before he or she graduates.
It is a lot harder and complicated to get qualified to take the CPA exam than the CFA exam, especially for non-US candidates.
CFA or CPA: Exam Content and Format
There are four parts of the Uniform CPA Exam: Financial Accounting & Reporting (FAR), Audit & Attestation (AUD), Regulation (REG), and Business Environment & Concepts (BEC).
The exam is a 100% computerized test consisting of multiple-choice questions, task-based simulations (similar to case studies), and written communications component called essays.
For CPA, you may choose to take the four exam parts one at a time, two at a time, or even four parts at the same time, but you must complete all parts within eighteen months of taking the first part. You can choose to sit for the exam any time (Monday to Friday / Saturday) during the first two months of each quarter and at any of the Prometric centers available throughout the USA as well as in Japan, Brazil, and four Middle Eastern countries.
The exam format for CFA is much less flexible than the CPA. There are three levels of the exam, and you need to complete one level in order to move on to the next. Exam content is mainly focused on financial analysis and portfolio management.
The CFA exam is the traditional pencil-and-paper format test, administrated twice a year for the first level, and once a year for the second and third.
There are a number of international testing centers for the CFA exam in major cities and metropolitan areas around the world. Each exam is offered 1 or 2 times a year.
CPA or CFA: Time Required to Become Qualified
Most candidates aim to pass the US CPA exam within 12 to 18 months. Those who have the time and commitment can choose to take all the exam parts at once and complete the exams within 3 to 6 months as well.
With the number of papers and the fact that the exams are held only twice a year, candidates generally need 3 - 4 years to complete all the exam papers and become an ACCA member.
Technically candidates can complete all levels of the CFA exam in 18 months, but most candidates take a total of 4 years to complete all the exams. It takes a lot longer to become a CFA than a CPA.
You also require four years of relevant experience is required to get the CFA designation, but your supervisor, who will verify your experience, does not necessarily need to be a CFA, thus adding a lot of flexibility in the process.
Hope the above article helps you take a sound decision about what career path to follow. If you have any queries, feel free to comment in the section below. Happy Learning!
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