CPA VS CFA – WHAT IS THE DIFFERENCE

1. CPA VS CFA – WHAT IS THE DIFFERENCE? Considering a career path in corporate finance and accounting requires many aspects to be considered, and hence many qualifications to decide from. Finance experts often pursue professional courses to advance their careers resulting in a confusion between CPA (Certified Public Accountant) and CFA (Chartered Financial Analyst) designations. Although both designations are arguably two of the most prestigious titles in their respective fields, finance and accounting, it is imperative to know the basic differences between them in order to make a wise decision. Overview of CPA (Certified Public Accountant): A Certified Public Accountant (CPA) is an individual who is specifically trained and certified to provide various accounting services, namely preparing financial statements for large organizations, preparing taxes, etc to their customers. CPA is a highly qualified certification where you gain proper expertise in audit, tax, and accounting. One can achieve this credential by successfully passing the Uniform CPA Exam and by meeting certain educational and experience requirements. Overview of CFA (Chartered Financial Analyst): While CPA covers most of part of accounting, CFA covers most part of finance and investment. A Chartered Financial Analyst is one who analyses various financial options and provides best investment options for financial planners. CFA also provides options to higher management of different investment companies. CFA is the best title one can get in case he/she is interested in making a career as professionals in asset management or even as fund managers or equity analysts. What are the main differences between CPA & CFA? CPA and CFA are both well-qualified and well-respected certifications. Although possessing numerous variations between the two designations, the primary and most significant variation is in their main ambition. A CPA would be all into taxation, accounting and helping people out by preparing their tax returns. However, a CFA would be helping people invest a large sum of money.

2. A CPA’s basic functions include the following: Internal Auditing Financial planning Income tax Tax preparation Forensic accounting Financial Statements A CFA’s basic functions include the following: Portfolio management Investment strategy Consulting Risk analysis Risk Management Financial Research CPA vs CFA – Pre-requisites: CPA:- Although the educational requirements for the CPA exam vary from state to state, the basic requirement expected from a candidate is a bachelor’s degree along with 120 semester hours, out of which 30 hours should be in accounting. In some states, the requirement may rise to 150 semester hours. As far as the work experience is concerned, this too might differ across different states. But in general, the candidate must have at least 1-2 years of experience working directly under a CPA professional. Overall, to receive the CPA certification one needs to clear the Uniform CPA examination, gain the required work experience and meet all the educational requirements. CFA:- For pursuing CFA, the candidate should have a bachelor’s degree. However, in its absence, this condition can be satisfied if the candidate has four years of professional experience. CFA requires four years of experience in a field that is directly related to the investment banking process and the candidate needs to be a member of the CFA institute.

3. Overall, to receive a CFA certification one needs to clear the CFA exam and gain the required work experience. CPA vs CFA – Exam Content & Format: CPA:- The CPA examination is prepared and sorted by the American Institute of Certified Public Accountants (AICPA). The exam has four sections of paper: Auditing and attestation (AUD) Financial accounting and reporting (FAR) Regulation (REG) Business environment and concepts (BEC) The Uniform CPA exam is 100% online and it involves sections such as: Writing skills exercise Multiple choice questions Case studies A person can attend the exam any time within the CPA exam testing window which is within 18 months. Each part of the Uniform examination is a 4-hour paper that covers different subsets of topics and concepts related to business and finance. CFA:- The exam format of CFA is not as flexible as the CPA format. CFA consists of 3 levels of exam and one must complete a section in order to move on to the next one. The 3-tier exam is conducted once in a year and it includes questions all about financial analysis, and portfolio management. The candidate learns all the concepts and the analytical methods in the entire syllabus. The three level CFA exam covers all the following topics: Accounting Economics Ethics Money Management Security Analysis

4. The CFA exam is conducted in the conventional ‘pen and paper’ mode. The CPA exam can be given in any order and at any time within the testing window. However, the CFA exam has to be answered sequentially and each exam is offered 1-2 times in a year. CPA vs CFA – Duration to be certified: CPA:- Candidates usually wish to clear the Uniform CPA exam within a year. However, if you put in the right hard-work, you can complete the full syllabus within 6 months and appear for all 4 papers in a single go. This requires extreme dedication, and diligence. After clearing the exams, the candidate must acquire accounting experience for a whole year. In some states the accounting experience must be acquired under the supervision of a certified CPA. CFA:- Most CFA candidates take about 4 years to complete the certification. Although it is possible to complete the course within 18 months, it certainly is a daunting task. It takes much more effort and time to be a CFA than a CPA. The candidate must acquire 4 years of work experience. Supervision of a certified CFA is not mandatory. CFA level 1 is conducted twice a year in the months of June and December. Level 2 is conducted only once a year, in the month of June. CPA vs CFA – Salary: With rapid globalization and industrialization, demand for finance professionals have increased considerably. The demand for both CPA and CFA is strong and thriving in India. A CPAs average salary in India is around INR 8,24,336 per annum whereas the average salary of a CFA in India is around INR 6,10,128 per annum according to PayScale. CPA vs CFA: Essential Differences:- CPA CFA

5. CPA (Certified Public Accountant) CFA (Chartered Financial Analyst) Organized by AICPA (American Institute of CPA). Organized by the CFA Institute. There is one level with 4 parts in the CPA examination. These parts can be taken in any order. There are 3 levels in the CFA exam, and they must be taken sequentially. Mode of the exam is traditional pen-and- paper. Mode of the exam is online. CFA covers topics like financial investment, finance management, Wealth planning etc. CPA covers topics like accounting, auditing, taxation, business etc. If a client has a large sum of money and wishes to invest then he/she would hire a CFA. If a client needs help with filing tax returns, then he/she would hire a CPA. The average salary in India is 8,24,336 INR. The average salary in India is 6,10,128 INR. 4 years of work experience is required. However, supervision of a CFA is not mandatory. 1-2 years of work experience under a CPA is required to be certified. Is a more feasible certification as the time taken to be certified is generally within a year. It takes almost 4 – years for candidates to be certified. CFAs basic functions include investment strategy, risk management, portfolio CPAs basic functions include taxation,

6. auditing, financial statements etc. management etc. Why should one pursue CPA? Accounting as a career choice is in high demand and will continue to be. With a rapid increase in businesses and its resulting industries, the demand of accounting professionals is ever increasing. A CPA is a highly prestigious designation and is indeed an indicator of high quantitative skills and standards of professionalism. A CPA can be employed in any firm, be a small private business or a large public organization. Earning the CPA license demonstrates a firm commitment to the profession. Often potential candidates for management and leadership positions are discovered. While working in a business or for organizations, one would be dealing with financial accounting, financial analysis, etc. When employed in the government sector one can expect to be working at the central, state or local levels. Why should one pursue CFA? CFA is a designation given by the CFA Institute. Career opportunities are plenty for a CFA which includes treasurers, research analysts, financial analysts, portfolio managers, investment banking analysts etc. Although clearing the CFA exam takes more time than its CPA counterpart, this is also a highly recognized credential and helps impart skills that are highly acknowledged. If one is interested in investment banking and wishes a career in this field, the CFA designation is one of the best options to go for. Conclusion: Overall, CPA is a more widely recognized credential and is a great path for those who are interested in a career in finance or accounting. The CFA has a lower entry barrier, but it takes much more time to complete. Becoming a qualified CPA is a more flexible process and can be accomplished within a shorter period. Both the certifications are valuable and worth the time and money invested. Both the credentials have what you might be looking for if you are planning to pursue a career in finance and accounting. Hope this information will help you. This blog has all the required information for one to make a choice depending on various factors. If there are any more queries you may drop a comment below. Simandhar Education:

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