Friday, November 23, 2007

Benefits of Becoming a CMA/CFM

Benefits of Becoming a CMA/CFM

Many regard the CMA (Certified Management Accountant) and CFM (Certified in Financial Management) designations as credentials that compete with the CPA (Certified Public Accountant) designation. Nothing could be further from the truth. The CPA exam focuses on accounting, business law, auditing, and taxation in great depth. On the other hand, the CMA and CFM designations concentrate on breadth rather than depth.

The CMA exam has one part (Part 2) that covers, to some extent, the same financial accounting related material that appears on the CPA exam. For that reason, the IMA (Institute of Management Accountants) permits CPAs to become CMAs without having to take Part 2 of the CMA exam. Of course, CPAs do have to pass the other three parts of the CMA exam. Joseph J. Martin (1997), in comparing the CPA and CMA designations states:
"For the highly competitive, fast-changing, global business world in which they operate, companies need individuals who can demonstrate more than just a knowledge of the latest Financial Accounting Standards Board (FASB) and Securities & Exchange Commission (SEC) regulations. They must be able to make sound decisions and offer solutions within the requirement of those regulations that will benefit their organizations while keeping in mind the managerial and motivational aspects of a set of circumstances."
The CMA designation was developed to certify those individuals who could use accounting information to offer solutions and make sound decisions that take into consideration the economic, organizational, and motivational aspects of a situation.

Why should an individual become a CMA

Certainly, in some companies, obtaining the CMA designation is an important prerequisite to career progression. In other companies, the CMA differentiates among accountants and plays only a subtle role in career progression. However, having the CMA designation is very important when one seeks other employment. The CMA designation is often cited as a requirement or a desired attribute in position descriptions appearing in employment advertisements. This is especially so for the mid to higher-level accounting and finance positions.

One of the IMA's publications, Strategic Finance, periodically reports compensation by age and certification. The most recent published information is shown below: (Reichardt and Schroeder, 2000)
The CMA and CFM exams both have four parts as described below:
CMA
Part One: Economics, Finance and Management
Part Two: Financial Accounting and Reporting
Part Three: Management Reporting, Analysis and Behavioral Issues
Part Four: Decision Analysis and Information Systems

CFM
Part One: Same as CMA
Part Two: Corporate Financial Management
Part Three: Same as CMA
Part Four: Same as CMA

As described, there is only one exam part that is different between the CMA exam and the CFM exam. Part 2 for the CMA exam covers all aspects of financial accounting. Part 2 for the CFM exam covers financial accounting (30%) and advanced finance topics (70%). Given the significant overlap between Part 2 of the CMA exam and Part 2 of the CFM exam, many who become a CMA or CFM go on to take the one additional Part 2 to become both a CMA and CFM.

1 comment:

Certifications said...

Certified Management Accountant (CMA)
http://career-assessments.blogspot.com/2008/02/cma-certified-management-accountant.html
http://career-assessments.blogspot.com/2008/02/cma-certified-management-accountant.html