To further their professions, finance professionals frequently acquire professional certifications. Chartered Financial Analyst (CFA) and Certified Public Accountant (CPA) are two of the most esteemed qualifications in their respective areas. We’ll discuss the distinctions between CFA and CPA so you can choose which is best for you. You could ultimately decide to go after both!
The questions “Should I acquire a CPA or CFA?” and “Which is better?” are frequently heard by those thinking about a career in corporate finance or the capital markets. We will compare the CPA and CFA credentials in this post along with some of their similarities and distinctions in an effort to help you decide which is best for you. It all depends on your own professional goals; none is superior to the other.
Here is a brief list of differences between CFA and CPA:
|Certificate Issuer||CFA Institute||American Institute of Certified Public Accountants (AICPA).|
|Eligibility||12th pass/UndergraduateGraduation is mandatory before level 2||Graduation or equivalent degree4 year equivalent degree or PG|
|Course Duration||4 years Min 2.5 years||18 months|
|Job Titles||Portfolio ManagerResearch AnalystCorporate Financial AnalystConsultant||Public AccountantManagement AccountantAuditorTax Analyst|
|Pattern||The CFA course has three levels:Level I Level IILevel III||4 – Part Exam|
Business Environment and ConceptsFinancial Accounting & Reporting (FAR)Audit & Attestation (AUD)Regulation (REG)
What is the difference between CFA and CPA?
What is CFA?
CFA stands for Chartered Financial Analyst. CFA is one of the most sought-after financial designations in India as well as globally. CFA should be your go-to financial certification course if you are someone interested in the field of investment management.
The CFA course will help you master and around investment analysis, portfolio management, investment management, financial analysis, and many more.
The CFA course has a total of three levels, Level I, Level II, and Level III. These three levels not only test your skills and subject knowledge but also your consistency and patience levels.
Candidates who clear their CFA exam will open doors to infinite career and job opportunities. Let’s get to know more details about the CFA course and the benefits of doing this course.
What is CPA?
CPA Stands for Certified Public Accountants and the CPA certification is issued by the State Board of Accountancy. Individual state boards set their CPA exam requirements. Most states will have a similar core set of CPA requirements with minor differences to be eligible for CPA exams.
CPA Professionals will usually be individuals whose credential allows them to practice public accounting duties.
CPAs will also go through the same rigorous process of preparation and testing as CMAs to clear their courses and get the certification.
CFA VS CPA: Exam Pattern
CFA Exam Pattern:
CFA Level I Exam Pattern:
- The complete examination would be divided into 1/2 every term of two hours and 15 minutes.
- There might be ninety MCQ questions for each half.
- The first session would cover subjects that include ethics & professional requirements, quantitative techniques, economics, and financial reporting and analysis.
- the second session includes questions about corporate finance, equity, fixed profits, derivatives, opportunity investments, and portfolio management
- Applicants get an average of ninety seconds to answer a particular question in the level 1 examination.
- In our research and analysis, we observed that most candidates spent an average of 303 hours a year to clear their CFA level 1 exam on the very first attempt.
CFA Level II Exam Pattern:
- The time allotted for the CFA level 2 exam is 4.5 hours.
- With an optional break in between, the exam is split into two halves, each lasting 135 minutes.
- There are 88 multiple-choice questions that are supported with vignettes in total. Consequently, each session would consist of 44 questions.
- 4-6 MCQs would follow each Vignette. For each accurate response, each MCQ is worth 3 points.
- It stresses the use of investing techniques and concepts in context-specific scenarios while concentrating on the valuation of distinct assets.
- The passing rate is 45% on average.
- To pass the level 2 exam, students must put in a total of 328 hours every year, or 27 hours per month.
CFA Level III Exam Pattern:
- The total time required to complete the CFA Level 3 test is 4.5 hours, with each session lasting 2 hours and 15 minutes.
- In the second session, there will be a total of 8–11 vignettes, followed by MCQs. The Level 3 test consists of 44 MCQs in total.
- Additionally, there are essay-style questions with a range of points assigned to them.
- The answers must be typed by the applicants into the text field.
- There will be 3 or more options for the MCQs.
- It requires the applicant to synthesize all the ideas and analytical techniques taught throughout the whole program with an emphasis on successful wealth planning and portfolio management.
- To pass, the applicants must put in around 344 hours every year.
CPA Exam Pattern:
CPA Exam is of four-hour duration and has 3 sections to be answered. The three tests in CPA with their respective weightage in the grading are as follows.
|Multiple Choice Questions (MCQ)||50|
|Task-Based Simulations (TBS)||50|
|Written Communication Tasks||N/A|
The weightage assigned to particular sections may vary based on the grading board. On the standard, MCQ type questions are worth 50% of your score, while Task based simulations and Written Communication Tasks are for the remaining 50%.
CFA vs CPA: Exam Syllabus
CFA Exam Syllabus:
The CFA programme curriculum is broken up into three levels, with Level I covering financial concepts, Level II concentrating on financial analysis and accounting, and Level III going further into portfolio management. Financial reporting and analysis, stock valuation, quantitative techniques, corporate finance, economics, portfolio management, derivatives, fixed income, alternative investments, ethical and professional standards, and others are some of the major topics addressed in the course.
|CFA Subjects||Weight Given in CFA Level 1||Weight Given in CFA Level 2||Weight Given in CFA Level 3|
|Ethical and Professional Standards||15-20||10-15||10-15|
|Financial Statement Analysis||13-17||10-15||N/A|
|Portfolio Management and Wealth Planning||5-8||10-15||35-40|
CPA Exam Syllabus:
The CPA exam is mainly divided into four papers or modules as follows:
Paper-1: Financial Accounting & Reporting (FAR)
- Conceptual Framework, Standard Setting, and Financial Reporting
- Select Financial Statement Accounts
- Select Transactions
- State and Local Governments
Paper-2: Auditing & Attestation (AUD)
- Ethics, Professional Responsibilities, and General Principles
- Assessing Risk and Developing a Planned Response
- Performing Further Procedures and Obtaining Evidence
- Forming Conclusions & Reporting
Paper-3: Regulation (REG)
- Business Law
- Individual Federal Taxation
- Property Transaction Federal Taxation
- Entity Federal Taxation
- Professional Responsibilities, Ethics, and Federal Tax Procedures
Paper-4: Business Environment & Concepts (BEC)
- Economic Concepts and Analysis
- Operations Management
- Corporate Governance
- Financial Management
- Information Technology
CFA vs CPA: Eligibility
In order to take the CFA exam, the candidates have to meet a set of requirements to register for the examination.
- Candidates have to complete their bachelor’s degree or any equivalent degree from any recognized college or university in any stream.
- A minimum work experience of 4000 hours over a duration of three years is a must for registration for the Level I exam. The required work experience can also be a combination of 4000 hours or the equivalent of higher education.
- The required work experience need not be just in the fields of investment management and analysis. It can be in any other field but it is important that the candidate have top-notch management and communication skills.
- Candidates must have an international passport to sit for the exam.
- Candidates must have fluency in the English language as the syllabus and exams will be conducted in English language only.
- Candidates who are in their last year of bachelor’s can also register for the exam. But it should be seen that their graduation is completed by the time of their Level II registration.
- If you are someone doing your own business or working as an intern or in an article ship, your experience there can be counted under the minimum work requirement.
- A professional compliance statement is also a requirement for registration for the CFA exam.
Every state has a separate set of requirements for CPA License issues. A CPA license is issued by the State Board of Accountants. Here is the standard prerequisite for issuing a CPA License.
- Candidates must be a graduate or have an equivalent degree.
- A minimum of 1-2 years of continuous work experience under any CPA.
- 150 semester hours of post-Graduation or college courses for a CMA License.
- Pass the ethics exam.
Salary and Career Opportunities: CFA vs CPA
The most common question when it comes to CFA and CPA is who earns better and which certification has better opportunities.
Before we dive into salary details and career opportunities of CFA and CPA, let’s look into the job roles of CFA and CPA:
Job titles of CFA:
- Portfolio Manager
- Research Analyst
- Corporate Financial Analyst
Job titles of CPA:
- Financial Advisor
- Risk and Compliance Professional
- Internal Auditor
- Corporate Controller
- Tax Compliance
- Personal Financial Advisor
- Finance Director
- Financial Accounting and Reporting
- Public Accountant
With careers in positions like Portfolio Manager, Research Analyst, Risk Manager, Corporate Financial Analyst, and Investment Banking Analyst, Scope of CFA is one of the most well-known courses for finance in India.
The abilities possessed by these professions are in more demand. It is for this reason that organizations like KPMG, PwC, Deloitte, EY, JP Morgan Chase, Bank of America Merrill Lynch, Deutsche Bank, Credit Suisse, Motilal Oswal, and Anand Rathi employ CFAs right out of Level 1.
India is the global center for accounting. The majority of multinational financial corporations operate in India. In a developing nation like India, where the IMF has predicted a growth rate of 10%, the value of a finance degree is enormous.
There are several job options open to CPAs. Public accounting falls under the first group, which includes a wide range of company kinds, sizes, and clientele. There might be a wide range of alternatives available within a single business, such as audit, tax, and advice services, or consultancy. There are several businesses and possibilities within them on the company and industry side, including financial accounting and reporting, financial planning and analysis, management accounting, treasury or cash management, and corporate growth.
CFA Vs CPA: Salary
In contrast, the basic pay for a CFA ranges from $52,000 to $153,000, with an average of $92,432. However, throughout the course of a career, a CFA’s pay tends to peak later. An entry-level CFA in the USA may expect to make around $77,000, with mid-career earnings barely increasing to $80,000 and the industry peak coming after 15-20 years at $101,000 to $143,000.
The average base pay for a CPA in the US in 2020, as reported by Payscale.com, is $68,090. Eighty percent of CPA incomes fall between $49,000 and $114,000 on average. The specifics will depend on your professional status and the cost of living in your location. For instance, a CPA starting out will make around $54,000, increasing to $71,000 mid-career, and reaching a maximum of roughly $96,000 late-career.
CFA vs CPA: Course Fees
The course fee for CFA enrolment is USD350 which converts to around INR27,000 in India. CFA is an expensive course when compared to other financial certifications.
The fee paid for the CFA course will vary based on the time you register for the exam. The earlier you register, the less your enrollment fee will be.
Here is more info regarding the CFA course fees:
|Course Fee in USD|
The rescheduling fee if you want to change your exam date will be USD 250.
The average cost for a CPA course
|US CPA Course||Fees|
|Application Fees||USD170 -USD225|
|Evaluation Fees||USD598 per paper|
|International Testing Fees||USD1500|
CFA vs CPA: Skill Set
Hard and soft skills may be developed by professionals pursuing the CFA certification to assist them to finish the program and pass the test. These financial experts can keep using these abilities to succeed in their jobs once they become charter holders. Following are some instances of CFA skills:
- Financial analysis and modeling: CFA charter holders must possess expertise in financial analysis and modeling in order to analyze and handle massive volumes of data. By analyzing previous data, these specialists may forecast future economic patterns with the use of their financial analysis abilities. To properly counsel their customers, they employ their analytical skills to weigh potential investment risks. By predicting income and cash flow, they utilize financial modeling to analyze a company’s financial performance. CFAs may provide their clients with sound advice by utilizing their expertise in financial analysis and modeling.
- Decision-making: CFA-designated financial professionals employ decision-making abilities to aid their customers’ financial development. They assess financial data using logic and analysis, and they look at business trends or investment prospects. To assure their clients’ financial success, they take into account possible dangers and come up with practical solutions. These experts act as leaders to assist customers in achieving their strategic objectives. They offer effective advice to businesses and people by utilizing their great judgment and financial knowledge.
- Technical skills: To manage financial data successfully, charter holders need to have a broad variety of technical abilities. They have database management abilities and can electronically organize financial data. To access and retrieve data from databases, certain professionals study Structured Query Language (SQL). To do data analysis, many charter holders decide to learn a computer language like Python. CFAs can leverage their technical expertise to pick up new software or tools as technology develops so they can do their responsibilities more successfully.
Summary of the Skillset of a CPA professional:
- Ability to analyze and crunch numbers
- Knowledge of business acumen
- Up to date taxation knowledge and skills
- Technical abilities to use finance and accounting software like QuickBooks, SQL, and ERP Systems.
CFA VS CPA: Which is best for you?
It’s critical to understand which job route is a better fit for you because both provide good employment options. The CPA is fantastic if you want to advance in the ranks in a public accounting firm or the finance department of a big corporation and eventually become the CFO. The CFA certification, in contrast, is excellent if you want to work at a bank, particularly in stock research or investment management. Both provide excellent chances for anyone seeking to enter the corporate finance field.
The choice of whether to pursue a CPA or CFA certificate relies on the route you want to take in your career. Overall, we may conclude that they are all distinctive and concentrated in the fields of accounting and investing, respectively. I’m hoping that this article will enable you to choose your job with greater knowledge.