CPA vs CFA : Course Details, Eligibility, and Major Difference

Trying to choose between the CPA and the CFA? Think of it as deciding between two incredible paths in finance-a trusted accountant who makes sure everything is right and a smart analyst who can read the market and forecast trends. 

Of course, both the CPA and the CFA have their spotlights in finance, but which one leads best to your career objectives? Let’s discuss it some more and then you can decide which one is appropriate for you.

CFA vs CPA: How do they differ?

The areas in which you will focus primarily are different for CFA and CPA, both of them opening doors to high-paying and respectable roles, here is a deeper look:

CFA vs CPA: Primary Focus

CFA: The focus of CFA is on investments portfolio management, and financial analysis. CFAs are also the people who forecast market trends and investment opportunities.

CPA: A CPA is more specialized in the fields of accounting, auditing, compliance, and regulatory aspects. CPAs work more closely with financial records ensuring them to be in line with legal standards and often prepare and review financial statements.

CFA vs CPA: Career Paths 

CFA: The holder of a CFA will be an investment banker, portfolio manager, financial analyst, or risk manager. Generally, a CFA works for an asset management firm, banks, or investment funds as a provider of maximum return to the clients.

CPA: Many CPAs work as Accountants, Auditors, and Tax Advisors and also practice as Financial Controllers. Most CPAs work with accounting firms or large business corporations to ensure the companies’ financial accuracy, compliance, and transparency.

CPA vs CFA

Salary after US CPA

CFA vs CPA: Skills 

CFA: Skills include financial modelling, Discounted Cash Flow analysis, complex investment products understanding, and trend prediction through various financial tools and methodologies.

CPA: The CPAs must be masters of accounting principles, tax law, auditing practices, and compliance. They mostly work with GAAP and understand all the intricate financial regulations.

CFA: What is it?

CFA is Chartered Financial Analyst, a certification awarded by the CFA Institute is one of the most acknowledged investment certificates in the market. 

CFAs assess investment ideas for clients, forecast movements in economies and advice for portfolio management. The CFA program comes in three challenging levels in topics such as ethics, economics, asset valuation, and portfolio management. You need to pass those three levels to earn your CFA title. 

CPA: What is it?

The full form of CPA is Certified Public Accountant, is a respected accountancy certification, issued at the individual state level through Boards of Accountancy. CPA is offered by the National Association of State Boards of Accountancy. CPAs are known for their great deal of trust in terms of preparing financial reports, filing taxes, and auditing.

CPAs work on following financial regulations carrying out audits, making tax filings, and advising clients on various matters.

There are four parts of the CPA exam. Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation. A candidate must pass all of these four sections to receive the CPA license.

Choosing a CFA over a CPA: Meeting the Requirements

While both CFA and CPA designations are prestigious, your career aspiration, interest in finance vs. accounting, and dedication to meeting the rigid requirements are important factors that determine which one you would prefer over the other. If you are interested in a CFA instead of a CPA, the following factors are relevant:

Career Focus:

CFA: Ideally used in investment management, portfolio analysis, or research work within the financial services industry. Asset management, private equity, and hedge funds hire CFAs.

CPA: Ideal for accounting, tax, and audit work. CPAs are also most often found in accounting firms, corporate finance, and public accounting.

Industry Demand:

CFA: The CFA certification is widely recognized worldwide, especially in investment-focused jobs. It is more appealing to candidates who want to work abroad.

CPA: The CPA holds much value in the United States and offers solid career opportunities in accounting and tax regulation, especially in those that require compliance with U.S. accounting standards.

Level of Commitment

CFA: The CFA program is a long-term commitment with three levels of exams, each requiring several hundred hours of study. To earn the charter, you need to complete relevant work experience.

CPA: The CPA varies by state but typically requires passing the four-part exam and completing specific educational credits and work experience.

Guide to Becoming a CFA

CFA is the abbreviation of Chartered Financial Analyst. It is one of the most highly valued certifications globally for investment professionals under the CFA Institute. Here is a step-by-step guide on how to become a CFA:

1. Educational Requirements

Bachelor’s Degree or Equivalent: You need to have a bachelor’s degree or equivalent level of work experience of 4,000 hours in any relevant field to join the CFA program.

2. Registration and Preparation of Exams

There are three levels for the CFA exam and progressively involve more advanced materials within their respective fields in the domain of economics, equity analysis, portfolio management, and ethics.

• Level I revolves around the foundation and application of basic knowledge and understanding- dealing mainly with the tools and investment. 
• Level II deals with asset valuation; further analytical skills should be evident by this stage. 
• Level III entails portfolio management and wealth planning; an integration ability which the concepts mastered from Level I and Level II need to be manifested. Roughly 300 hours for each level, but in some cases may differ among participants

3. Examination Fee and Registration Fee

Registration fee for the programme: A one-time fee that is approximately $350

Exam Fee: Early registration; ranges from $700-$900 depending on the level to which one is registering and $1,200 under regular registration.

4. Relevant Working Experience

The candidate should have at least 4,000 hours of relevant work experience in investment management, financial analysis, and portfolio management, among others, and should be completed over at least three years. The work experience can be done before, during, or after passing the exams.

5. Apply for CFA Membership

After passing all three exams and completing the work experience requirement, you apply for membership with the CFA Institute and a local CFA Society. After approval, you receive your CFA charter and can use the “CFA” designation professionally.

Guide to Becoming a CPA

CPA full form is Certified Public Accountant and is widely recognised for accounting professionals, especially in the U.S. Here’s a step-by-step guide to becoming a CPA:

1. Educational Requirements

Bachelor’s Degree with 150 Credit Hours: Generally, most states require the candidate to have at least a bachelor’s degree that has 150 credit hours; this may require additional credit courses beyond a typical undergraduate degree. Courses must include accounting, finance, business law, auditing, and more.

2. Pass the Uniform CPA Examination

The CPA exam has four sections that may be taken in any order:

AUD – Auditing and Attestation: Concentrate on auditing procedures and internal controls.

BEC – Business Environment and Concepts: Includes business concepts, corporate governance, and information technology.

FAR – Financial Accounting and Reporting: Focus on the preparation of financial statements, GAAP, and IFRS standards.

Regulation (REG) – It is concerned with federal taxation, business law, and ethics.

Exams are scored section by section. You must pass all four sections within 18 months. Candidates typically take 100–150 hours to study for each section.

3. Meet Work Experience Requirements

The experience in work differs from state to state, but most of them require 1-2 years of supervised experience in accounting under a licensed CPA. This experience can often be completed before or after passing the CPA exam depending on the state regulations.

4. Apply for Licensure in Your State

You should apply for licensure after passing the exam and gaining experience. Requirements may vary from state to state; therefore, check with your state board of accountancy.

5. Maintaining Your CPA License

The CPA license requires a renewal cycle through the completion of CPE credits annually or biennially. It varies according to state but is usually 40 hours of CPE annually.

CPA Exam vs CFA Exam

The CPA and CFA are highly prestigious certifications, but they come in different areas. CPA is about accounting, auditing, and taxation, whereas the CFA exam is designed for investment analysis, portfolio management, and financial markets. 

Both of the exams require deep preparation and effort, but the context and scope differ significantly between the two exams. You will be selecting one as per your area of interest, whether it is an accounting field or a finance area.

Structure of the CFA Exam 

The structure of the CFA exam tests candidates’ knowledge of theoretical principles and their practical applications. Level I takes place with multiple-choice questions. The questions are fairly straightforward, but they often concern ideas or instruments. Level II occurs in the form of item sets. In these, applicants will need to apply the knowledge that has been acquired based on case studies. The item sets for Level III come in essay-type form as well as item-set questions meant to synthesize portfolio management knowledge. 

Structure of the CPA Examination

It is divided into four sections- Audit and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). Candidates are allowed to take the four separate exams in any order they want. The exam will test the candidates with a combination of multiple-choice questions, task-based simulations, and even written communication tasks in the Business Environment and Concepts exam. Every section takes 4 hours to complete.

How Does a CPA Help You?

A career as a CPA provides a broad range of accounting and finance career opportunities. CPAs are sought after for their skills in financial reporting, audit, and compliance. These skills are important to the smooth operation of public companies and other organizations. A CPA can work in corporate accounting, a public accounting firm, or in government. There are also opportunities to advance to executive positions such as CFO. Such a designation as CPA is also valuable because of reputation and job security in many industries requiring regulatory compliance.

Exam Difficulty for CFA vs CPA

The CFA and CPA exams differ in type. The CFA is more challenging and more complex in that it tests fundamental investment management skills, which include studying economics, financial analysis, and portfolio management, spread out over three levels. Both the first and second levels have failure rates of more than 50%, indicating how challenging it is to pass those tests. The CPA exam is divided into four separate sections, including Audit, Business, Financial, and Regulation. One can take these sections one at a time. The CPA exam can be considered demanding, but not as time-consuming as other exams are because the questions are practical skills of accounting rather than investment theories.

What is the Difference Between a CPA and a CFA? 

Which is Best for You, a CPA or a CFA?

This choice between CPA and CFA depends upon career interests and strengths. If one’s interests lie in accounting, tax regulations, and compliance, then the best fit is the CPA. In accounting, auditing, corporate finance, and broad job security, CPAs carry more value. 

If your interests are finance analysis, market strategies, and investments, then it will be more suitable to pursue CFA. It is a certification to acquire the skills of investing in management. The roles and areas of working in CFA are asset management, investment banking, and financial advisors.

Conclusion 

Both the CPA and CFA certifications are highly regarded globally and hold high prestige, and they can greatly contribute to improving your career in finance. The ideal for those interested in accounting, audit and tax services, CPAs have skills ensuring a high degree of financial transparency and regulatory compliance. CFAs suit those who like to analyze financial markets and investment strategies. This may help you align your career pathway with passions and goals leading to a successful long-run in finance.

FAQs on CPA vs CFA :

What are the benefits of CFA over CPA?

CFA should be your pick if you are interested in careers aligned with investment analysis and portfolio management, financial careers, asset management, and investment banking.

How hard is CFA compared to CPA?

The CFA is considered tougher because it puts emphasis on advanced finance concepts and has a three-level exam format with low pass rates.

Is it a good idea to have both a CPA and a CFA?

Yes, having both certifications makes you highly credible and competitive, especially in job roles combining accounting and investment analysis.

Partham Barot is an ACCA-certified professional. showcasing his expertise in finance and accountancy. he’s revolutionising education by focusing on practical, real-world skills. Partham’s achievements underscore his commitment to elevating educational standards and empowering the next generation of professionals.