CPA vs CFA – What’s the Difference & Which Is Better?

When it comes to career options in Finance, becoming a Certified Public Accountant (CPA) or Chartered Financial Analyst (CFA) is a significant milestone. Both these qualifications open up a multitude of job opportunities for you. If you’re considering obtaining either of these certifications, it’s important to understand the difference between the two. 

Read on to learn more about each of these distinctive offerings!

What is a CPA?

The designation of a Certified Public Accountant (CPA) holds great significance. CPAs are experts who have successfully passed CPA exams and obtained the license to practice in the United States.

CPAs play a role in maintaining accuracy and transparency in records for various entities such as businesses, government agencies and individuals. Their responsibilities include tasks such as auditing statements, providing tax advice and offering consultancy services on matters. CPAs are highly regarded for their adherence to standards and their dedication to upholding integrity.

What sets CPAs apart is their diverse skill set. CPAs possess a wide range of financial skills and are not limited to a specific area within the finance field. They receive training to handle various tasks, such as tax planning and compliance, financial reporting and analysis. This makes them well-prepared to navigate the complex landscape of finance.

Also Read – A detailed guide on CPA

What is a CFA?

The Chartered Financial Analyst designation is a globally recognized credential in the investment management and financial analysis industry. Unlike CPAs, CFAs specialise in roles related to investments, particularly in portfolio management and equity research.

A CFA charter holder is an expert in analysing financial markets, managing investment portfolios and making well-informed investment decisions. Asset management firms, hedge funds and other financial institutions seek out CFAs for their analytical abilities and deep understanding of investment principles.

One notable aspect that sets the CFA program apart is its global recognition. The CFA designation is respected worldwide, making it an appealing choice for those aiming to work in international finance markets.

Also Read – A detailed guide on CFA

Differences between CPA vs CFA

To assist you in making an informed decision about which certification to pursue, let’s compare CPA and CFA across various key aspects.

• Skills Acquired

CPAs develop a diverse set of skills that encompass auditing, taxation, financial reporting, management accounting, and expertise in business and economic laws. They have a strong understanding of accounting principles and possess the skills necessary to ensure the financial stability and compliance of organizations.

In contrast, CFAs specialize in investment-related abilities. They develop expertise in financial analysis, portfolio management, and asset valuation. Their focus is on making effective investment decisions and efficiently managing investment portfolios.

• Course Content

The CPA examination covers a wide range of topics, including auditing and attestation, business environment and concepts, financial accounting and reporting, as well as regulation. It encompasses both accounting-specific subjects and non-accounting subjects, making it comprehensive in nature.

The CFA program consists of three levels, each with its own specific emphasis. Level 1 covers ethics and professional standards, quantitative methods, economics, financial reporting and analysis. Level 2 delves deeper into financial instruments intricacies, asset valuation techniques and portfolio management strategies. Level 3 focuses primarily on advanced portfolio management techniques and wealth planning strategies.

• Duration

Becoming a CPA usually takes 12-18 months of study combined with work experience.

Candidates who choose to pursue the CFA program while working full-time should anticipate dedicating a minimum of 3 years to complete all three levels.

CPA might take only 12-18 months

• Eligibility Requirements

To be eligible for a CPA license, aspiring CPAs must meet specific requirements and successfully pass a comprehensive four-part examination. Additionally, within a 5 year period, CPA candidates should have accumulated a minimum of 1,500 hours of valuation experience. The CPA licensure has to be taken within 3 years of passing the exam in California. However, the rules are different in different states and not all states have valuation hours criteria. 

For individuals aiming to become CFA charter holders, they must have either 4,000 hours of work experience or hold a Bachelor’s degree. If candidates intend to take the Level 1 exam, they should be either within 23 months of completing their degree or possess a combination of 4,000 hours of professional work experience.

• Curriculum

When it comes to curriculum focus, CPA candidates undertake an extensive study of various accounting and business subjects such as financial accounting, auditing, taxation and Business law. The aim is to provide them with a comprehensive understanding of fundamental accounting principles and practices.

CFAs concentrate primarily on investment-related topics. Their curriculum extensively covers areas such as financial analysis, portfolio management and investment principles. This specialized focus prepares them for roles within the investment industry.

• Exams

In terms of examination structure for CPAs, there are four distinct sections: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR) and Regulation (REG). Each part is considered as a distinct examination.

The CFA program consists of three levels, and each level has its own exam. Level 1 is available twice a year, whereas Levels 2 and 3 are only offered once a year. In order to earn the CFA charter, candidates must pass each level in a sequential manner.

• Time Required for Preparation

CPA candidates usually allocate several months to prepare for each section of the CPA exam. The total study time can vary significantly, but many candidates invest hundreds of hours to prepare.

CFAs typically dedicate 300 to 400 hours to studying for each level of the CFA exam. The overall study time required to complete all three levels can surpass 1,000 hours.

• Fees & Pass Rates

Becoming a CPA involves expenses such as exam fees, evaluation fees, international testing fees (if the exam is taken outside the US), study materials and application fees for state licensure. The total cost can vary depending on the chosen state and study resources. On average, it is around $1500 for domestic applicants. For applicants outside the US, this cost can shoot up to $2900-3200 because of the international testing fees. The pass rates for each section of the CPA exam range from 40% to 60%, indicating its challenging nature.

For the CFA program, candidates need to cover enrollment fees, exam registration fees, and purchase study materials. The fees range between $2500 and $3500. Pass rates for the CFA exam vary across different levels but typically fall below 50%, highlighting the rigorous nature of the program.

• Career and Salary

CPAs have a wide range of options in various accounting roles, such as auditing, tax consulting, and financial analysis. They can find employment in public accounting firms, corporate finance departments, government agencies and more. In the United States, the average salary for CPAs varies depending on experience and location but typically falls between $49,000 and $110,000 or even higher.

CFAs mainly pursue careers in investment management, portfolio analysis and equity research. They are employed by asset management firms, hedge funds, investment banks, pension funds and similar institutions. CFA charterholders often earn competitive salaries with potential earnings ranging from $56,000 to $120,000.

CPA vs CFA – A Brief Summary

CPA vs CFA – What’s Best For You?

Ultimately, the decision to choose between CFA or CPA boils down to your career goals and strengths. 

If a career focused in finance interests you, a CFA charter holder would be a great choice. If you want to explore roles revolving around accounting, you should target CPA certification. 

For a candidate who likes structure, a CPA would be a good fit. For someone who likes the unknown, a CFA would be more enjoyable.

You should also consider the time that you can devote. CPA has restrictive and stringent work experience and eligibility requirements. For accounting professionals, CPA can be comparatively easier, as they can clear it in 12-18 months. The entry barrier is low in the case of CFA, but a substantial time commitment is required to prepare for the exams. 

Both these career paths have their own challenges and rewards. It’s important to choose the qualification that is aligned with your long-term career goals. 

At Proschool, we offer comprehensive training for CPA and CFA. Our program includes meticulously crafted learning material, simulated mock tests, and an experienced faculty with a rich industry background. 

We also provide hands-on training on a range of essential tools and conduct doubt-solving sessions. 

Conclusion

A CFA and a CPA are both well-known certifications that can open up many opportunities in finance. CPA, or certified public accountant, is especially useful if you want to handle audited or reviewed financial statements. On the other hand, CFA, or chartered financial analyst, is great if you’re interested in working in investments and related fields. Both certifications provide a strong foundation for a successful career in finance.

IMS Prochool is here to offer support as you embark on your journey toward becoming an accomplished finance professional, regardless of which path you ultimately choose!

FAQs

CPA vs CFA – Which is harder to pass?

Deciding which is “harder,” CPA or CFA, depends on how you look at it. If we only consider the exams, then CFA tends to be more challenging. However, if we think about other aspects like the application process and educational requirements, especially for people outside the US, then becoming a CPA can be more complex.

Can I do both CPA and CFA?

Yes. You can do both of these qualifications if you’re interested in finance and accounting. There is a lot of overlap in the syllabus. 

What is the typical timeframe for becoming a CPA?

The process of becoming a Certified Public Accountant usually takes several years as it involves fulfilling educational prerequisites, successfully passing the examinations, and having practical work experience.