CFA vs CPA Exam Prep guide

Do you want to improve your accounting credentials? Explore options like becoming a CFA or CPA and the educational requirements for those positions.

If you have a career as an accountant, you already know it involves recording financial records. It can also require you to analyze existing records for discrepancies or patterns. Advancing in the field of accounting is easy because accountants are frequently required in the business world. They also often help individual citizens organize their finances. Accounting is such a popular profession that approximately  1,392,200 accountants and auditors were working within the U.S. as of 2021. Accounting is also a potentially lucrative career path. The average annual salary for an accountant in 2021 was $77,250.

Despite the ease of advancement in the accounting industry, there are still some difficult choices to make. For instance, you may decide to study for extra certifications to improve your career. If so, you may select from several certification options. Two of the most popular are the Certified Public Accountant (CPA) and Chartered Financial Analyst (CFA) certifications. Use the following information to discover the differences between the two and select the certification you feel is best for you.

What is a CPA?

A Certified Public Accountant (CPA) is a fully licensed accountant. Not every accountant is a CPA. In fact, many individuals perform personal and business accounting tasks daily with no formal training. It is possible for any non-professional to perform certain accounting or bookkeeping tasks legally, but it is not always the best idea. The CPA designation indicates the professional is truly a trained accountant. Proper certification credentials often make businesses more likely to hire accountants.

Another reason many clients hire CPAs, rather than non-certified accounting assistants, is only CPAs are authorized to perform certain tasks. Most of those tasks relate to dealings with government organizations. For example, the Securities and Exchange Commission (SEC) requires all U.S. companies to regularly have CPAs file audited financial statements on their behalf. 

Often, CPAs also represent clients in dealings with the Internal Revenue Service (IRS). The services of CPAs are often requested when tax filings are in dispute. CPA representation is not always required. Sometimes attorneys or other authorized agents represent clients in IRS disputes, instead.

What is a CFA?

A Chartered Financial Analyst (CFA) may advise individuals or businesses regarding making investments. In the business world, a CFA's job includes analysis of company growth and stability. The CFA must also base analysis and recommendations on data that includes:

  • Company Debts

  • Credit Worthiness of Each Company

  • Profitability Likelihood Based on Other Financial Data Gathered

A CFA may also opt to have individual private clients, rather than business clients. One primary role of a CFA in such instances is to advise clients regarding investment options. The CFA can also help his or her clients with various other aspects of wealth management and financial planning. For example, the CFA may facilitate the setup of retirement accounts. 

What Schooling is Required to Become a CPA?

You must hold a bachelor's degree to become a CPA in any U.S. state. You must also complete 150 hours of schooling. Since many bachelor's degree programs only consist of 120 hours of study, you must also typically choose a secondary study goal. One option is to obtain an accounting master's degree. The total number of hours of study needed in certain categories, such as business or finance, varies by state.

What Schooling is Required to Become a CFA?

A common way to qualify to become a CFA is to obtain a bachelor's degree. However, a bachelor's degree is not always required to become a CFA. If you do not hold a bachelor's degree, you must meet other general educational or work requirements. One option is you can complete at least 4,000 hours of full-time work. The other is to prove you have at least 4,000 hours of non-overlapping education and work experience.

What Certifications Are Necessary to Become a CPA or CFA?

You must pass the Uniform CPA Exam to become a CPA. The CPA certification is only applied after the exam is successfully completed, even if you have completed work and schooling requirements. The Uniform CPA Exam was created by the Association of International Certified Professional Accountants (AICPA). The exact requirements to qualify to sit for the exam vary slightly in each state. Check with your state's regulating authority to make sure you meet qualifications.

If you wish to become a CFA, you must pass the CFA exam. The exam is divided into three sections in all states. It consists primarily of multiple-choice questions. However, some essay questions are also included. The exam is given over the course of several sessions on multiple days due to its long length. The exam has a minimum passing score (MPS). However, it is changed annually and not revealed to students. Exam grading takes several months. Students who pass are issued their CFA certificates.

What Exam Prep Tools and Options Are Available for CPA and CFA Students?

It is important to prepare as much as possible for the CPA or CFA exam, since taking the exam costs money and takes time. You can increase your chances of success with study and practice. There are several tools and options available to help you study for a CPA or CFA exam. You can choose from many textbooks, including the 2022 CFA Program Curriculum Level I Boxed Set. There are also multiple online study programs and mock exams available. There are also free online guides available that provide tips about CPA and CFA exams. Among those tips are ways to set study schedules and recommendations for how long you may need to study.

Why Are CPA and CFA Exams Important?

CPA and CFA exams are important because CPAs and CFAs work with sensitive financial data daily. Accounting is a profession that often requires extreme accuracy and attention to detail. It also requires financial analysts and accountants to have important knowledge about financial laws and practices. The CPA and CFA exams ensure only skilled, highly-trained professionals receive those certifications. If you wish to become one of those skilled professionals, you must study carefully. Both exams are intentionally made difficult to pass.