Difference Between CPA and CFA
The main difference is that a CPA qualification (Certified Public Accountant) is for those candidates who seek a career in the field of accounting, auditing and taxation, while a CFA designation (Chartered Financial Analyst ) prepares candidates for investment portfolio management and corporate finance profiles.
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CPA vs CFA – Comparative Table
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CPA vs CFA – Which is Better?
Rather than straightaway deciding on which is a better qualification, it is important that you understand what career paths each qualification leads to and then decide which one is a better fit for you based on your career goals. If you intend to build a career in the financial domain of accounting, then CPA is a better credential for you. On the other hand, if you are interested in portfolio management or corporate finance, CFA suits you better. So, the appropriate answer is that the choice between the two completely depends on your career aspirations.
As a CPA professional, you will be required to perform many calculations as the role will be purely into accounting. Hence, the CPA course ensures that after the qualification, you become adept at crunching numbers. On the other hand, as a CFA charter holder, you will develop critical thinking, analytical ability, advanced excel skills, excellent modeling skills, and acquire decision-making and communication skills.
From the day you clear one of the 4 parts of the CPA exams, you will have another 18 months to clear the remaining 3 parts of the course. On the other hand, CFA takes a little more time as you have to clear 3 levels of examinations one after the other and mandatory 4 years of professional experience. Given that the work experience can be gained even while pursuing the CFA course, you can complete the course in a span of 4 years.
Eligibility or Experience Required
If you want to become a CPA qualified professional, then you need to have at least a bachelor’s degree or related professional credential along with two years of work experience in a relevant field. On the other hand, to become a CFA charter holder, you need a bachelor’s degree and four years of relevant work experience.
The syllabus for CPA primarily revolves around the four parts – regulation, audit & attestation, business environment & concepts, and financial accounting & reporting. Some of the main subjects covered in the course include economic concepts & analysis, financial statement accounts, entity & individual federal taxation, professional responsibilities ethics & general principles, corporate governanceCorporate GovernanceCorporate governance is a set of rules or practices through which an entity is directed and controlled to increase shareholders wealth by increasing the economic value and is concerned about its relations with various entity stakeholders. etc. The CFA program syllabus is divided into three levels, wherein Level I covers topics on financial principles, Level II focuses on financial analysis & accounting, and Level III delves deeper into portfolio management. Some of the main subjects covered in the course include financial reporting & analysis, equity valuation, quantitative methods, corporate finance, economics, portfolio management, derivatives, fixed incomeFixed IncomeFixed Income refers to those investments that pay fixed interests and dividends to the investors until maturity. Government and corporate bonds are examples of fixed income investments., alternative investments, ethical & professional standards etc.
Career Opportunity and Salary
Both CPA and CFA offer bright career prospects for aspiring candidates. A CPA qualified professional usually ends up in a forensic accountant, public accountant, financial analyst, consultant internal auditor etc. On the other hand, a CFA charter holder often works as a portfolio manager, research analyst, investment banking analystInvestment Banking AnalystInvestment Banking Analyst works with investment banking team and expertise in the area of Accounting, Financial Modeling, Project financing, Project Valuation, and Financial statement Analysis. These analyst has deep knowledge in Excel and they are good at VBA to analyze the market data and financial modeling. The analytic work consists of building a financial model for different projects like Infrastructure projects (i.e. Power projects, real estate, etc.)., corporate financial analyst, consultant, financial advisor etc.
In the US, CPA professionals’ salary varies in the range of $49,000 and $113,000, with a median salary of around $68,000 [Source: Payscale]. In contrast, CFA charter holders’ salary varies in the range of $56,000 and $120,000 with a median salary of $95,000.
Fees and Passing Rates
The cost of a CPA license and a CFA charter in terms of exam fees is quite comparable. The overall cost (including exam and application fees) of CPA qualification stands at around $1,500. On the other hand, each level of the CFA exam’s cost lies in between $700 (early registration) to $1,000 (late registration). Further, you need to pay a one-time registration fee of $450, which means that the CFA program’s overall cost lies in the range of $2,550 and $3,450.
Based on the historical passing rates, it can be said that the CFA exams are much more difficult than the CPA exams. During 2020, the overall passing rate of the CPA exams was more than 50% given that all the four parts reported passing rates over 55% [Source: AICPA]. During June 2019, the pass rates for CFA exams Level I, Level II, and Level III stood at 41%, 44%, and 56% respectively [Source: CFA Institute]. Since a candidate has to clear each level one after the other, it can be approximated that only around ~10% (= 41% * 44% * 56%) of the candidates who started with Level I comes out successful after completing Level III.
The upcoming CPA exams will be conducted as part of the Continuous Testing model wherein the candidates will be allowed to write the exams throughout the year. The schedule of the upcoming CFA exams for 2021 is as follows:
|Level I||Feb 16- Mar 1||May 18-24||Aug 24-30||Nov 16-22|
|Level II||May 25- Jun 1||Aug 31- Sep 4|
|Level III||May 25- Jun 1||Nov 23-25|
CPA vs CFA – How to Enroll?
The decision to take up either CPA or a CFA credential depends on choosing the direction you want to give your career. In all, we could say that each one of them is unique and focused on areas of accounting and investments, respectively. I hope this write up will help you make an informed choice for your career. All the very best :-)
This has been a guide to CPA vs CFA. Here we discuss the difference between these two certifications in terms of exam details, requirements, and career, which will ease your apprehension regarding them. You can learn more from the following articles –