There are many careers out there for students to pursue in the field of finance. Two of the most sought-after are that of CPA and CFA. However, many students may still be confused regarding exactly what the differences between these positions are.
Those differences, it turns out, are actually quite substantial. Below are some of the important distinctions between CPAs and CFAs that students should be aware of.
What is a CPA?
CPA is an acronym that stands for Certified Public Accountant. A CPA is an accountant that has received licensing through the state they operate in. The title of a certified public accountant is a professional designation that must be earned through meeting specific educational requirements and receiving training in an appropriate professional setting to obtain the required experience.
Lastly, to obtain the title of CPA, one must pass the CPA exam. The exam can vary based on the state an accountant wishes to operate in. Once this designation has been obtained, a CPA may perform a wide variety of different accounting work for different entities. This can include accounting for private individuals, businesses, schools, local governments, non-profit organizations, and more.
What is a CFA?
CFA, on the other hand, stands for Chartered Financial Analyst. Unlike CPA, CFA is a designation for a financial analyst. Instead of only performing accounting functions, financial analysts also perform work like analyzing historical financial results, collecting financial data and organizing the data. From this analysis, that CFA may then make financial forecasts and projections. Based on these forecasts and projections, specific advice can then be given to a company or other financial entity in regards to how to invest their money.
However, like CPA, CFA is a professional designation that requires certification. This certification is handled by the CFA Institute. Becoming a CFA through the Institute requires passing three levels of exams covering different financial fields. Material that will be tested includes economic theory, accounting, security analysis, ethics, and more.
Studying to Become a CPA
The course load you should tackle to become a CPA can also be quite different than if you were planning to become a CFA after graduation. Educational requirements can vary from state to state. However, most states have similar requirements.
Commonly, one of these is going to be 150 semester hours of course work. This will likely include at least 30 semester hours completed in accounting classes specifically. The lion’s share of these, 24, will have to be completed at the introductory level. Specific courses should include topics like auditing, taxation, financial accounting, cost accounting, and professional ethics.
You may also be required to take business courses unrelated to accounting like business law, finance, economics, management, and marketing. Preparing for the CPA exam could also involve completing even more coursework to prepare you for the format of the test. Consider investigating CPA review course discounts to save money on your tuition for such classes.
Studying to Become a CFA
Obtaining your CFA typically requires either obtaining your bachelor’s degree or being in the last year of your bachelor’s degree program. Although becoming a chartered financial analyst also involves studying accounting, students will have to complete a different course load if they wish to become a CFA.
You will also need a strong knowledge of financial analysis and business management. Structure your course work appropriately. Keep in mind that the educational requirement is only part of it. You also need to have 48 months of practical experience in investment to become a CFA. This can include work like processing and recording the trades of a big investment bank or other investment-related work in corporate finance, trading, or economics generally. Overall, at least 50 percent of your relevant work experience must be directly related to investment.
While CPA and CFA may sound like similar positions, they are actually quite different. CPAs, of course, primarily deal with accounting. CFAs may also sometimes deal with accounting. However, they are more squarely focused on investment. The coursework you should complete is different, and so are the other qualifications for obtaining each professional designation. Overall, each is a very different career path. Think over what you want your future to be like when deciding which to pursue in your studies.
Stephanie Caroline Snyder graduated from The University of Florida in 2018; she majored in Communications with a minor in mass media. Currently, she is an Author and a Freelance Internet Writer, and a Blogger.
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