Why Become a Certified Management Accountant?
Accountants who are certified management accountants (CMA) will have a more pointed set of accounting skills, which may lead to jobs that are more specialized and higher paying than the typical accounting position. Specifically, the CMA focuses on preparing accountants for working in corporate finance and strategic roles, and those who pass the CMA examinations will often have more credibility in the eyes of potential employers. This is because CMA holders need to study for and pass an examination before they gain the credential. Furthermore, due to the increased automation of many types of simple accounting jobs, it’s even more important for accountants to gain skills focused on strategic thinking and corporate growth objectives to stay ahead of the curve.
What Is a CMA (Certified Management Accountant)?
A CMA is a type of specialized accounting certification that prepares accountants for strategic corporate finance and leadership roles within their organizations. Given a CMA’s focus on top-quality training in corporate and strategic business decisions that is based on financial data, CMA holders have a wide range of job prospects. Generally, reports and analyses produced by CMA holders are expected to go above and beyond generally accepted accounting principles to allow for leaders to make the best decisions for the company.
What Does a CMA Do?
A CMA’s job will be an enhanced version of a typical corporate accountant and will most often be found working for a private company. They will be responsible for preparing a corporation’s important financial statements, making sure that the income statement, balance sheet, and statement of cash flows are properly created and ensure that the corporation’s finances are in good standing. However, given a CMA’s training in strategic business decision making, another part of a CMA’s daily responsibilities is preparing insightful management reports to their organization’s highest-level decision-makers. Since most C-suite and Senior Vice President-level management will not have time to comb through individual line items in their organization’s financial statements, the CMA’s job will be to pull out the important pieces of financial data, such as performance metrics on specific projects or departments, as well as returns on investment of new products. The CMA will then combine this data into a report for management to be able to make smart, strategic decisions about the future growth trajectory of their organization. Given the CMA’s use of computers and spreadsheets for most of their job responsibilities, they will typically work in the company’s headquarters on a daily basis and not experience a lot of work travel.
Needed Requirements to Become a CMA
The CMA exam is administered by the Institute of Management Accountants (IMA) and requires all examinees to be an active member of the IMA. All examinees must also hold a bachelor’s degree from an accredited college and have at least two continuous years of professional experience in financial management or management accounting before receiving the certification, though they do not need work experience to sit for the exam. The IMA’s membership fee can range from $39-$230 a year depending on whether the accountant is an academic, young professional, or professional. Students and academics who join the IMA are eligible for discounts on the cost of the CMA exams.
The CMA focuses on two main subject pathways, both focusing on some aspect of financial management. The first part of the exam focuses on financial planning, performance, and analytics. Subjects covered by the exams include external financial reporting, budget forecasting, performance management, cost considerations, internal considerations, as well as technology and analytics. Although the subjects tested are interrelated, examinees will still need to study quite a lot of material to prepare. The second part of the exam focuses more on traditional, corporate finance-related topics. These topics include financial statement analysis, financial decision analysis, corporate finance, risk management, corporate investments, and ethics.
The CMA exam is split into two parts covering 12 core competencies. Examinees must pass both parts of the exam within three years before they can receive a CMA certification. Each half of the exam is four hours long, and examinees will need to answer 100 multiple choice questions and two essays over a total of eight hours of testing. Each year, there are three testing windows that examinees can register for depending on their personal availability and how quickly they feel prepared. These windows are January 1 through February 28, May 1 through June 30, or September 1 through October 31 of each year. If examinees fail the exam, they can take it again the next testing window, up to three times per year. Candidates should register for the CMA exam at least two months prior to the testing period when they expect to take the exam, as they will not be able to register for a seat in the current testing period.
How is the Certified Management Accountant Exam Scored?
The CMA test is scored on a range of 1-500, where a score of 360 or better is passing. Students must past at least half of the 100 multiple choice questions per section before they are able to move onto the essay questions, otherwise, they will need to retake the exam. Candidates’ answers will be weighted: multiple-choice questions will account for 75% of the final score and the essays will account for the remaining 25%. Luckily, the CMA exam does not deduct any points for incorrect answers; candidates will simply not receive any points for that question. The CMA exam uses a computer algorithm to grade multiple-choice questions, but a CMA expert grades the essay portion, which will focus on the clarity and knowledgeability that examinees show in their written answers. Test takers will receive their scores 42 days from the last day of their exam month. This means that whether a test taker took the exam in early January, mid-January, or late-January, they will receive their score around the same day in March. Candidates wanting to receive their scores by a certain date could still consider taking their exams later in the month to put in a few extra study days.
Study Resources and Preparation for the CMA Exam
The CMA exam is packed full of financial information, and exam-takers should start studying early to ensure the highest possibility of success.
Below are some tips and resources to help with studying for the CMA exam:
Available review resources include
Wiley CMAexcel Review Course: This is the only official exam preparation materials for the CMA exam endorsed by the IMA. The Platinum package includes unlimited access to 66 hours of video instruction, official IMA Learning System Textbooks, more than 5500 multiple choice questions, and more than 120 essay prompts until you pass the exam.
The CMA exam has been around for almost 50 years and is well-known within the accounting world to be a tough exam. The average pass rate for each part of the exam from 2014-2018 was just 43%, so candidates will need to prepare well before they look to sit for the exams. Compared to the Certified Public Accountant (CPA) certification, another popular accounting certification, the CMA has a lower pass rate, but also will tend to earn more late-career, with CPAs translating to a 15% salary enhancement over non-CPA holders and CMAs translating into a 63% earning premium over other non-CMA holders. While the CPA exam is longer, with 16 hours of examinations across four sections, the pass rate is around half or better. CPA candidates will only have 18 months to pass all four parts of the exam, while CMAs have three years.
In order to sit for the CMA exam, candidates will need to invest around a thousand dollars up front, not counting for study materials. For members with professional status designation, usually this refers to accounting practitioners with several years of experience, the CMA program fee will total $250 for the CMA Entrance Fee and $415 per part for the Exam Fee (for a total of $830). Students and academics are granted a slight discount to sit for the CMA, with the entrance fee costing $188 and the exam costing $311 per part (for a total of $622). This is in addition to any IMA membership fees that must be paid annually and any review or study materials that you purchase. The typical CMA review package will also cost anywhere between $700-$1700, with the Wiley official Platinum Package costing $1440.
Career & Salary
Where Might You Work?
Given the business and financial strategy focus of the CMA, certification holders have a wide range of employment options. All types of organizations will need strategic planning for their finances, so CMAs will be able to find gainful employment when working for both private and public companies, as well as government agencies.
According to the Bureau of Labor Statistics (BLS), the field of accountants and auditors will grow at a rate of 4% between 2019-2029. While this rate is not as high an increase as some job types, it’s as fast as the average job growth in the economy and is a good indicator of economic health given that most organizations will need to employ accountants. Thus, the field is competitive and has good prospects for wage growth, which is also particularly true for CMAs who have highly specialized certification within the field of accounting. Compared to the median annual wage of $71,550 for accountants, the average CMA earned a salary of around $89,400 in 2019. As the demand grows in general for accountants, those with CMA certifications will likely also see wage appreciation.
CMA holders have a wide variety of career prospects. Some common positions that they may take on, as well as the average earnings for each of these positions, are listed below.