CMA and CPA Careers - Why Their Differences Are So Important
By Ashley Ricks
For those familiar with public and management accounting, it won't be surprising to learn that the differences between the two are greater in number than their similarities. Knowing and understanding these differences and why they're so important is what could make a business successful. CPA is the more common acronym for an accountant; however a CMA contributes as much to the working of businesses today as a CPA, but with less familiarity. This is why it is important to become knowledgeable of each working entity and what each facet contributes to the business world.
With public accounting, the task of preparing, auditing, and presenting financial statements in the form of balance sheets, income statements, and cash flow statements are the accountant's primary focus for a client. They are to ensure the client's equity accounts, assets, and liabilities are presented on the balance sheets pertaining to a certain period of time. In essence, the balance sheet must represent exactly what its name infers, a balance: Assets = Liabilities + Owners Equities. As for income statements, a client's expenses and revenues are listed for said period of time. And for maybe the most important financial statement (due to its ability to show how much money a client actually has available) the statement for cash flow will illustrate how much of the client's cash was spent and received in financial activities, operating, and investing. It also lists where the cash is coming from and if that source of cash is likely to continue. Basically, public- (or financial) - accounting or accountants deal with the public through the objectivity, transparency, and conservativeness of information. Stockholders, creditors, investors are just some of the external users that utilize the services of financial accounting reports and information.
While Managerial accounting is concerned with reports as well, it places less emphasis on the historical aspect like public accounting does. Managerial accountants are more apt to be found in the planning and preparation of cost reports, budgets, modeling, and investment appraisals. In order to successfully execute many of the reports for management to use in their daily decisions, managerial accountants must complete extensive research and utilize databases to predict future costs and revenues, as well as review any historical data compiled. It's an uncommon practice for outside sources to see or utilize any of the managerial accounting reports or information gathered during the process. Its primary focus is to guide the internal management teams in their decision-making. Business planning, financial analysis, management, and modeling are increasingly becoming a more important aspect of the job for managerial accountants. Ethics, or lack thereof, has also been registering as a higher area of need and of great importance in the post-SOX (Sarbanes-Oxley) business world we live in today.
With both CPA's and CMA's completing jobs that are similar yet very different, it's evident that each entity has a very important job to do if a business is going to be successful.
Ashley Ricks 9/1/09
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