Before we can answer this question,
we need to address the elephant in the room...
“How does the average Business Owner handle their own business accounting?"
Is it Accrual or Cash Basis, or what about Tax Basis Accounting?
"Do they do Internal or External Reporting?"
"What about Financial versus Managerial Accounting?”
See, these are questions not every business owner knows to ask, or even knows what the differences are
Okay, maybe not the elephant in the room, but it probably made you think.
The CMA is a designation meant to provide businesses with the maximum benefit, and for accounting professionals to show advanced skills and knowledge in the area of managerial accounting. Typically, a managerial accountant of a company has advanced experience in financial, managerial and tax accounting, but their focus is on the internally needs of the company.
In other words, when the CEO, CFO, and Department Managers want to know exactly how well they are all doing, review the budget to actuals, compare KPI’s and metrics, it is the managerial accounting, or CMA, that provides them with the best information. These reports are usually NOT accrual, GAAP basis and are not compliant with external reporting requirements.
What is a CMA?
This designation is for those experts who “demonstrate a skilled ability in strategic management and financial accounting” (imanet.org). A CMA will typically be found within private companies, hold the CFO or Director of Finance position, and well out of the reach of small to medium size companies without the budget of a six-figure CFO. However, there are CPA firms, freelancers and the like that hire CMA’s with the ability to fill the “CFO” position and where the “CFO Hat” while the company grows.
Why hire a CMA?
Typically a company will hire a CMA for internal/corporate accounting. The CMA is considered one of the highest forms of professional certification in the corporate accounting world.
“The content of the CMA exam mirrors real-world applications used across the corporate finance and accounting functions”. – Ryan Perkins, CMA, a senior financial analyst at Johnson & Johnson.
CMAs have the skillset to “contribute to the process of reducing the risk of fraud in organizations worldwide, which amounts to a projected $3.7 trillion loss in revenues. CMAs can also provide executives with sound financial advice that will affect the future of the company by explaining the ‘why’ behind numbers, not just the ‘what’”. – Becker CMA
What does it take to become a CMA (Education Requirements)
Requirements to earn the CMA:
- Hold an active IMA membership
- Complete and pass the 2 part CMA Exam (see below)
- Bachelor’s Degree from an accredited college/university
- Abide by IMA’s Statement of Ethical Professional Practice
- Have two continuous years of professional experience in management accounting or financial management
Part One: Financial Reporting, Planning, Performance, and Control.
- External Financial Reporting Decisions
- Planning, budgeting, and forecasting
- Performance Management
- Cost Accounting
- Internal Controls
Part Two: Financial Decision Making
- Financial Statement Analysis
- Corporate Finance
- Decision Analysis
- Risk Management
- Investment Decisions
- Professional Ethics
The CMA adds value to your business
“CMAs bring strategic thinking, applied work experience, and the ability to convert data into dialogue.” – Imanet.org
Bookkeepers provide you with the numbers, but CMAs will tell you what they mean.
This publication is designed to provide information of federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.
This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.
This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.