CMA vs. EA: Which designation is better

CMA vs. EA: Which designation is better

CMA vs. EA: Which Designation Is Better For Your Career 

Are you considering the CMA certification vs. the EA designation? After all, becoming a Certified Management Accountant or an enrolled agent could both propel your career. However, the accounting field has lots of specific niches to fit every career goal and personality type. So before you start on your accounting journey, be sure you understand the roles and requirements of various accounting credentials. In this article, therefore, we’ll review the differences between the CMA certification and EA designation.

CMA vs. EA: Roles and Responsibilities

The roles and responsibilities of a CMA versus an EA are very different. Basically, the CMA denotes that you have advanced critical accounting and financial management skills. Therefore, the CMA is especially relevant if you plan to work in a business environment or a globally-based company. In contrast, the EA is best suited for tax preparers who want to advance their career. After all, an EA is a tax professional with specialized expertise in US taxation.

What does a CMA do?

The CMA is considered the gold standard in management accounting. The Institute of Management Accounting started issuing the certification in 1972, so it has a long reputation. Plus, it’s one of the top certifications you can get in the management accounting niche. Today, the CMA has become the most popular management accounting certification in the United States. And it’s quickly becoming more common in developing areas like China and the Middle East.

What’s the role of an EA?

Enrolled agents are tax preparers with high levels of knowledge about taxation in the United States. In fact, the EA is the highest credential offered by the IRS.

EAs can perform many steps related to the preparation of tax returns, both business and personal. Essentially, they can do everything from file documents on a client’s behalf to going to IRS hearings for a client. EAs also advise parties on the tax implications of their business dealings and transactions.

CMA vs. EA: Exam Requirements and Format

The requirements, format, and content of the CMA exam are very different from the EA exam. So, let’s review the exams and how to qualify for them.

Qualifying for the CMA and EA exams

To qualify for the CMA exam, candidates must:

  • Have an active membership with the IMA
  • Pay an entrance fee to gain acceptance into the CMA program
  • Register to take their first exam part within 12 months of enrolling in the CMA program

Once candidates have entered the CMA program, they have 3 years to pass the 2-part exam. Plus, candidates must meet the education and work experience requirements within 7 years of passing the CMA exam. Those requirements are outlined below, but you can take the exam without meeting them first.

In contrast, candidates don’t need to meet any education or experience requirements to get the EA or take the EA exam. Therefore, here’s a summary of how to get started with the EA exam:

  • Go to the IRS website, create an online account, and apply for a PTIN, or Preparer Tax Identification Number
  • Within your IRS account, register to take the 3-part SEE, or Special Enrollment Examination
  • Once you pass your first part, you need to pass the remaining parts within 2 years

Understanding the CMA exam

The CMA exam has two parts:

  • CMA Part 1: Financial Planning, Performance, and Analytics
  • CMA Part 2: Strategic Financial Management

Each part lasts 4 hours and includes 100 multiple-choice questions (MCQs) and 2 essay questions. And in each part, you’ll answer the MCQs first. If you answer at least 50% correctly, you’ll be allowed to move on to the essays. It doesn’t matter which CMA exam part you start with first. However, you must register for your first CMA exam within 12 months of enrolling in the CMA program.

The SEE exam for Enrolled Agents

The SEE exam has three parts, each addressing a separate area of taxation in the US:

  • Part 1: Individuals
  • Part 2: Businesses
  • Part 3: Representation, Practices, and Procedures

Each part has 100 MCQs and takes 3 ½ hours to finish. Once you pass all the exam sections, you need to apply for your EA designation within 1 year.

However, some EA candidates can obtain the credential without taking the exam. Candidates who have been working for the IRS for at least 5 years don’t need to take the exam as long as they regularly applied and interpreted the Internal Revenue Code (IRC). Usually, candidates who meet this benchmark have titles like appeals officer, special agent, settlement officer, tax or tax law specialist, or revenue officer or agent.

Passing your exams

The CMA exam pass rate is only about 45-50% globally. However, the EA exam pass rates are higher at 61-88%, depending on the exam part and the year. Still, about 69% of EA candidates pass their exams, which is higher than other accounting credentials like the CPA, CMA, and CIA.

Nonetheless, once you start to take either the CMA or EA exams, you have a limited amount of time to complete them. Therefore, it’s best to study with a proven review course. Even though you’ll have to invest in prep materials, the cost is often worth it in the long run. Besides, if you pick the review course that’s right for your learning style, you’ll probably study more effectively, significantly reducing your overall study time.

CMA vs. EA: Other Requirements

After potential Enrolled Agents have passed all parts of the SEE exam, they only need to apply for the EA designation to receive it. Therefore, EAs don’t have to meet any other education or work requirements.

However, EAs must meet annual CPE or CE (continuing professional education) benchmarks to keep their credential active. Specifically, EAs need:

  • 72 hours of continuing education per 3 years
  • In addition, 16 hours must be completed each year
  • At least 2 of the annual 16 hours must be in an approved ethics course

Other requirements for the CMA

In contrast, potential CMAs still have education and experience requirements to meet once they’ve passed both parts of the exam. Then, they must acquire CPE hours to keep their credential active. However, as noted below, CMAs have two options to gain credit for their educational background.

  • Education — Option 1: Receive a bachelor’s degree from an accredited college or university; your degree can be in any field.
  • OR — Option 2: Obtain an approved certification from another accrediting body, which includes the CPA from the Canadian Institute of Chartered Accountants or the US AICPA, the CA from the Institute of Chartered Accountants of India, the CFA from the Chartered Financial Analyst Institute, and the CIA from the Institute of Internal Auditors, among others.
  • Experience: 2 years of continuous experience (or 4 years of part-time experience) in management accounting or financial management. Examples could include auditing, budget preparation and/or reporting, costing analysis, financial planning, risk evaluation, and others. Plus, you must meet the CMA experience requirements within 7 years of passing the CMA exam.
  • CPE: CMAs must meet annual CPE (or continuing professional education) requirements. Specifically, CMAs need 30 hours of CPE every year to maintain an active credential.

CMA vs. EA Costs

The process to become a CMA or EA both include several different costs, so make sure you understand the fees before starting.

CMA costs

  • IMA membership fee: professionals $245, students $39
  • CMA program entrance fee: professionals $250, students $188
  • CMA examination fee: professionals $415 per part ($830 total), students $311 ($622 total)

Therefore, the total CMA fees equal about $849 for students and $1,325 for professionals. Plus, there is an extra $15 application fee for first-time exam takers. Also, candidates should budget the cost of CMA exam review materials too.

EA costs

  • SEE exam fees per part: $181.94, for a total of $545.82 for all 3 SEE parts
  • About $500 for EA review course materials
  • EA enrollment fee (payable after passing the exam to receive the EA designation): $30

So in total, depending on the cost of your review materials, pursuing the EA costs just under $1,100.

CMA vs. EA: Salaries and Job Opportunities

CMAs can hold titles as diverse as budget analyst, CEO or CFO, cost accountant, controller, financial analyst, manager, internal auditor, senior or staff accountant, or treasurer. According to the IMA, CMAs worldwide make about 58% percent more than their peers who don’t have the credential. And higher salaries aren’t just reserved for CMAs at the height of their careers either. In fact, even CMAs in their 30s receive salaries that are about 49-50% higher than their non-CMA peers.

Enrolled agents have the potential to make larger salaries than uncredentialled tax preparers. Essentially, EAs have the skills needed to complete complicated tax returns, leading to higher earning potential. And therefore, on average, EAs make about 10% more per return than un-enrolled tax preparers.

EAs work in a variety of settings. For example, accounting, law, and investment firms frequently use the services of EAs. You’ll also find EAs in corporate accounting departments, state departments of revenue, and even banks. Therefore, EAs are always in need and always valued in the business world.

The Value of the CMA or EA

You’ll find CMAs working in the finance departments of major companies around the world. Their expertise in management accounting and financial planning is critical and always in demand. CMAs are essential to keep large businesses running, especially those in industry and manufacturing.

EAs, on the other hand, are valued because they can handle all sorts of tax matters. That is, they can deal with tax audits, collections, and even appeals with the IRS. EAs are fully authorized to represent clients and taxpayers in matters with all levels of the IRS. The only exception is that EAs cannot represent clients in tax court; only lawyers can do that.

Although CPAs and lawyers can also handle these same issues, their licenses are tied to a specific state or jurisdiction. But EAs, on the other hand, are recognized in any state because the credential is authorized by the U.S. Department of Treasury instead of state boards of accountancy or state law boards.

CMA vs. EA: The Choice

The CMA and EA credentials are for candidates who want to pursue very different careers. The CMA might be the better choice for accountants interested in management, analytics, and financial planning. Plus, the CMA is recognized worldwide, so CMAs have the flexibility to work from many locations. The EA, however, is better suited for professionals who plan to specialize in taxation and only plan to work in or for clients in the United States.

Either path could advance your career, depending on your overall interests and goals.

 

HOCK international thanks Stephanie Ng for writing this article. Stephanie Ng is the author of the guide How to Pass the CPA Exam, and the person behind the I Pass the CMA Exam and I Pass the EA Exam sites.

If you decide that the CMA Exam is a better choice for you, check out our CMA free trial. The trial lasts for two weeks and includes all of the HOCK study materials for CMA Part 1 Section A and CMA Part 2 Section E.

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