A Certified Management Accountant (CMA) is a professional certification awarded by the Institute of Management Accountants (IMA) to individuals who demonstrate expertise in financial planning, analysis, control, decision support, and professional ethics. A CMA can help your small or medium-sized business (SMB) by analyzing fixed vs. variable costs, setting a profitable sales price, determining optimal production quantities, and even determining when a product should be discontinued.
In this article, we look at what a CMA can do for your business, when you should hire one, and the requirements to become a certified management accountant.
Key takeaways
- CMAs possess specialized expertise in managerial accounting, financial planning, and strategic decision-making.
- CMAs can help businesses make decisions by assisting with cost analysis, budgets, and modeling.
- CMAs can assess financial risks—including potential financial effects—and recommend ways of managing these risks.
- CMAs adhere to a strong code of professional ethics, emphasizing integrity, confidentiality, and objectivity in their work,
- The CMA designation—recognized globally—stands as a testament to a professional’s commitment to excellence in managerial accounting, making them well-equipped to meet the ever-changing demands of the business world.
What Certified Management Accountants Do for Your Business
CMAs are financial professionals who specialize in managerial accounting and financial management. They play a crucial role in helping organizations make strategic business decisions by providing financial expertise and analysis. Following are some key responsibilities and activities that a certified management accountant can do for your business:
- Financial planning and analysis: CMAs are involved in creating budgets, forecasts, and financial plans to guide the organization’s financial decisions. They analyze historical data and market trends to develop realistic financial projections.
- Cost management: They focus on managing and controlling costs within an organization. They analyze cost structures, identify areas for cost reduction, and help optimize resource allocation to enhance efficiency and profitability.
- Performance management: CMAs measure and evaluate the performance of various departments or business units against established goals and benchmarks. They develop key performance indicators (KPIs) and provide insights to improve overall organizational performance.
- Risk management: Assessing financial risks and recommending strategies to mitigate them are the responsibilities of a CMA. This involves identifying potential financial threats, evaluating their impact, and developing plans to minimize or avoid adverse outcomes.
- Strategic planning: CMAs actively contribute to the strategic planning process by providing financial analysis and insights. They work closely with top management to align financial goals with overall business objectives.
- Financial reporting: They are responsible for preparing and presenting financial reports to internal and external stakeholders. They ensure compliance with accounting standards and regulations, providing accurate and timely financial information for decision-making.
- Decision support: Providing decision support by conducting financial analysis and modeling to assist management in making informed decisions is also a CMA’s duty. This may involve evaluating investment opportunities, assessing the financial impact of different strategies, and advising on potential courses of action.
- Internal controls: CMAs are involved in designing and implementing internal control systems to safeguard the organization’s assets and ensure the accuracy of financial information. This includes monitoring and evaluating the effectiveness of internal controls.
- Ethical considerations: They adhere to a strict code of ethics and are responsible for maintaining the highest standards of professional conduct. They often face ethical dilemmas and must make decisions that align with the best interests of the organization and its stakeholders.
When You Should Hire a Certified Management Accountant
Businesses should consider hiring a CMA when they require a professional who can assist with providing strategic financial insights, supporting decision-making processes, and ensuring effective financial management. Here are a few situations when hiring a CMA would be particularly useful:
- Cost analysis: Understanding your total costs can be very complicated, especially for manufacturing. It’s vital to understand the effect on costs of differing levels of production, equipment upgrades, and many more strategic manufacturing decisions. CMAs can analyze your cost structure to maximize profitability.
- Business management: A CMA’s experience in top-level managerial positions provides the ability to drive overall organizational growth. This includes making strategic decisions, working closely with business owners, and offering guidance for business expansion.
- Strategy building: The ability to analyze financial data enables CMAs to create effective financial and accounting strategies for business growth. They can also craft long-term plans for companies and convey complex information accurately, making them highly valuable assets.
- Budgeting: CMAs excel in preparing budgets for organizations, analyzing financial data skillfully to make strategic decisions that will boost a company’s profitability.
While CMAs are accounting professionals and certainly understand financial accounting and bookkeeping, their expertise is not in Generally Accepted Accounting Principles (GAAP), income taxation, or auditing. For these tasks, you’d be better off hiring a certified public accountant (CPA).
Requirements To Become a Certified Management Accountant
There are strict requirements to become a CMA, so when you hire a CMA, you know you’re getting an accounting professional. To be eligible for CMA certification, candidates must fulfill all the following requirements:
- Satisfy the education qualification
- Satisfy the experience qualification
- Complete all required examination parts
- Active membership in the IMA
- Active CMA entrance fee
- Comply with the IMA Statement of Ethical Professional Practice
Candidates must satisfy one of the following education requirements and submit verification of education within seven years of completing the CMA examination:
- Bachelor’s degree from an accredited college or university
- Professional certifications, like Chartered Financial Analyst (CFA), Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE), or Certified Treasury Professional (CTP)
Candidates must complete at least two continuous years of professional experience in managerial accounting and/or financial management. Professional experience is expected to be gained in full-time employment. However, continuous part-time positions of 20 hours per week meeting the definition of qualified experience will count toward this requirement at a rate of one year of experience or every two years of part-time employment. Experience is evaluated on a case-by-case basis.
The CMA entrance fee must be paid before taking the examination. Candidates must complete the CMA program within three years from the date of entry into the program. The CMA entrance fee includes:
- Access to the CMA support package beginning on the date of entry into the CMA program
- Performance feedback reports
- Review of educational and experience credentials
- Employer notification of CMA designation by request
- Personalized certificate upon completion of all requirements
- Listing of all CMAs in good standing on the IMA website
- Final score report upon completion of exams
Each exam is four hours with 100 multiple-choice questions and two 30-minute essays each. The essay section consists of approximately 10 to 12 written response or calculation questions based on two scenarios, describing a typical business situation. Candidates must answer at least 50% of the multiple-choice questions correctly to be eligible to take the essay section. Candidates are not required to pass both sections; the total score determines pass/fail status. Exam results will be emailed and posted to your online profile approximately six weeks from the end of the month in which you tested.
Here’s the breakdown of topics covered for each part of the CMA exam:
CMA Part I: Financial Planning, Performance & Analytics | CMA Part II: Strategic Financial Management |
|---|---|
15%: External Financial Reporting Decisions | 20%: Financial Statement Analysis |
20%: Planning, Budgeting, and Forecasting | 20%: Corporate Finance |
20%: Performance Management | 25%: Decision Analysis |
15%: Cost Management | 10%: Risk Management |
15%: Internal Controls | 10%: Investment Decisions |
15%: Technology and Analytics | 15%: Professional Ethics |
To become a CMA, candidates must fulfill specific educational and experience requirements and successfully pass the CMA examination. In addition to the educational and experience requirements, candidates must become members of the IMA, which is the professional organization that awards the CMA designation. Membership involves adherence to the IMA’s Statement of Ethical Professional Practice.
There are two categories of pricing for the exam and membership, for students and professionals. Following is a breakdown of the costs:
For Professionals | |
|---|---|
CMA Entrance Fee (Nonrefundable) | $300 |
CMA Exam Fee | $495 per part |
IMA Membership | $295* |
Beginning in September 2024, the CMA exam will change based on a recent Job Analysis study. Minor updates and additions will be made in the areas of data management, internal controls testing and remediation, data ethics, and business fraud.
Frequently Asked Questions (FAQs)
A CMA is a professional designation for accountants who specialize in financial management and strategic planning within organizations. CMAs play a crucial role in decision-making by providing financial insights and analysis.
The requirements to become a CMA include a bachelor’s degree from an accredited institution, relevant work experience in managerial accounting or financial management, and successful completion of the CMA exam.
Yes, CMAs can work in a variety of industries, including manufacturing, technology, healthcare, and finance. The skills acquired through CMA certification are transferable across different sectors.
The salary for a CMA depends on experience, education, location, and type of company, among other factors. An entry-level CMA can earn an annual salary of $80,000 while a more experienced CMA can earn around $125,000 per year.
Bottom Line
The role of CMAs is indispensable in the business landscape. Their specialized expertise in managerial accounting, financial planning, and strategic decision-making positions them as valuable assets for organizations seeking to navigate complex financial challenges. CMAs contribute not only to the accuracy and integrity of financial reporting but also play a pivotal role in shaping and executing strategic initiatives.
