CFA Accounting Knowledge

CFA General
#1

How would the accounting knowledge of a CFA charterholder (assuming accounting was not their undergraduate degree) compare to the following:

i) A person with an accounting diploma

ii) A person with an undergraduate degree in accounting but no designation

iii) A person with a professional accounting designation (CA, CPA etc.)

#2

I’m not sure I understand the distinction between i) and ii).

For the most part, someone with a CA or CPA will have greater accounting knowledge than a CFA charterholder. But there are some topics in the CFA FRA curriculum that most CAs and CPAs would not know, as it doesn’t appear on their exams (e.g., currency translation/remeasurement).

#3

Distinction between i and ii being that a diploma is a two year program (in the US I think it is sometimes refered to as an associates degree) and an undergraduate (Bachelors) degree is a 4 year program

#4

I’d say that a charterholder knows more than someone with an associate’s (AA) degree, but less than someone with a BA in Accounting.

I have a BA in Accounting, and it was a huge help when I studied for the CFA exams; the only new stuff that I recall was the multinational currency stuff.

#5

I would agree with that. However, a CFA charterholder would have (much) less accounting knowledge than a CPA holder.

I hold a CPA holder in my country (I work in a Big Four firm), and I am surprised at how little CFA helps in accounting matters here. However, the CFA helps immensely in understanding financial instruments, investments and complex financial structures.

#6

I’m a CA in Canada - CFA accounting curriculum is probabaly 20-25% of what I learned in the CA program.

We do learn translation/consolidation of foreign subs in Canada, perhaps it’s different in the US.

I also did an accounting undergraduate, would say that the CFA program covers maybe 60-65% of the material from my school (sample size of 1). Overall is not significant, I would expect someone who majored in accounting for their undergrad to know significantly more than a CFA charterholder (excl. work experience).

#7

Yes of course multinational currency accounting is covered in any undergraduate accounting program worth its salt…can’t imagine that someone would think it isn’t.

#8

I don’t think that there is an easy answer to this question. I am a CPA and have worked with hundreds of CPAs and degreed accountants and there is wide range of competencies. A few observations:

  • I think that if a CFA cahrterholder is used to working with ratios and making analytical adjustment to financial statements then they will know this area of ‘accounting’ much better than most CPA’s
  • Most CPAs work in somwhat narrrow areas and may not know much outside of those areas.
  • I have worked with very competent non-CPAs in areas such as Investment Accounting and Consolidations who had genuinley impressive domain knowledge
  • The CPA Exam is an exam like the CFA exam. You can pass without necessarily mastering the material, and what you did know at one point in time fades if you don’t use it.
  • In my opinion, the FASB’s Conceptual Framework is crticial to getting beyond a superficial understanding of accounting. Theory is not sufficiently stressed in accounting education or by many CPAs, and not at all in the CFA program that I have seen. After working with a CPA for a fairly short period of time, I can usually tell how well they really understand acccounting. It is hard to imagine a CFA charterholder having spent sufficient time doing hard thinking about accounting get a deeper understanding of accounting.

In short, a CFA Charterholder can get beyond a typical CPA in certain areas.Just my take.

#9

As a side note, when I fisrt got involved in SEC reporting as a preparer I thought that the analysts were deluding themselves if they thought they could understand comapnies based on publicly provided financial information. I thought that there was too much nuance and too many “well, but…” for an outsider to get a good read. I subsequently leanred that I was too deep in the weeds myself to be able to look at the situation with fresh and unbiased eyes.

#10

It’s certainly possible that salty accounting curricula have changed in the last 36 years; it’s been a while since I was an undergrad.