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Why take the CFM exam?

When we asked the first 500 individuals who passed the Certified in Financial Management (CFM) exam their primary reason for taking it, the overwhelming response was personal satisfaction (88%) followed by "to demonstrate competence/credibility in the field (75%)."

The IMA has sponsored the Certified Management Accountant (CMA) exam for more than 25 years now, drawing in over 30,000 participants to date. In 1997, with finance as well as accounting professionals in mind, the IMA also began offering the Certified in Financial Management program. In addition, in a move that boldly takes the IMA where no major professional accounting certification exam has gone before, the IMA is offering the CFM in a computerized format.

The first 500 individuals to become CFMs were surveyed and asked to complete our questionnaire; 349 responses were received for a 69.8% response rate. Surveys were returned from CFMs in 45 states, Washington, D.C., Puerto Rico, and Spain. The majority of new CFMs are male, earned their undergraduate degrees in accounting, and obtained a graduate degree.

Given the large amount of overlapping material tested between the CFM and CMA designations, it is not surprising that 97% of the first CFMs had already earned their CMA. In addition, many respondents already held other related professional certifications prior to passing the CFM exam. The average age for this initial group seeking CFM certification is 42 years; 84% were men, 16%, women.

In general, the CFMs had several years of relevant business experience prior to passing the exam (average, 14.9 years). The amount of time between receiving a degree and completing the exam was also fairly lengthy (average, 18.1 years since bachelor's degree; 13.7 years since master's degree; and 15.6 years since earning a doctoral degree). Of those responding to the survey, 13% held a doctorate degree, 73% had a master's degree, while the remaining 14% did not have a graduate degree.

Reasons for Taking the Exam

The CFMs were asked to give their primary reasons for taking the exam (Table 1). Most CFMs indicated multiple reasons for seeking this certification. Some of their reasons why they sat for this exam include "Demonstration of competence in financial matters complements my accounting credentials;" "To help in promoting myself to potential clients;" and "To market myself in the private sector in case I wanted to sell my CPA practice."
Table 1. Top Ten Reasons

Personal satisfaction 88%
To demonstrate competence/credibility in the field 75%
Professional advancement 57%
CPE 40%
To serve as a role model for others 33%
To increase opportunities for finding employment 31%
To increase chances of receiving a higher salary 28%
To receive recognition from employer 27%
To increase opportunities for promotion 26%
Received encouragement from others 4%
Table 2. Employer Support

Paid examination fees 45%
Paid for study guides/materials 40%
Provided time off with pay while taking exam 34%
Provided time off without pay while taking exam 5%
Paid for travel/lodging expenses during exam 5%

The level of employer support for the CFM exam varied among respondents (Table 2). Regardless of whether any direct support was provided by employers (for example, paying examination fees), 60% of the CFMs believed that their employers valued their new certification.

Benefits of Becoming a CFM

CFMs were asked whether they had received, or believed they would receive in the future, certain benefits in association with earning their certification [ILLUSTRATION FOR FIGURE 1 OMITTED]. A majority of respondents indicated the greatest benefit they already have received is personal satisfaction (96%), while they expected that in the future the greatest benefit of the CFM credential would be increased job mobility or marketability (61%). Survey respondents also believed that they would either receive a salary increase in the future (26%) or be promoted (22%) as a result of passing the exam. Given the high level of perceived benefits, it is not surprising that most CFMs (97%) recommend the program to other business professionals and students.

How to Prepare for the CFM Exam

When we surveyed the first individuals to make it through the Certified in Financial Management (CFM) program, we asked them to estimate the amount of time spent in preparation for the CFM exam. Most had already passed parts 1, 3, and 4 - which are identical to the same parts of the CMA examination. For Part 2, the part unique to the CFM exam, these successful candidates spent on average almost 10 hours a week for a little more than six weeks studying for this exam. However, total study time varied widely among the respondents, as shown in Figure 2.

Several CFMs indicated that they "crammed" for the exam just prior to attempting Part 2, while others reported study times extending from six to nine months. Interestingly, a few CFMs were currently working on their MBA degrees and indicated that they did not study for Part 2. Rather, they walked into the test with their knowledge from their graduate courses and successfully passed the exam in one attempt. This suggests that an ideal time to attempt the CFM exam may be near the end of one's graduate work.

Although the exam was new, some CFM study guides were available on the market, and CFMs were asked to list specific study guides or materials they found useful in preparing for the exam. In addition, they were asked to rank them according to their value. It is not surprising that respondents indicated a wide variety of materials as most useful. Some CFMs preferred to study on their own, while others preferred an organized review course (Table 3).

Individuals credit different factors for their success in passing the CFM exam. The CFMs were asked to assess the extent to which three factors contributed to their success. In order of importance, these factors were ranked as personal study and review prior to sitting for the exam, educational background, and work experience.

In general, individuals who attributed a large part of their success to their educational background and/or work experience reported little study time, while candidates who studied extensively attributed much of their success in passing the exam to their personal study and review. Thus, it appears that candidates tailored their study patterns to complement their individual backgrounds. It is interesting to note also that work experience was rarely given a heavy weighting as a factor contributing toward success on the CFM exam. This is consistent with the respondents' advice to take the exam as soon as possible after graduation.

Taking the CFM Exam

While the CFM exam consists of four parts, 97% of our survey respondents had already successfully passed the CMA exam and therefore needed to complete only Part 2 of the CFM exam. Of the 349 respondents, 334 reported they passed Part 2 in one attempt. The remaining 15 respondents reported two attempts were necessary to pass Part 2. But this should not be interpreted to mean that the CFM exam is an "easy" exam to pass. Preliminary exam pass rate statistics indicate that the exam is fairly challenging, as evidenced by the fact that only 43% of the first group of candidates passed the exam.

When asked to rate the difficulty [TABULAR DATA FOR TABLE 3 OMITTED] of the CFM exam's content, the respondents rated Part 2 as having an above-average level of difficulty. The average rating Part 2 received from all respondents was 6.7 on a scale of 1 to 10 (1 = extremely easy; 5 = average difficulty; 10 = extremely difficult). See Figure 3 for more detail.

Computerized Testing

The CFM exam is one of the first accounting certifications to allow candidates to take the exam using computerized testing. After critical analysis, the IMA decided to implement computerized testing as a means of making the exam process more efficient and more "user-friendly" in terms of flexibility in scheduling and obtaining immediate results. Prior to implementing this form of testing, the IMA determined that the higher-level cognitive skills and the body of knowledge required to achieve competence in the field of financial management can be tested effectively using the computer format. CFM candidates may now know their score immediately after completing the exam rather than waiting three months for the exam to be graded. The CFMs were asked to assess the testing process using the computerized format.

Overall, the responses indicate that CFMs had a positive experience with the computerized testing format [ILLUSTRATION FOR FIGURE 4 OMITTED]. While essay/computational problems may be easily included on the old "paper and pencil" format, the computerized format requires that questions be objective in nature. A large majority (79%) of the CFMs felt that the objective questions were no more difficult and were perhaps even easier to pass than the traditional essay/computational problems. Other CFMs noted that computational problems could still be (and were) included in the exam; however, a choice of four possible answers was provided rather than the traditional "here's a blank sheet of paper and you're on your own to come up with the answer" format. Many CFMs indicated that this arrangement caused them to believe that objective questions were easier because a candidate had a 25% chance of guessing the correct answer if he/she had no idea of how to do the problem. On the other hand, several CFMs observed that it was impossible to receive partial credit with objective questions, and they believed that made computerized testing somewhat more difficult.

The most common complaints on computerized testing included:

* Long questions required scrolling to read all the given information before arriving at the possible solutions, and this scrolling back and forth became cumbersome at times;

* Occasionally the candidate was not able to take the exam when scheduled due to the computer being down;

* Idiosyncrasies of working on the computer made the testing more difficult or uncomfortable (erratic mouse, accidental disconnection by touching a wrong key next to the scroll key, staring at a computer screen for three straight hours, screen being too small, etc.);

* People in the testing center were taking other exams at the same time and their typing on the keyboard was noisy and a distraction.

A large majority of respondents (69%) were positive about their experience with computerized testing. The greatest benefits of computerized testing noted by the CFMs included flexibility in scheduling examinations, immediate feedback on performance (pass or fail), and more convenient locations for testing.

Advice to Future CFM Candidates

Finally, CFMs were asked to give their advice to future candidates on a variety of related topics. In general, CFMs advised candidates to take the exam as soon as possible after graduation, to study over a prolonged period of time rather than "cram" right before taking the test, to study on one's own rather than taking a review course, and to take all four parts of the exam at once. In addition, the CFMs indicated that one should take the CFM exam whenever one felt ready, regardless of whether other certifications had been achieved, such as the CPA and the CMA exams.

For the most part, the CFMs followed their own advice. Most studied for a prolonged period of time rather than "cramming" prior to taking the test, and most studied independently rather than enroll in a review course. Of course, this may be due in part to the fact that few review courses are available to date because the CFM exam has not been in existence for long. Also, these CFMs did not have the option to take the exam as soon as possible after graduation because of its very recent inception.

Even though the CFM exam has been offered for only a short time, its early registration rate suggests that it will become a popular certification for professionals in finance and accounting. The first 500 individuals to become CFMs strongly recommend the credential to both professionals and business students. In general, they perceive the program to have provided them with a measure of personal satisfaction as well as greater job mobility and marketability in the future. As stated by one respondent, "I believe this program will help to emphasize the changing role of accounting and accountants. The expanded knowledge base required is representative of the increased demands being placed on accountants and the accounting function."

Lybrand Bronze Medal Winner

We would like to acknowledge the contributions made to this study by the CFMs who responded to our survey and to the IMA, which helped in administering the survey instrument.

Additional information on the CFM program can be obtained by writing to the ICMA, 10 Paragon Drive, Montvale, NJ 07645-1759, or by downloading the information from the IMA website,

Bonita K. Peterson, Ph.D., CMA, CPA, CIA, is assistant professor of accounting, Montana State University-Bozeman College of Business, Bozeman, Mont.

Barbara P. Reider, Ph.D., CMA, CFM, CPA, CIA, is associate professor of accounting, University of Alaska-Anchorage, Anchorage, Alaska.
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Title Annotation:Certified in Financial Management
Author:Peterson, Bonita K.; Reider, Barbara P.
Publication:Strategic Finance
Date:Apr 1, 1999
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