CA and CMA – spotting the difference


One of the biggest accountancy mistakes made by small businesses is that they fail to understand the different job designations. A textbook example of this is with chartered accountants (CAs) and chartered management accountants (CMAs), with companies regularly suffering because they hand the wrong roles to the wrong people.

Both play a key role, and are vital to your company’s bookkeeping and financial direction, but they are not the same thing. Let’s take a look at the two disciplines:

Chartered accountants

In the UK, CAs are concerned primarily with taxes and the legislation that relates to them. The insight they give to business owners will be guided by their knowledge of tax and their recording of the expenses of the business.

CAs are responsible for compiling tax returns, and generally view things on a short-term basis, such as whether the company has the funds available to bridge the gap in its working capital cycle.

Chartered management accountants

The big difference with CMAs is that they have a more hands-on role, and are responsible for such studies as strategic management and management report. They work closely with company directors to establish long-term visions for the business, basing their knowledge on the financial figures they analyse.

While CAs record the ins and outs of businesses, CMAs are tasked with identifying trends, establishing what drove peaks in business and noting any potential problems that may lie ahead. Through close communication with the business owner and the CA, accounts can be maintained in a way that goes beyond simply staying on the right side of HMRC, and can instead be used to make informed business decisions.

Getting the best of both

For this reason, the two roles are very different and should therefore be covered by different people or teams. However, it’s common for businesses to find themselves in a situation where their CA is covering a CMA role, even though he or she might not have the time, qualifications or experience to do so effectively.

One way that companies can fulfil both roles without draining their wage bill is by using outsourced management accountants. Indeed, this will likely prove to be an investment, as it allows in-house accountants to maximise their time on day-to-day bookkeeping while leaving the setting of strategies to a trained team with the time and skills necessary to grow your business.

Since there is rarely a need for an in-house CMA, it suits the business owner and accounts team well that one is just a phone call or email away when needed.