A:

There is understandable confusion between different financial professionals and their designations. The difference between the functions performed by an accountant and an analyst are subtle. Accountants and analysts are both important members of the financial system.

A Certified Public Accountant (CPA) is a person who has completed the Uniform Certified Public Accountant Examination and who meets his or her state's requirements for membership. This exam is developed and administered by the American Institute of Certified Public Accountants. There are minimum education requirements for a CPA as well.

A Chartered Financial Analyst (CFA) is a person who has completed the requirements of the program set out by the CFA Institute. This includes completing a university degree, completing three six-hour tests and gaining the necessary experience in the investment industry. People with these designations are expected to maintain strict codes of conduct and high standards of ethics and integrity.

A CPA is involved with producing reports that accurately reflect the business dealings of companies and individuals they work for. They are also involved in tax reporting and filing. A CPA can help people and companies choose the best course of action in terms of minimizing taxes and maximizing profitability. A CPA may advise on different forms of business organization and the benefits and advantages of each in different situations. A CPA may choose to specialize in one or more areas. A CPA is also trained to advise clients who have been audited or require reports to be audited.

A CFA is likely to receive and analyze reports produced by an accountant. Public companies produce annual reports that are often prepared by CPAs, and CFAs then make recommendations to clients on how to invest in securities offered by these companies. A CFA is often hired by investment management companies such as mutual funds, hedge funds and private equity firms. A CFA analyzes the growth and profitability of companies as well as their creditworthiness and the amount of debt they carry. A CFA is qualified to perform personal financial planning and wealth management; he or she can advise clients on the best investments to make for individual situations by analyzing goals and risk tolerance as well as considering different type of tax-advantaged investment plans such as Individual Retirement Accounts (IRAs) and Roth IRAs.

Different financial analysts provide consensus analyst estimate forecasts regarding the numbers reported in publicly traded companies' quarterly and annual reports. When many financial analysts give forecasts for one data point, a CFA can then calculate an analyst consensus estimate. These consensus estimates are widely followed by clients and companies alike. It is interesting that financial forecasts are usually made by CFAs, whereas the financial reports that they use as the basis for their forecasts are typically produced and audited by CPAs.

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