CFO and CPA – Complementary, Not Competing
I speak to a lot of small business owners, and there seems to be a great deal of confusion about the differences between a Chief Financial Officer’s (CFO’s) job functions compared to those of a Certified Public Accountant (CPA). Companies hire CPAs for bookkeeping activities and the preparation of business tax returns. While it might sound logical that a CPA could offer larger-scale, strategic financial advice, there is a misconception about the depth and breadth a CPA can provide. A CPA’s education and experience is geared toward providing tax advice, looking at historical data and using that data to compile a multitude of financial statements. A CFO’s primary function is the exact opposite. They are invested in looking forward, primarily from a strategic point of view, planning, forecasting, and budgeting based on the financial statements that a CPA has put together.
Companies that utilize a CPA and a CFO have both ends of the spectrum covered. While a CPA’s responsibilities revolve around compiling past data, a CFO has overall responsibility for the financial well-being of the future of the business. A CFO typically is part of the executive team and focuses on the future strategies needed to achieve the business plan. They understand how to assess financial risk, manage budgets, and develop standards for fiscal performance for the company. They are focused on all operations and advise the CEO/Owner and other executives how to align their financial strategy to meet business goals. CFOs implement systems and processes, develop key performance indicators both operationally and financially, develop and implement financial planning, and manage cash to ensure smooth operations and business growth.
Growing a small business requires both of these roles to facilitate collaboration and establish a connection between past activities and future strategy. Below is a comparison chart of their different roles.
As you look at your own company, ask yourself if you have both of these roles adequately covered. If you thought that the strategic portion of your business should rest on your CPA’s shoulders, perhaps it’s time to think again.