Getting the Right Kind of Professional Financial Help

Below is a recent conversation I had with one of our long-term, entrepreneurial clients:

Jane, the Client: So, one of my friends has just found out that the individual managing the finance and accounting operation for her organization made a number of pretty significant oversights.  She asked me for a little advice.

Robin: Hey Jane! Sorry to hear about your colleague’s experience. I hope it wasn’t too difficult to unwind and repair.

Jane: Well, it is going to require a good bit to repair the tax liens for missed payroll, the incorrectly prepared accounting records that are confusing and my friend can’t read them.  My friend said to me…overall, John is a great accountant, so I just don’t get how all these things happened.  And, if they were such a great accountant, wouldn’t they be a CPA?

Robin: I couldn’t agree more! The right person for the right seat.  It can be very costly for organizations that choose to not build in proper supervision of the accounting function.  The most qualified accountant is likely to be one that has their CPA (Certified Professional Accountant) credential, and not every accountant has that certification, nor are they required to. While it may not seem like a lot, those three letters can represent the difference between accounting oversights and smooth sailing.  Let your friend know they are welcome to call me if they have a few questions.

Accounting Roles Within An Organization

When I speak to prospective clients, there is often a lack of understanding of the various accounting functions, especially the vast difference between the Accounting Clerk role, the importance of obtaining a CPA credential, and further, the Chief Financial Officer (CFO) role. Without the understanding of the various roles within the accounting functions, an organization won’t know when the time is right to obtain assistance from a more senior CFO role versus the accounting clerk (or bookkeeper).

The primary accounting functions required for most small businesses include a senior financial role, usually provided by an accountant who can work without any supervision. Compared to your everyday run-of-the-mill accountants, Certified Public Accountants (CPAs) have additional education and have fulfilled stringent requirements in order to be licensed by the state. A CPA exists to provide the supervision a business needs.. 

They also have continuing education requirements that keep them up to date on the latest regulations and must adhere to specific ethical requirements. CPAs review a company’s financial records on a quarterly or annual basis and give management a big-picture perspective. They are the only ones who can perform audits for publicly held businesses. CPA duties can include: 

  •       Tax advice and tax planning
  •       Financial projections for the business’s future
  •       Oversight and recommendations regarding company spending

CFOs and CPAs aren’t interchangeable, although both perform essential functions in running a successful company.  A CFO uses industry knowledge, experience, and tactics to focus on planning and executing an all-encompassing growth strategy. They serve as more of a visionary for your business, pursuing its long-term success.

On the other hand, small business accountants usually focus on shorter-term tactical actions that improve current results. They primarily find and correct inefficiencies and mistakes that have a near-term effect on the business, rarely focusing on a long-term perspective.

Although CFOs don’t need to be licensed as CPAs, that credential ensures that a CFO has in-depth financial expertise. Many CFOs also hold the CGMA (Chartered Global Management Accountant) designation–which is granted after a participant completes a course of financial leadership study and passes a rigorous exam. CGMA helps finance professionals become strategic business partners and advisers to other departments in the business.

If you think you might need the help of a financial professional, contact KBS CFO