I believe we get good at what we do all day every day. So, a CPA in public practice who spends most of their time doing audits or taxes is not doing CFO work all day every day like a CFO does.
Likewise, CFO’s are not spending their time doing audits and taxes so those are best left to a public accountant. In general, my suggestion is to have a CFO lead your accounting department and a CPA do your audit and tax return. But let me explain.
CPA is a certification for passing a technical accounting exam. It’s not a job description, although it’s generally used to describe an accountant in a public accounting firm. But CPA’s are also in corporate jobs like CFO and controller.
Accountants, whether certified or not, will either work in public accounting for a CPA firm financial statement audits or tax returns or they’ll work for a company as a controller or CFO.
An accountant with financial accounting (especially audit) experience at a public accounting firm is more likely to be hired as a CFO or Controller for a company than are tax accountants because of their training in financial reporting and internal controls.
Private accountants, also known as management or corporate accountants, manage the accounting department of a corporation and become expert at managing cash flow, receivables, payables, inventory, profitability, technology and more. In short, they focus on managing people and processes rather than technical accounting or tax matters on which public accountants focus.
CPA’s, then, are technical experts in the rules of financial reporting or taxes. CFO’s and Controllers are management experts. Public accountants are mostly project based (e.g., audits, reviews, tax returns) versus management accountants who manage and juggle the day to day accounting and finance activities of their company.
Today, there are CFO consulting firms who specialize in CFO and controller duties, leading the accounting departments for their clients. They oversee the books, accounting practices and controls, receivables, payables, payroll, HR and IT. They maintain budgets, manage cash flow, raise capital and do a host of other financial tasks. Because they do this all day every day, they are ideally suited to help early stage or any other companies too small for a full-time CFO. The earlier you engage a CFO the better off your business will be.
If you need help structuring your accounting function, contact me at reb@robertband.com or (305) 467-5909. I’ll evaluate things for you and give you my expert advice.
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This is Robert Band, your business finance expert, helping business owners make their accounting problems go away. Remember, one tip could be worth millions and profits today become fortunes tomorrow so don’t let them fall through the cracks.