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Firm Announcements
Joe Pivinski, as CFO of Greenbelt Resources Corporation (Website) has led a team which successfully completed a multi-year audit and filed a $16.0 Million common stock offering under Regulation A with Securities & Exchange Commission.
September 2016
Please join us on September 1, 2016 as we sponsor the 2016 Marcum Florida Construction Summit. This event is being heldat the Seminole Hard Rock Hotel & Casino, 1 Seminole Way, Hollywood, FL 33314. The summit includes lunch at 12 noon and a reception following the afternoon agenda. For more details
Join Nperspective as we sponsor the next CEO Leadership Forum event " Your valuation benchmark and beyond!" at Valencia college West Campus 1800 S. Kirkman Road, Building 11, Room 106, Orlando, FL 32811 on Tuesday, September 27, 2016 - 8:00 AM-12:30 PM. For more details click here
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August 2016
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CFO vs. CPA vs. Controller
Keith Blackman, CPA - Principal
Oftentimes, as CFO and Strategic Consultants, we encounter the following responses from prospective clients: "I already have a CPA, why do I need you?" or "What can you provide that my CPA doesn't?" or "I have a Controller, do I need a CFO also?". We know, therefore, that there is some confusion out there as to the differences between an outsourced CFO and a CPA, and even sometimes, the differences between a CFO and a Controller.
The Role of the CFO
As most people already know, CFO stands for Chief Financial Officer. As with any other "C" title, CFO, like CEO (Chief Executive Officer), CIO (Chief Information Officer) or CMO (Chief Marketing Officer), for example, the key words are "chief" and "officer". This means that the respective individual is an officer of the organization and as chief is the head of a particular function within the organization. Therefore, as head of the finance function within the organization, the CFO has full oversight for all aspects of that function and its successful integration within the organization as a whole.
The finance function encompasses all accounting, treasury, risk management, strategic planning, external relationships and other related activities. The chart below gives a snapshot of the finance function, but it goes much deeper than that and of course, as indicated, it is much more than just accounting or financial reporting.
This is all to delineate the importance of the role of the CFO to the success of an organization, regardless of company size or industry type. In fact, it can be argued that smaller companies in growth mode have an even more critical need for the services of a CFO than larger, more mature companies do, especially for managing and coordinating planning, risk management and treasury activities - factors that have proven to be vital to the success and growth of any organization. Since these companies may have neither the financial resources nor the need for a full-time CFO, they can more efficiently and cost-effectively be serviced by a part-time CFO.
It is important to note also that as head of the finance function the CFO is the strategic partner or "right-hand person" to the CEO or business owner. He or she helps the owner/president of the company set the strategic course and assists with guiding the ship through whatever turbulent waters might be encountered in pursuit of its goals.
More importantly, the CFO translates the conceptual strategic goals of the organization into financial terms. It is great to want to achieve 30% revenue growth for each of the next 3 years for example, but is that goal realistic? In order to get it done, what financial and other resources would be needed by the organization? The CFO would also analyze the extent and timing of cash flows related to following a particular strategy and its overall financial impact to the organization as a whole. He or she has a fiduciary responsibility to ensure that the organization is always pursuing a strategic path that offers the most value and the highest return to its owners.
This is all to delineate the importance of the role of the CFO to the success of an organization, regardless of company size or industry type. In fact, it can be argued that smaller companies in growth mode have an even more critical need for the services of a CFO than larger, more mature companies do, especially for managing and coordinating planning, risk management and treasury activities - factors that have proven to be vital to the success and growth of any organization. Since these companies may have neither the financial resources nor the need for a full-time CFO, they can more efficiently and cost-effectively be serviced by a part-time CFO.
CPA Explained
CPA is an acronym meaning Certified Public Accountant, and is a professional designation attained by accountants who have achieved a certain combined level of education, experience and training along with passing the uniform CPA exam. Although obtaining the CPA designation is not necessarily a requirement for becoming a CFO, many CFOs and others in the finance field who have come through the accounting ranks have indeed attained the CPA designation. However, "being a CPA" usually connotes a different meaning and a role clearly more restrictive than that of a CFO.
CPAs and CPA firms may be more concerned with providing an organization with tax and assurance services. The latter includes audits, reviews and compilations of financial statements, which can only be performed by CPAs following strict guidelines and rules, while the former relates to tax preparation, filing and planning. Incidentally, only CPAs, Attorneys, and Enrolled Agents can represent clients in IRS-related matters.
While many CPA firms also offer strategic and other consulting services, they are bound by conflict-of-interest and independence issues prohibiting them from offering these services in conjunction with some of the aforementioned ones. Moreover, the CPA designation in and of itself in no way implies that the individual has attained the CFO-level type of experience that would allow them to proffer such services to the corporate world.
The Limitations of a Controller
Controllers, too, may also be CPAs. In fact, since the controllership function is more closely related to accounting matters, it is often required that controllers be CPAs. Consequently, in very many cases Controllers are plucked from the assurance ranks as experienced auditors have proven to very effective in performance of controllership duties. Their experience with financial statement preparation and analysis, for example, is clearly a beneficial skill-set in this role.
Nonetheless, controllers are not often tasked with strategic roles or asked to be fiscal visionaries and as a result, do not always have the broader experience to perform effectively at the CFO level.
Conclusion
The conclusion, therefore, is that while a CFO may be a CPA and may also have been a Controller at some point, the role demands a much broader perspective and knowledge base than that of the other two. This more extensive experience level requirement is necessary for the individual to be effective and to be able to add value to the organization.
Additionally, since the CFO role entails more than just accounting or tax, an in-house CFO can ascend from any of the other disciplines that make up the gist of the CFO role, from treasury to risk management to Financial Planning and Analysis or such. This renders experienced CFOs ideally suited to partner with small and medium-sized entities in helping them grow their businesses in an efficient, controlled manner.
Follow-up
If your company or one of your clients may benefit by our experience and knowledge, or for a complimentary consultation please contact us:
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About Nperspective
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Nperspective provides interim, part-time, and project CFO and Strategic Services using a flexible engagement model that is dependent on our clients' unique business needs. Our partners are seasoned CFOs who focus on rolling up their sleeves, are accommodating to client needs and helping create significant value from within their finance organizations.
Contact us at [email protected] for more information.
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