Differences Between: Accountant vs. Controller vs. CFO
By Space Coast Daily // August 24, 2022
An organization’s size and lifecycle offer multiple options for managing economic operations. Finance is the most crucial component of a firm’s operations as it forms the nerves supplying blood and life to the entire organization.
Thus, every company needs a dedicated accounting and finance department to take care of this element. Accounting services enable firms to manage incoming and outgoing cash flow, maintain complete and accurate records, and present this information to stakeholders through financial statements and documents.
The accounting and finance department works collaboratively to optimize financial performance, management, and guidance for the future.
Several roles- internal and external, help with daily reporting and strategic advisory. Structuring financial operations will depend on the firm’s goals, resources, human staff, and expertise.
The ultimate goal of accounting and bookkeeping is to ensure compliance, complete and accurate records, and financial intelligence. It leads to dependable month-end close, management reports, and KPIs. Such information renders deep insights into the business and allows for informed strategic decisions.
Accomplishing the accounting goals require professional expertise to handle the operations. Various roles open up in this sector to manage these activities.
However, businesses may get confused about which to keep based on their needs, size, and lifecycle. Let us cover the three accounting professional roles- accountants, CFOs, and controllers to understand their differences and analyze their impact on a firm’s performance.
Accountant vs Controller vs CFO
Although all these titles manage financial accounting services, their responsibilities and duties may differ. Thus, understanding their differences is critical to ensure seamless performance.
The financial management operations involve bookkeeping, accounting, financial statement preparations, reporting, budgeting, forecasting, management accounting, strategic advisory, etc. These activities become the core for reaching the firm’s goals and making informed decisions.
Let us look into each role one by one:
An accountant interprets, analyses and communicates financial information to stakeholders. They conduct auditing and ensure complete and accurate calculation and recording of financial information.
Depending on an organization’s size or needs, these professionals may undertake bookkeeping activities like gathering, recording, and managing routine transactions. However, their experience and qualifications are higher than a bookkeeper as they undertake a four-year college degree.
Certified Public Accountants (CPAs) are different from regular accountants. They pass additional education, examinations, and requirements to achieve this designation. The accountants manage administrative roles like overseeing the bookkeeper, performing billing, making general ledger entries, reviewing accounts payables, and reconciling accounts.
They are free to open their practice, work in an internal accounting department of an organization, or get employed in an accounting firm. Accountants bag a mid-level position, meaning they report to accounting managers, company controllers, or financial directors.
Accountants are the front-line people for data and numbers management. They ensure complete accounts and periodic reconciliation to maintain accuracy and compliance. Accounting principles like matching, revenue recognition, and GAAP form a critical part of their supervision.
These professionals do not undertake budgeting, forecasting, and strategic decision-making. Instead, they focus on accounts management, reconciliation, month and year-end closing, and accurate, timely, and whole financial statements.
The various accounting responsibilities of an accountant include:
■ Preparing journal entries and general ledger
■ Closing books at month-end
■ Reconciling and preparing financial statements
■ Monthly financial reporting and accounts analysis
■ Year-end closings
■ Receivables and payables assistance
■ Tax computations and returns filing
■ Payroll administration, budgeting, and forecasting
■ Processing expense reports
■ Audit process preparation and coordination
■ Implementing and maintaining internal financial controls and procedures
Controllers oversee the bookkeepers, tax managers, credit managers, and other accounting staff and then report directly to the CFO, CEO, or owner. These professionals control the cash flow movement- keeping tabs on where the money comes from or goes.
They are responsible for accurate financial statements, balance sheets, complete and reconciled records, presentation to appropriate stakeholders, and timely budget creation.
Controllers should create a month-end closing schedule and communicate the roles and responsibilities to personnel. They should define everything clearly to ensure an uninterrupted workflow.
After the data gets processed, these professionals verify the completeness, accuracy, and viability of financial statements. Since companies must adhere to government regulations and accounting principles, controllers ensure compliance, risk management, and cash optimization.
Controllers undertake the following responsibilities:
■ Cash flow monitoring and controlling
■ Protecting assets by establishing, monitoring, and enforcing policies and procedures
■ Creating and completing financial reporting systems
■ Undertaking audits to confirm the firm’s current financial condition and communicating to stakeholders
■ Overseeing payroll, reconciliation, payables, and receivables
■ Adherence to the regulations
■ Managing financial staff- recruitment, selection, and training
2. CFO (Chief Financial Officer):
CFOs differ from accountants and controllers as they do not undertake administrative accounting and bookkeeping functions. Instead, they guide the company in the right direction for long-term prosperity and sustainability.
These experts analyze the holistic view for a long-term financial picture and pave the way to a thriving company. CFOs are forward-looking but may perform controller duties if necessary.
Unlike accounting services, these specialists oversee investments, capital structures, debt-equity leveraging, etc. They handle the current and future financial performance and position of the organization, and excellent CFOs can detect a firm’s strengths, weaknesses, threats, and opportunities and capitalize wisely. It requires them to conduct forecasting and modeling through scenario analysis and other options, thus developing successful strategies.
While small firms require CFOs for strategic advice and scalability, large companies need them for capital investments and strengthening investor relations. Thus, their responsibilities become as follows:
■ Investment in capital opportunities
■ Communication with financial institutions
■ Advisory on strategic routes
■ Analyzing financial indicators
■ Establishing financial, taxation, or risk strategies
■ Strategizing for mergers and acquisitions
■ Management reports interpretation
Although small firms may deny the significance of a CFO, these professionals can be invaluable in attaining scalability.
The accounting and finance department works efficiently with numerous experts handling specific activities for the business. When a firm is young, it may have one or two personnel undertaking all these responsibilities.
However, as the business size increases, they may hire employees to cater to each role dedicatedly and provide maximum benefits. Thus, the distinction between the three positions may be clearer in large-scale organizations than in small businesses.