The better question to ask is when should you need to consider a CFO in conjunction with a CPA for your startup. Scoping a list of finance and accounting responsibilities for both a Certified Public Accountants (CPA) and Chief Financial Officers (CFO) can be overwhelming. So let’s first start with a simple guide to understanding when you need someone in each role.
P is for the past, and F is for the future. Whenever you need to deal with past financials, such as filing an annual tax return, a CPA has you covered. When its future projections and financial strategies your startup needs, the CFO is your ally. Where the CPA is focused on immediacy, compliance & regulatory, the experienced CFO is responsible for the strategic vision and long term view of the company.
The CPA is responsible for industry financial compliance, filing taxes, and external audit. Whereas the CFO is often involved or needs to understand the needs and operational functions of multiple departments within the growing company, operations, marketing, manufacturing, finance, etc.
As a member of the executive team, the CFO is responsible for managing all financial aspects of the business, including advising the startup's Founder/CEO and other executives on how to align the financial strategy to achieve corporate goals. While every CFO is concerned with increasing the wealth of the company and development of assets, the long-term vision may necessitate the costs of a growth strategy for the near future. In this case, it’s up to the CFO to assess how the company will invest in its infrastructure to promote long-term growth rather than short-term profits.
A skilled startup CFO should have a background in corporate finance, understand how to assess financial risk, manage budgets, and develop standards for fiscal performance. As a result, the CFO is also responsible for designing financial systems and ways to chart accounts. The CPA should collaborate with the CFO, providing insight and advice that will guide financial decisions relative to the goals and objectives of the company.
When discussing the role of CPA and CFO, the two functions are different, but not mutually exclusive. According to statistics from Spenser Stuart, the number of CFOs with the CPA certification rose from 29 percent to 45 percent in the ten years following the implementation of Sarbanes-Oxley. Not all Certified Public Accountants (CPA) aspire to manage corporate finances, and one doesn’t necessarily have to be a CPA to be an effective Chief Financial Officer (CFO).
Think your startup is too green to need both a CPA and a CFO? You can outsource a CFO who is a CPA, or CPA and a CFO on a part-time or consulting basis to keep your operation running smoothly. Whether you want a unified CFO-CPA hybrid or not depends mainly on the needs of your organization. Having a CPA available when you need one can keep you out of trouble with the authorities, and a fractional or interim CFO can offer insight into how to help your business grow.