When businesses post job openings for CFOs or VPs of Finance, it’s common to see requirements like a CPA designation or several years of accounting experience. This might seem puzzling at first—aren’t finance and accounting entirely different disciplines? Let’s dive into why these qualifications matter and how they shape effective financial leadership.
Finance vs. Accounting: Are They Really That Different?
On the surface, finance and accounting appear to serve distinct purposes. Accounting focuses on tracking and reporting financial data, while finance emphasizes planning and strategy. However, these roles share far more common ground than many realize:
- Attention to Detail: Both demand precision and accuracy.
- Numeracy: Strong math skills are non-negotiable.
- Understanding Financial Statements: A deep knowledge of the balance sheet, income statement, and cash flow statement is critical.
- Business Acumen: Success in either role requires understanding how a company operates and generates value.
These overlapping skills make accounting a natural stepping stone for finance professionals. In fact, many top CFOs began their careers with 3-5 years in public accounting before transitioning to broader finance roles.
Why Accounting Experience Builds Great CFOs
The best CFOs often have an accounting foundation because:
- They’re the Chief Accountant: As the top financial officer, the CFO is responsible for ensuring accurate financial reporting and safeguarding investor capital. This requires a deep understanding of accounting principles.
- Investor Confidence: Boards and investors look for assurance that their funds are managed by someone who grasps the financial fundamentals—not just at a strategic level but operationally too. A CPA designation often serves as a shorthand for accounting competence.
- Risk Mitigation: Losing control of the balance sheet is a leading reason CFOs lose their jobs. Accounting expertise reduces the risk of errors and builds credibility with stakeholders.
Does This Mean All CFOs Must Be Accountants?
Not necessarily. While many successful CFOs have accounting backgrounds, there are other paths to the role. Leaders with strong finance skills can excel as CFOs if they also develop sufficient accounting knowledge to oversee the function effectively. Ultimately, a well-rounded CFO needs both a strategic finance mind and a solid grasp of accounting fundamentals.
Conclusion: Accounting Experience as a Proven Path
The overlap between accounting and finance isn’t coincidental; it’s foundational. Accounting experience equips CFOs with the skills they need to lead with confidence, ensure financial integrity, and meet the high expectations of boards and investors. While it’s not the only path to becoming a CFO, it’s a proven one that has shaped many of the most effective financial leaders.