What is the Difference Between a CFO and a CPA?
The terms Chief Financial Officer (CFO) and Certified Public Accountant (CPA) often get used interchangeably. The truth, however, is that there are major differences between a CFO and CPA. Let’s take a closer look at what they are so you can choose the right professional for your the needs at hand.
What is a CFO?
CFOs are individuals who oversee a company’s finances & financial strategy. They monitor financial statements, analyze reports, manage compliance, and develop policies. They are strong leaders with impressive analytical skills and the ability to build positive relationships. While they support companies with both short-term and long-term goals, the primary objective is to drive long-term, sustainable growth.
What is a CPA?
A CPA is a licensed accounting professional who handles a variety of finance and
accounting, auditing,
tax, and compliance tasks. They audit the books of a business, prepare tax documents, advise on tax strategies, serve as litigation consultants in lawsuits, and more. Most CPAs are very analytical and detail-oriented. In addition, they are proficient in various tax and accounting software programs.
Key Differences Between a CFO vs. CPA
Now that we’ve defined a CFO and CPA, let’s dive deeper into how these two professionals are different.
CPAs Manage Tax Strategy
Taxes can be confusing and overwhelming. That’s where CPAs come in. They have the specialized knowledge and training to audit and inspect financial records and prepare tax reports. With a CPA, you can ensure your finances are tax compliant, reduce your tax liability, and manage tax audits in the event they arise.
CFOs Focus on Financial Strategy
While CPAs offer tax services, CFOs allocate their efforts to strategic business planning. Their focus is to make sure your business is performing optimally. They may help you accelerate financial strategy and growth, measure and improve profitability, establish policies and procedures, and maintain relationships with shareholders. Essentially, they provide support with crucial, high-level tasks.
Access to a CFO or CPA is Within Reach
Fortunately, you don’t have to hire a CFO or CPA on a full-time basis. You can opt for a fractional CFO who offers part-time, shared services. In addition, you may choose a CPA that works for you on a part-time or as needed basis. With fractional CFO services and occasional CPA services, you can save a great deal of money while still receiving the expertise your business needs to thrive.
Frequently Asked Questions About CFOs & CPAs
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Can a CPA be a CFO?
Yes, a CPA can be a CFO. Many CFOs have CPA certifications because the CPA designation provides a strong foundation in accounting and financial management. However, a CFO’s role requires broader skills in strategic planning, leadership, and financial strategy beyond the technical expertise of a CPA.
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Is a CPA required to become a CFO?
While a CPA designation is not strictly required to become a CFO, it is highly valued and can provide a significant advantage. Many CFOs have CPA backgrounds because of the strong accounting and financial expertise the certification represents. However, CFOs often have additional qualifications, such as an MBA or experience in corporate finance, to complement their strategic role.
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How do CPAs and CFOs work together?
CPAs and CFOs often work closely together within an organization. The CPA handles the technical aspects of accounting, such as financial reporting, tax compliance, and audits, while the CFO focuses on strategic financial planning, budgeting, and overall financial management. Together, they ensure the financial health of the company and compliance with financial regulations.
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What qualifications are needed to be a CPA vs. a CFO?
To become a CPA, one must pass the CPA exam, meet educational requirements (usually a bachelor’s degree in accounting or finance), and complete a certain amount of professional experience.
To become a CFO, a person typically needs extensive experience in finance or accounting, often complemented by advanced degrees like an MBA, and strong leadership skills. A CPA designation can be an advantage but is not mandatory for a CFO role.
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Can a small business afford a CFO?
Small businesses may not be able to afford a full-time CFO due to the high salary associated with the role. However, many small businesses use fractional or part-time CFO services, where a CFO provides strategic financial guidance on a part-time or project basis, making it more affordable while still benefiting from high-level financial expertise.
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