Is it necessary for a finance Manager (CFO) to understand Accounting if the firm has a professional accountant (CPA)on staff? Why or Why not?

Yes, it is necessary for a finance manager, such as a Chief Financial Officer (CFO), to understand accounting even if the firm has a professional accountant, such as a Certified Public Accountant (CPA) on staff.

Here's why:

1. Decision making: As a finance manager, the CFO is responsible for making critical financial decisions that can directly impact the overall financial health of the firm. Understanding accounting enables the CFO to analyze financial information accurately, evaluate different financial scenarios, and make well-informed decisions that align with the company's goals.

2. Communication: The CFO often interacts with various stakeholders, including investors, board members, and other executives. Accounting is the universal language of business, and having a thorough understanding of accounting allows the CFO to effectively communicate financial results, forecasts, and strategies to these stakeholders. This facilitates better decision-making and collaboration.

3. Controls and Compliance: Accounting principles and regulations govern financial reporting and control systems. It is crucial for the CFO to understand these principles to ensure proper financial controls and compliance with regulatory requirements. By being knowledgeable in accounting, the CFO can review financial statements, identify potential risks, and implement appropriate internal controls to safeguard the company's assets.

4. Strategic Planning: A CFO contributes to the company's strategic planning process, which involves setting long-term financial goals, identifying growth opportunities, and allocating resources efficiently. Understanding accounting helps the CFO evaluate the financial feasibility of different strategic options, assess the financial impact of investments, and develop realistic financial plans to achieve company objectives.

5. Collaboration with Accountants: While having a professional accountant, such as a CPA, on staff is valuable, the CFO's understanding of accounting allows for effective collaboration. By comprehending accounting concepts, the CFO can provide guidance and direction to the accounting team, ensure the accuracy and integrity of financial records, and address any complex accounting issues that may arise.

In summary, the CFO's understanding of accounting is essential because it enables effective decision making, facilitates communication with stakeholders, ensures controls and compliance, supports strategic planning, and enhances collaboration with the accounting team. While having a CPA on staff provides specialized expertise, the CFO's accounting knowledge is critical in fulfilling their role effectively.