An average person may interchangeably use the different financial job roles like bookkeeper, accountant, financial controller, etc. mostly because of ignorance. The distinction between a bookkeeper, an accountant, a Certified Public Accountant (CPA) or a chartered accountant (CA), a controller and a CFO might not be substantial for the layperson, yet they are as different as different can be. Each role requires specific skillsets and caters to different responsibilities.
We will look at what differentiates each role from the other and how important each role is in the smooth functioning of the business. According to the size of the business, sometimes the roles merge into each other. The job responsibilities of each role are unique to itself.
Bookkeepers handle the accurate maintenance of financial data and provide basic financial reports. They must have basic accounting knowledge for grouping the data correctly. The account payable and account receivable management will be effective only if they do the bookkeeping without fault. A minor error in the data entry will have a ripple effect on various calculations, costing the business time and money to rectify. Bookkeepers must have keen attention to detail and thoroughness in entering the financial data. A good bookkeeping practice is the first crucial step to ensure better financial health for the business.
Accountants are professionals who handle the financial data documentation, prepare financial reports and reconcile the accounts. They have to ensure that these reports, schedules, and invoice reconciliations are time-bound, accurate, and meaningful. The accountants provide their findings for the perusal of the management. The accountants must have analytical and problem-solving skills. They help in the budget allocations of different departments and ensure that the business complies with the tax and government regulations. They ensure the accounting practices are in conformance with GAAP (Generally Accepted Accounting Principles). An accountant sets the tone for the right financial practices. It is possible that the same person might take up the bookkeeping and accounting responsibilities in small businesses. Accountants can take up the role of bookkeepers, but bookkeepers must get the proper educational qualification to become successful accountants.
Certified Public Accountant (CPA) or Chartered Accountant (CA)
Again, every CPA or CA is an accountant, while it is not the case vice versa. For an accountant to be a CPA or CA, they need to complete additional education and testing requirements. This rigorous training and licensing give CPA or CA the fiduciary edge over an accountant. CPAs handle complex accounting issues because of their training. They know the changes in the tax and audit as part of their job demands. The tests enhance the planning, budgeting, costing skills in a CPA. They establish proper accounting practices and ensuring that the business is complying with the financial and tax regulations. They oversee the process and financial audit. So, as the business grows, a CPA or a CA will add to the strength of its financial team.
The controller, as the name suggests, is in a tactical position to ensure compliance with regulations. We can consider them as the financial gatekeepers of the business. They ensure that the financial processes of the organization are well-oiled for smooth functioning. Planning, directing, coordinating, and evaluating the different accounting functions are the important duties of a controller. The financial growth of the business is not the priority of a controller. So, the role of a controller is more needed by big businesses.
Chief Financial Officer (CFO)
CFO or chief financial officer is the right-hand person to the owner or CEO of the business. This is because they act as advisors and strategy developers based on the financial data. A CFO plays a vital role in the growth and future of the business. The CFO can take the duties of a controller, but the focus is on growth and investment. The CFO must be enterprising, outspoken, and collaborative. They are part of the key decision-makers of the business.
A bookkeeper ensures proper entry of financial data. An accountant uses this data for preparing necessary reports for the management and ensure compliance with government regulations. The chartered public accountant or CPA not only ensures compliance but conducts audits to streamline the financial processes. A controller ensures the work is completed on time and keeps the rhythm in place. A CFO is part of the key decision-making team. He knows the pulse of the business.
Every business is unique in its needs. It is in identifying these needs that they can provide the best solution. Diligen has been at the forefront of virtual financial services not only by the expertise but also by the dedication of the team. They realize the importance of prioritizing the needs of clients to give them a delightful experience.