The Biggest Questions in Accounting Answered: Accounting Roles Explained

I get asked these questions all the time: “What is the difference between a CFO and a Controller?” and “When do I need a Senior Accountant versus a Bookkeeper?” Today, I’m going to answer both as I explain the broader framework around accounting roles and responsibilities across the industry. 

A team of accountants – which is right for your business?

​The role you need depends on your business needs, so let’s look at common business triggers that most likely require needing the next level of financial role, and what kind of activities and responsibilities each role typically includes. We’ll start with bookkeeper and work our way up to Chief Financial Officer (CFO). 

Bookkeeper
If you’re starting up your business or you’re tapped out on trying to do your own accounting for your small business, you likely need a Bookkeeper!

If you’re starting a new business or have an existing business and you’ve outgrown using your bank account and spreadsheets to track your financial transactions, then it’s time to hire a bookkeeper.  Most likely you would start with a fractional bookkeeper (not full time), paired with a CPA Firm that can advise on taxes and recording more complex transactions such as debt and equity. Your financial transactions should be reviewed by your CPA Firm, an owner, or a fractional Controller or CFO.  A bookkeeper often has an AA degree or less. 

A Bookkeeper will typically handle the following:

• Recording Day-to-Day Transactions: A bookkeeper focuses on recording daily routine financial transactions into the accounting system such as customer sales and receipts (accounts receivable), purchases and supplier and vendor payments (accounts payable), and employee payments (payroll) into the organization's accounting system. They ensure that all financial data is accurately entered and classified into appropriate accounts, typically using QuickBooks, Xero, or a similar basic accounting software system.
• Bank Reconciliation: They reconcile bank statements with the organization's financial records to identify any discrepancies.
• Running Reports: They may generate basic cash basis financial reports such as trial balances, income statements, and balance sheets.

Accountant
If your business is growing in size and complexity, and your bank or investors are asking for more than a P&L statement, you likely need a degreed Accountant, Staff to Senior Level.

When your business is growing and your bank or your investors want financial statements that are GAAP (Generally Accepted Accounting Principles) compliant financials instead of cash basis financials, you will need an accountant. However, an Accountant still needs oversight and guidance, and their work needs to be reviewed by another qualified person if the financials are being sent to an external user. The qualified reviewer may be an owner, a fractional or full-time Controller or CFO depending on your size, or possibly a CPA Firm.  An Accountant has a BA degree in accounting and may have a CPA.

The difference between Staff and Senior accountants is typically the number of years of experience – often an accountant will move up from Staff to Senior accountant over time, or it may also mean a promotion to Senior accountant once a BA degree or CPA is earned. 

In addition to the above, an accountant can provide the following:

• Monthly GAAP Financials: Develop and follow monthly close processes including reconciliation of accounts from Cash to GAAP basis. 
• Complex Transactions: Accountants handle more complex financial transactions, such as adjustments, accruals, and depreciation.  Depending on their experience level, an accountant may be able to produce financial reports such as a Balance Sheet, and Cash Flow Statement.
• Consolidation:  Consolidating multiple locations or entities requires knowledge of things such as intercompany transactions that need to be eliminated.  An Accountant will likely be able to assist with this, depending on their experience level.
• Mentoring: An Accountant may also provide guidance and mentorship to less experienced staff, including bookkeepers and beginner accountants.
• Process Documentation & Improvement:  They may be involved in identifying process improvements within the accounting department and helping to implement them.
• Cross-Functional Collaboration: Depending on the organization's size, they could collaborate with other departments or teams to provide financial insights and information.

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In summary, bookkeepers primarily focus on recording transactions and maintaining accurate financial records, whereas accountants have a broader role that includes analyzing data, preparing complex reports, providing insights, and supporting decision-making. The distinction between the two roles lies in the level of responsibility, analysis, and expertise required.

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Accounting Manager
If with your growth, you are hiring more people to process a high volume of transactions and need someone to oversee the team, then you likely need an Accounting Manager!

When you have more than two to three people in accounting processing your transactions, they likely need oversight and guidance. An Accounting manager oversees multiple accountants and bookkeepers.  There are two types of Accounting Managers:

1. The non-degreed, former bookkeeper who has good people-management skills and has worked their way up to a reviewing/managing role in a high-volume business.
2. The degreed Accounting Manager who is on a career path to Controller+ and excels in reviewing/managing but also handles more complex work than people below them.

An Accounting Manager is a go-to person for the business owner. They know more, at a higher level, than the other accountants on the team.

An Accounting Manager will typically handle the following:

• Day-to-Day Operations: Accounting Managers oversee the day-to-day operations of the accounting department. They manage accountants and bookkeepers and ensure tasks are completed accurately and on time.
• Task Delegation: They assign responsibilities to the accounting team, monitor progress, and ensure that deadlines are met.
• Staff Development: Accounting Managers provide coaching, training, and performance feedback to their team members, helping them grow professionally.
• Problem Resolution: They address issues that arise in day-to-day accounting operations and work to resolve discrepancies or errors.
• Reporting: While not as high-level as the Controller's financial reporting, Accounting Managers may prepare reports for internal use.

Controller
If your business is very complex, operating in multiple states, multiple entities, multiple lines of business and you need someone to oversee your growing accounting department and manage risk, then you likely need a Controller!

Because your business is becoming more complex, your accounting, reporting, tax and compliance needs are as well. The bank or investors may want more oversight of your accounting.  At this point, you should be working with a solid CPA firm on tax strategy and compliance, as well performing an audit or compliance review which may be required by your bank or investors. Internal controls as well as formalized processes and procedures become more important at this stage, which means you may need a Controller to supervise and lead your accounting team and help with these more complex needs.   

If you’re a very large company, you may need a Controller.  If you’re a smaller business that needs someone with a title higher than Controller, you might change the title to Director of Finance or Director of Accounting. Controllers often have a BA and CPA and may have started their career in a CPA firm. 
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A Controller will typically handle the following:

• Financial Operations: The Controller is responsible for managing the day-to-day financial operations of the organization. They oversee accounting and financial reporting.
• Financial Reporting: Controllers ensure accurate and timely financial reporting in compliance with accounting standards and regulations. They prepare financial statements and provide them to internal and external stakeholders.
• Internal Controls: Controllers establish and maintain internal controls to safeguard assets, prevent fraud, and ensure the accuracy of financial data.
• Process Improvement: Controllers often identify opportunities to streamline processes and improve efficiency within the accounting department.
• Audit and Tax Compliance: They work closely with a CPA firm to ensure the organization adheres to relevant financial regulations, tax laws, and reporting requirements, as well as managing financial audits to provide necessary documentation and address any audit findings.
• Budgeting: Controllers often play a role in the budgeting process, ensuring that budgets align with the organization's financial goals and constraints.
• Financial Analysis: While CFOs focus on strategic financial analysis, Controllers may also engage in financial analysis to support decision-making and provide insights to management.
• Collaboration: They collaborate with other departments, such as finance, treasury, and operations, to ensure accurate financial data exchange and reporting.

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In summary, the Controller role is often more focused on assisting with the overall financial management and control of the organization, while the Accounting Manager's role is more hands-on, involving direct oversight of the accounting team and the daily accounting processes. Both roles contribute to the accurate and efficient operation of the accounting department. The specific responsibilities and scope of these roles can vary based on the organization's size, structure, and industry.

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​Chief Financial Officer (CFO)
If your business is very complex, operating in multiple states, multiple entities, multiple lines of business and you need someone to help you strategize and plan for the future, then you likely need a CFO!

A CFO is integral when you have a solid accounting team that is handling everything, but you need someone in your court to bounce ideas off, strategize about the future of your business and operations, or maybe help you decide if merging, acquiring or selling your business is a good idea. Most often a CFO will have started their career in public accounting and moved into a Controller role, and then will have been mentored by a CFO who may be retiring or leaving and take over as a new CFO.  

A CFO will typically handle the following:

• Strategic Leadership: The CFO is a high-level executive responsible for leading the organization's overall financial strategy. They work closely with other executives to align financial goals with the organization's strategic objectives.
• Strategic Planning and Analysis: CFOs are heavily involved in financial forecasting, budgeting, and long-term financial planning. They provide insights and recommendations to the organization to guide financial decisions.
• Investor Relations: CFOs often interact with shareholders, investors, analysts, and the financial community to communicate the company's financial performance and future prospects.
• Capital Management: They manage the organization's capital structure, including decisions about raising funds through equity or debt, and assess the best ways to allocate resources for growth.
• Risk Management: CFOs play a role in identifying and managing financial risks, including market risks, regulatory compliance, and other factors that could impact the organization's financial health.
• Mergers and Acquisitions: CFOs may be involved in evaluating potential mergers, acquisitions, or divestitures, assessing the financial implications and potential synergies.
• Strategic Partnerships: They collaborate with external partners, such as banks and financial institutions, to secure funding, manage relationships, and negotiate favorable terms.
• Coaching & Mentoring: They provide guidance to the accounting team to help them grow, develop and learn. 

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In summary, while both the CFO and Controller have key financial responsibilities, the role of the CFO is more strategic, focusing on shaping the organization's financial direction and interacting with stakeholders, while the Controller's role is more operational, ensuring accuracy, compliance, and effective financial management on a day-to-day basis.

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Keep in mind that with all these positions you can always start with someone fractionally or part time and develop that role into a full-time position as your business grows. If you need bookkeeping services or a part-time accountant, The ASP Team has a team of experienced accountants to help. On the management side of things, if you need a fractional controller or consulting CFO, the CFO Selections team has extensive experience to offer. Both companies offer the customized accounting and finance solutions needed to meet your business where it is at any stage and help it grow to the next level.
 
About the Author
Jen Girard

​At CFO Selections, Jen focuses on helping businesses succeed and grow by matching each company’s unique financial needs with the right resources and solutions.
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Jen has more than 25 years of professional services experience focused primarily on consulting, client service, engagement management, and talent acquisition.  She has served clients ranging from startups to those in extensive growth stages, and those experiencing M&A transactions. Her industry focus has included technology, real estate, construction, transportation, manufacturing, and distribution.  

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