Chief accounting officer vs chief financial officer

One of the biggest C-suite trends over the last decade has been the evolution of the chief financial officer (CFO) into more of a strategic manager, which begs the question of who on the executive team devotes their time to overseeing the financial reporting.

Table of Contents Show

CAOs vs. CFOs
Essential skills chief accounting officers need
CAO Education Requirements
Does Chief Accounting Officer report to CFO?
What is the difference between financial officer and accounting officer?
Who is higher chief accountant or finance manager?
Is a chief financial officer and accountant?

A recent study by Tippie College of Business Assistant Professor Adrienne Rhodes and her co-author, Dan Russomanno of the University of Arizona, finds that many firms elevate a chief accounting officer (CAO) or controller to the executive officer team. Overall, this has been beneficial for firms that have made the change, as those that elevate their CAO to an executive officer position tend to produce more reliable financial statements than firms with a chief financial officer only. Firms with this reporting structure see a 14% decrease in the likelihood of a restatement than firms that have only a CFO, and the longer the CAO is in place, the less likely a firm
will need to restate its earnings.

Rhodes and her co-author tracked the executive officers in Form 10-K or proxy statement filings of public firms between 2000 and 2016, some with CAOs, others with only CFOs. They found other benefits for those with CAOs or equivalent positions: they made fewer accrual estimation errors and unsigned total current accruals, and corrected material weaknesses in internal control more quickly.

They also found firms are most likely to benefit from a CAO at the executive officer level when there is more pressure on executives’ time and attention, such as those with more segments and subsidiaries, and with more foreign transactions. Since the CFO in many
firms has evolved into a position focused more on strategic matters and firm management, a CAO is able to give financial reporting the time and attention that a CFO may no longer have time for.

Since restatements are often seen as signs of sloppy management, they can lead to lower stock prices or greater attention from regulators that will lower the firm’s value. Rhodes says elevating the CAO to an executive officer position also has a kind of symbolism that could build trust and firm value.

“The presence of a CAO may represent a firm strategy to signal high financial reporting quality to the market, and the increased reliability of reporting from a firm with a CAO may be driven by this commitment,” she said.

Seeking a master’s degree in accounting is one way for professionals to prepare for the more leadership-intensive positions at the head of accounting departments, jobs that demand ironclad knowledge of the field’s concepts and intrapersonal skills to keep team members on the right track.

A chief accounting officer, sometimes called a corporate controller, is the top of the accounting leadership pyramid. A person with this executive-level position holds final responsibility for organizational bookkeeping, regulatory compliance and other essentials. This individual works closely with the chief financial officer and has direct authority over the rest of the accounting workforce.

CAOs vs. CFOs

Those considering the path of a chief accounting officer are likely to be curious about the differences between that role and that of a chief financial officer. The difference is less stark than you would think, according to ZipRecruiter. A chief accounting officer is the operations manager in charge of accounting for an organization. CAOs are responsible for overseeing all accounting functions, making sure reporting and bookkeeping is accurate and in compliance with federal regulations laid out by the Securities and Exchange Commission. CAOs direct and implement all accounting-related practices for a company.

A chief financial officer, on the other hand, is responsible for all aspects of an organization’s finances. A CFO sets the company’s budgets and financial goals. Often reporting directly to the CEO, it is the CFO’s job to ensure that undertakings have the funds they need and to advise their fellow executives about the financial impact certain measures will have. Any individual involved in an aspect of finance is likely to report to the CFO. Management of an organization’s treasury and all financial policy-making decisions come from the CFO’s desk; the CFO oversees the company’s ledger and financial controls. In a way, a CAO could be considered a more focused and specialized version of a CFO.

Essential skills chief accounting officers need

The role of CAO brings with it a large set of responsibilities, and therefore requires a robust set of skills. These abilities combine a solid grasp of all the accounting functions they’ll be overseeing — from tax law to effective budgeting and financial statement preparation. CAOs manage all of an organization’s accounting operations. They must delegate and make effective use of a department’s worth of personnel, and they should also have the soft skills needed to keep others on task.

Because chief accounting officers will be in charge of directing bookkeeping operations and making sure reports are accurate, education in accounting is an obvious must-have. Years of experience in other accounting roles are usually necessary to be considered for a CAO role. Since organizational leaders will be trusting their CAOs to take charge of their teams’ professional development, they’ll likely focus on candidates who have proven track records of excellent day-to-day work in this capacity.

Chief accounting officers are in charge of making sure a company’s accounting practices comply with federal law. As a result, companies won’t hand over the reins of this high-level oversight responsibility to individuals who don’t have a solid understanding of the accounting world. Seeking a master’s degree in accounting is a way to focus on highly relevant and in-demand skills and competencies. Taking such courses online allows students to build up credits while remaining employed in their present roles, building professional experience hiring managers may notice.

CAO Career

The latest data from PayScale lists the average salary of a CAO as $156,181. This figure is even higher than that of the CFO, which comes in at $127,544. The specialized knowledge required to become a chief accounting officer comes from long experience in other accounting roles or specialized education.

Professionals who rise to the CAO role need to be ready to meticulously oversee important tasks as their day-to-day routine. The following areas fall under the direct purview of the CAO:

Financial statements: Are the company’s statements correct, complete, and in compliance with all relevant laws? As the head of the accounting department, the final responsibility for these statements rests with the CAO.
Payroll management: Accurate, timely, and effective payroll management is one of the CAO’s priorities.
Budgeting: While the CAO may not have the last word on financial strategy, he or she has an important voice in dealing with budgetary matters, determining effective uses of funds.
Tax compliance: Both federal and state tax filings go through the accounting department. The CAO must maintain the records that enable accurate taxes.

CAO Education Requirements

What does it take to seek a Master of Accounting degree and aim for a high-ranking role in the financial department? Prospective students may be surprised to learn that they don’t need to have a bachelor’s degree from a four-year college in accounting to apply. Programs such as the University of Alabama at Birmingham Accounting Bridge Program are designed to give students from other backgrounds the technical accounting grounding they need to enter a master’s program.

Today’s online master’s programs are designed to help working professionals study for a degree, allowing them to move quickly toward a credential with all the weight of an in-person degree. Enrolling in such a program is an exciting opportunity for professionals with CAO aspirations. Check out the University of Alabama at Birmingham’s Collat School of Business to learn more about seeking a Master of Accounting degree.

Does Chief Accounting Officer report to CFO?

The CAO is the second-highest ranking finance professional in an organization, reporting to and working directly with the CFO. As the role of CFO has become more demanding, CAOs oversee the tactical and operational tasks that CFOs once dominated.

What is the difference between financial officer and accounting officer?

The main difference between them is that those who work in finance typically focus on planning and directing the financial transactions for an organization, while those who work in accounting focus on recording and reporting on those transactions.

Who is higher chief accountant or finance manager?

The chief financial officer (CFO) sits at the top of the accounting department organizational structure and is the overall head of the finance department.

Is a chief financial officer and accountant?

Generally, no, a CFO is not the same as an accountant. Accountants handle bookkeeping tasks and tax filings. Meanwhile, a CFO focuses on the company's financial future, creating forecasts.