The controversy is back.
Should Chief Financial Officers be required to hold a CPA designation, or not?
It began with a guest post on the FEI blog, with a couple of nightmares, I mean examples, of companies with non-CPA CFOs at the helm, and continued on through the comment section. This has also been a hot topic in Proformative, too.
Non-CPA CFOs say it doesn’t matter, shouldn’t matter because they can still do the job, and companies just don’t understand that fact. Companies “glorify” that piece of paper. What they fail to understand is that it’s not about them. It is about what corporate leadership has decided is right for the company.
The other argument is that CPAs are bean counters and not strategic leaders. I couldn’t disagree more. Many more of my clients began in accounting, secured their CPA, and have gone on to holding a seat at the executive table as strategic leaders.
Statistics from Spencer Stuart support what I see. The number of CPA CFOs has risen from 29% to 45% since 2003. Simultaneously, bean counting is out; driving strategic vision is in high demand. The two are not mutually exclusive.
Rather, I think it speaks more to the wiring of the individual. Some CPAs are numbers nerds. It’s what they love and where they feel comfortable. Their lifelong goal may be accounting. It works for them.
On the other hand, some numbers savvy folks are also quite high on the “D” (dominant) and “I” (influence) DISC scale. They have both leadership and people skills. Those CPA CFOs are both left brain and right brain thinkers and will always be high value targets.
Since you can’t change what a company has decided they need, it’s important as a candidate to identify your target audience. Who needs what you bring to the table? It’s a much easier sale then beating your head against a wall trying to convince someone else that they need / want / should buy something different.
One final thought … the second example in the FEI blog post points to the reason why companies, as a rule, prefer to hire sitting CFOs over candidates who have never held that title.
This reminds me of the MBA/non-MBA argument that has front and center for years. Demands fluctuate as the market moves and some recent high profile cases have CPA certification in vogue again. That, and the supply of candidates – it is easy to list every possible qualification as a “must have” in this environment.
Pieces of paper are differentiating factors early in a career. At some point experience takes over. In addition, many with CPAs do not remain current in their certification once they leave public accounting. Your second to last paragraph is key, however. Who needs what you bring to the table? That is really all that matters.
Right Mike. If you don’t have a CPA and a company wants that designation, it’s probably not going to be the right fit … UNLESS you have a solid lead in the door. It will still be a challenge but at least you have a fighting chance.
I agree with your statement about maintaining the CPA certification … some do let the credential lapse. However, if you’re a CFO who is serious about playing in a large public company, an active CPA certification is pretty much a necessity.
Mike and Cindy make good points, however I didn’t see the reference that the discussion was centered on public companies. The designation may be more of an issue in public companies than privates. It’s interesting to note that even after accepting the direction Stewart’s stats cite in the article, 65% of CFOs are non-CPAs. Would be interesting to see the public company vs. private company split on that 65%. I’m convinced the stats support Mike and Cindy’s point about matching a candidates experience and track record with the needs of the company.
Just checking your math, Brent, it actually looks like 55% of CFO’s are non-CPA’s. Just can’t take the CPA out of me:)
I agree with the assertion that my certificate that I earned at the age of 24 does not make me more or less qualified to be a CFO. However, it opened doors within my company that would not have been opened, or opened as quickly had I not had the designation.
Experience matters, and as you are working your way up the ladder with a CPA designation it absolutely gives you better exposure, with all other considerations being equal. With greater exposure and experience early on in your career, this allows your talents to either shine, or not. In my opinion being a CPA has the greatest differentiation early on in your career which propels more CPA’s to mid and senior level management roles which becomes the candidate pool for CFO. This has to be why there are a disproportianatley high number of CFO’s with CPA’s.
A CPA is a plus, but a MBA and a CMA are a good combo. I am working on my CMA right now and the prep work is a great combination of accounting and business skills. I am getting more out of my CMA from a finance perspective then I did my MBA.
The F in CFO stands for Financial, not accountant. The function is to partner with the business. She/he should be able to have a delicate balance between allocation of resources to support profitable growth, with the conservatism embedded in the controllership function, generally found in a CPA. It is not a surprise that with recent scandals in public companies more boards have chosen CPAs for the CFO function, where there was a risk of an imbalance. Too conservative finance functions (many times lead by CPAs) may slow growth or, at least, innovation and even cost reduction, in an attempt to avoid risk of failure.
In fact, a strong controller is advisable, where the CFO could bounce ideas and hear the conservative voice. But a CPA-CFO (conservative by nature)talking with his 2nd in command also a conservative, does not initially appear to be a good business partner.
For full disclosure, I am an Accountant, non-certified CPA.
Should Chief Financial Officers be Required to Hold a CPA Designation?
“The controversy is back. Should Chief Financial Officers be required to hold a CPA designation, or not? It began with a guest post on the FEI blog, with a couple of nightmares, I mean examples, of companies with non-CPA CFOs…
I totally believe that a CFO should be CPA, the reason being not the glamor attached to the CPA designation but what it takes to earn that designation and also over the years after gaining experience he/she is best suited to take important financial decisions as he/she is totally well versed with not only financial aspect but also ethical aspect and in the midst of all accounting scandals surfacing in recent times, I feel it is important that a CPA be a CFO
Too many boards and CEOs missunderstand the role of the CFO. The CFO should be focused on how the business raises its capital, allocates its capital, and creates shareholder value… This has everything to do with economic performance not accounting rules. An effective CFO, can manage a controller CPA to ensure the books are appropriately managed, but business decisions need to be made on economic data not accounting data..some CPA CFOs understand this point, but too many CPA CFOs do not and this is why many companies with non CPA CFOs who have MBAs create greater shareholder value….accounting is not finance.
Let’s stop spinning the data for self serving CPAs, a CPA is not necessary to be a top performing CFO if anything it causes the board and executive team to focus too much on accounting strategy versus creating true business value.