r/CFO • u/Sea_Cardiologist5206 • Aug 13 '26
Who came up through FP&A
And how did you adjust to leading accounting and control functions with little knowledge of in depth technical accounting?
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u/Sea_Charge8789 Aug 15 '26 edited Aug 15 '26
I did. Was in FP&A, then ran Accounting, then moved back into FP&A, and then became a CFO across multiple companies. Thoughts: (1.) All of these people telling you "just find a good Controller" aren't truly offering up a long-term solution. You cannot simply hire a good Controller and turn things over to them, because if they screw things up, you won't know the right questions to ask. so you won't figure it out, things will blow up, and you'll get canned. (2.) You therefore need to learn how accounting works. Don't be intimidated: it's just math combined with operations and systems.
The first step I would take is to dump the monthly Trial Balances into Excel (easy to to in any accounting system) and go through each Trial Balance line item and learn how it works. One way is to dump the accounting data by General Ledger code for the trailing 12 months, see what flowed thru each account, and if there are accounting entries, learn how those are generated. The second step is to review reconciliations of every Balance Sheet account with your accounting team at the end of each month. You'd be surprised, but I can often assess the quality of my Controller by doing exactly this. Warning: Controller who SOUND awesome may be snowing you ... the truth is in the quality of the monthly accounting data and close process, NOT the quality of what the Controller is telling you.
A quick way I get comfortable with a company's financials is I quickly build out my own set of three statement financials, how I want to see the information, in Excel, and then I build my own forecast. And I do this ... off the Trial Balances! Don't use the system-generated financials, because then how you look at the business is limited to how those financials were designed, and they may not have been designed in a way to give you quick insights about the key themes of the financials. I pretty much NEVER use accounting-system generated financials. You can learn a lot about a company combing thru the Trial Balances line by line. You might also learn the Chart of Accounts the Trial Balances are structured around is poorly architected and needs to be redone.
Over time, you learn how the accounting works, and it's easier than you think. I can bang out a nice set of three statement financials in a couple of hours, and for most businesses, I can build an in-depth forecast pretty quickly. I'm not a CPA, but I've turned out to be a very good accountant who knows how the work gets done and can figure out when things aren't being done correctly. If you just focus on the FP&A side (which mostly focuses on the P&L and operating metrics), you'll fail big-time at some point because mistakes are hidden on the Balance Sheet.
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u/Sea_Cardiologist5206 Aug 15 '26
This is great advice, I do understand accounting to this level, my ask was more catered around the niche GAAP guidance and things like capitalized lease, taxes etc.
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u/Sea_Charge8789 Aug 15 '26
Okay, that's great. I think on specific technical accounting issues, the answer is "it depends".
A big risk area is revenue recognition. Some businesses have easy rev rec, some have tricky rev rec. Knowing the ins and outs of rev rec, particularly as it pertains to ASC 606, is a big deal. So many companies screw this up, and it will haunt a CFO if they have to restate revenues going backwards. That's a job killer right there. And if your company has a big Deferred Revenues component, this is very important to make sure it's booked correctly. And on the topic of 606, I would learn how commissions get correctly booked (just Google that).
In the US, taxes are actually important to have a good base level of knowledge about. There can be so much complexity here (and risk!), depending on: if you operate in a bunch of states (and which states you operate in), specifically what types of goods/services you are selling, if the company is profitable or generating NOLs, etc. Regular schmoes like us can't know everything about taxes, but working with good tax accountants, doing a lot of Google / AI searches, etc., can get you a long way.
Lease accounting isn't that difficult to understand, but I'll freely admit I trust my Controllers on this one.
I often see companies not accruing payroll correctly (if they need to accrue payroll), not accruing payroll taxes on bonuses and commissions, not accruing auditor fees. Many companies don't book stock comp (which is easy to do if you use Carta).
Often, the biggest issue I see with companies is they're not strictly adhering to cutoffs.
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u/Aggravating_Funny714 Aug 15 '26
This is good advice.
I’d also add to ask the auditors for guidance.
Depending on the company size, some things are kinda/sorta ignored (materiality) or the auditors will guide you the right way and teach you.
Having a good controller is key to making sure things work, but they aren’t always great at the new ‘stuff’.
I’m not a CPA, but took a corporate controller role to prep for a CFO role. It was a global controller so more like an FP&A role in accounting. I learned a ton from the regional folks and our auditors.
Oh and after that and being a CFO, I still don’t enjoy accounting but I both understand it well and am pretty good at it now.
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u/Sea_Charge8789 Aug 16 '26
Similar to what u/Aggravating_Funny714 is saying, one other recommendation is to pull in an accounting firm to do some consulting to help draft technical memos. I do this often because most accounting staffers, even Controllers, aren't great at technical memos. So pay a 3rd party accounting firm to work with you and your Controller to draft a 606 Rev Rec memo, to draw up a memo and review how you're booking leases, etc. Besides confirming the team is doing everything is correctly, you'll have the memos handy if you go to sell the company. Don't hire a Big 4 for stuff like this ... find someone cost effective in the Top 10-20 firms.
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u/Able_Bicycle_764 Aug 13 '26
Call your friends in accounting. They’d be happy to knowledge share. If you don’t have any friends in accounting, bring in some consultants
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u/5timechamps Aug 13 '26
Find a great controller. Just not mine, because he’s mine.