Accounting vs Finance (FP&A) – What you do? Jobs? Roles and Responsibilities

Welcome back to the corporate finance academy and today we’re going to talk about accounting versus finance and fp a so a quick look at what we’re going to talk about we are going to go through a high level comparison of finance accounting we’re going to talk about the roles and responsibilities between the two and how they differ the subject matter you cover talk a

Little bit about how you can be good at either one then we’ll finish with what type of education and certifications do you need for accounting versus finance and what types of jobs do you do in the two okay so i want to start this off with saying it really depends finance and accounting the definitions of what they do and what they are differ greatly based on where

You work and remember we’re talking here about corporate finance and corporate accounting we’re not talking about big four public accounting talking about working within a company in the finance function so finance these are high level descriptions generally finance is going to be more forward look they’re looking at forecasting out the future planning what’s going

To happen setting budgets evaluating potential decisions and things like that but there is a fair bit of analysis versus prior periods versus budget but generally you’ll often hear finances more forward-looking but the reality is good finance people understand backward and forward if you don’t know what’s happened in the past you don’t know the business works it’s

Really hard to be successful at being forward-looking now on the accounting side you’ll often hear that it’s more backward looking so they’re ensuring that everything happened that happened is processed financials are accurately recorded that we’re following all the accounting rules and regulations things are classified correctly but again a good accountant knows

To look forward to they’re getting out ahead of potential issues they’re partnering with the finance team and the operating team to make sure they’re preparing correctly for anything that’s going to happen within the business roles and responsibilities and again i’m going to go back to the first slide we talked about where we say that it depends owners of these

Different tasks so in some worlds accounting may play a more proactive role in a budgeting process or forecasting process so again take this for what it’s worth these are general roles and responsibilities so let’s get into it finance one of the most common things you do within finance or fpa is forecast the financials so that may mean what is this quarter going

To look like from a financial statement standpoint and it may even be a further out forecast finance typically owns the strategy planning budgeting process you’ll often hear this called the annual operating plan long-term planning but this could also extend out three years five years reporting and performance management now again sometimes accounting might own

Reporting and finance may be more on the performance management side of it making sure all the different areas within the business are performing they’re hitting their kpis they’re hitting their metrics operational and commercial support so you’ll often see finance folks that are in a manufacturing business working in the shops or supporting different pieces of the

Business and same on the commercial side they support the sales team they work on commercial deals sometimes interface with customers or at least support the sales team who’s working with the customer analysis and analytics again this one can also bounce between accounting and finance depending on what you’re looking at but finance is tasked with analyzing results

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Finding opportunities doing analytics to bring new knowledge and information to the business based on what the numbers say decision making support so should you buy this new piece of equipment should you invest in this new building should you do this new deal with a customer finance will often model those things out and help with that decision making support and

Really just partnering with the business and it goes along with a number of the bullets in this a good finance pertinent person is a good partner to the business to the operating team the commercial team the marketing team the human resources department everyone so moving on to accounting what does accounting do so accounting often owns closing the books so this

Includes journal entries making accruals cut-off testing preparing reports and a number of other things but closing the books and this might be might be monthly this might be quarterly or annually depends on where you work account reconciliation so doing those necessary control points of reconciling your accounts reconciling your cash balances all those sort of

Things then in a manufacturing business they’ll often own the fixed assets in the capex management so they track the spend they close out your construction progress they issue tags they run depreciation they do all the things associated fixed assets overseeing accounts receivable accounts payable payroll tax returns tax payments all those different things it’s

Not necessarily true that the accountant is the one doing all the minute details of these but they’re overseeing it they might be helping to automate it or make it run more smoothly internal audits so checking the different controls from the business supporting the external audits if you work at a company that has external audits that are completed researching

Accounting issues and assuring the businesses is complying with all those different accounting rules and regulations that are out there and again the manufacturing business they might be responsible for setting cost standards doing inventory counts all those elements that are associated with working in a manufacturing environment as i said at the beginning these

Are broad buckets not everything falls cleanly into one of these descriptions finance and accounting and in some companies you’ll actually see these jobs merged so you’ll see someone who’s just called a finance person or or an accountant and they’re doing both the budgeting the forecasting they’re also closing the books doing account reconciliations in fact

Early in my career that’s how it was for me i wore many hats and you know for folks who work in a shop or small business it’s often very true that you’ll wear hats under both of these areas so subject matter this one’s this is a little more theoretical but i just wanted to talk about how you know counting from a philosophical standpoint is really in corporate

Accounting is managerial accounting it’s maintenance of the company’s books and records is everything stated correctly is everything compliant what’s our process like to get there are you eliminating manual processes having air checks and controls in place to make sure things run smoothly understanding the accounting theory and even getting involved in things

Like like tax and tax law then from the finance perspective you’re often blending together pieces of accounting but also economics and this business strategy and you’re taking those things and you’re you’re often modeling out what it means whether that’s a model that shows you your forecast your budget whether or not you should purchase a piece of equipment but

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Finance is blending together a number of those different strategies but to be good at either one of these you have to work well with the other side again sometimes you might do both there might not be in your business a differentiation between finance and accounting but if there is you should talk to each other work hand in hand you should both know what the other

Is doing you should know the accounting practice and how things happen the accounting side should understand the forecast the expectation the budget and they should work hand in hand in addition they should be working closely with the folks outside of finance and accounting again whether that’s human resources the marketing team the sales team the operating team

The procurement team and you should look forward in backward as we said beginning you’ll hear that the turn the finance focuses forward and counting backward but i don’t know that i buy into this you really need to be adept at understanding both forward and backward if you want to be good at your job okay so changing gears a little bit what do you need in terms of

Education and certifications to work in financial accounting so in finance typically you’re going to have an undergraduate degree in finance accounting economics and some other business field though that’s not a hard and fast rule that’s where the majority of folks are going to come through and if you go look at our cfo video you can see that where the most common

Sources of cfos at big companies where they come from their undergraduate degrees advanced degree uh not required it’s fairly common that you’ll see in the higher levels of finance uh folks with mbas but it’s by no means a required designation and trends again in our cfo video you’ll see that the trend is actually that the number of cfos with mbos or with mbas

Are decreasing certification in corporate finance you will sometimes see cpas you will occasionally see somebody with a cfa designation but there’s not really a specific certification for corporate finance or fpa now there are some newer companies that are doing fp a certificates uh and we actually on our website if you go check it out we have some courses that

We’re starting to offer but there’s not a widely accepted certification for for finance or fbna on the accounting side typically accounting is the undergraduate degree especially if you’re going to be a cpa you’re typically required to hold an accounting degree or have the requisite number of credit hours and accounting classes to to sit for the cfa cpa and and

To get that certification but you will also see some folks with a dual degree you might see an economics or a finance person who gets enough credits that they can sit for it but most often you’ll see an accounting degree advanced degrees again you can get a master’s of accounting degree there are schools that offer these four plus one programs where you do your

Undergrad in four years you do one more year you get your master’s you get enough credits to sit for the cpa and you get everything done in five years certifications again cpa is the most common but there are some other certifications uh in audit some are in uh management accounting i think the ima has a certification but cpa is the most common okay so types

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Of roles what types of roles you’re getting so we’ll hit finance first you’ll you’ll sometimes hear finance and fp a used interchangeably uh you could get roles in fpa that are more like a consolidation of reporting they’re like headquarters corporate jobs roll up the numbers report consolidate you’ll see some that are more cost focused expense sg a that type

Of thing you’ll see finance folks align specifically to sales or commercial finance you’ll see project roles heavy operational industrial manufacturing jobs exist in those type of companies there are coe which stands for center of excellence specific jobs where you might focus solely on procurement capex cash p l owner where you actually own everything within a

Little division or segment of your business and this could also include if you just work at a small business you’ll wear many hats then there are roles within treasury which deals with working with banks and cash and then you and bigger companies will often have standalone investor relations jobs on the accounting side uh you have you typically start out as a

Staff accountant or junior accountant and again we’re talking about corporate accounting we’re not talking about public accounting so your staff accounting jobs move through to accounting manager and some of these are more specific where you’re we work in a shop or your manufacturing you might have a technical controller job where you’re dealing in a more complex

Business with making policy and assuring that everything’s followed you have operational controller roles uh internal audit roles sometimes you have tax accountants depending on where you work you could have roles specific to sec reporting and then at the top of the house you have controller roles these could be at a divisional level or segment level uh or business

Unit level and chief accounting officer roles but you can see from this that there are a number of different ways you can go in your career there’s a number of different roles and you certainly can jump from finance to accounting or back and forth now sometimes depending on the role it can be tougher to jump from finance to accounting just because of the technical

Knowledge needed and potentially a cpa requirement in some worlds but you see a lot of people successfully transition from accounting to finance or fpa but there are a ton of options and the world of finance and accounting is a is a big one with a ton of opportunity and and there can be some really great careers in these areas so that’s all we have for today it

Can be difficult to to understand sometimes the differences between finance and accounting what the careers look like what you need but what you do in the jobs hopefully this gives a little bit of clarity but if you have questions feel free to leave them below please subscribe like the video and like i said if you have questions leave them below and we’ll try to get you answers

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Accounting vs Finance (FP&A) – What you do? Jobs? Roles and Responsibilities By Corporate Finance Academy