Accounting vs. Financial Management: Objectives, Purposes & Differences
Accounting vs. Financial Management
Becoming a certified public accounting (CPA) or a financial manager can both have their separate benefits, however, they are equally lucrative and rewarding career paths that have many growth opportunities. Both careers allow the individual to work with finances and numbers, using analysis techniques to work for a firm, family, or business. In order to thoroughly understand the similarities and differences, it is essential to analyze and evaluate the different qualities found in each role, the qualifications needed to be qualified for each role, and the purpose and objectives of each role.
- Certified Public Accountants
- What is a Certified Public Accountants?
- Qualities Needed for the Role
- Underlying Qualifications and Education
- Purpose and Objective of the Role
- Financial Manager
- What is a Financial Manager?
- Qualities Needed for the Role
- Underlying Qualifications and Education
- Purpose and Objective of the Role
- Difference Between a Certified Public Accountant and a Financial Manager?
- FAQs
Certified Public Accountants
What is a Certified Public Accountants?
An accountant is a professional who performs various accounting functions such as auditing, account analysis, and financial statement analysis. This work can be done for an accounting firm or for an internal accounting department with a large company. Accountants may also set up their own individual or family practices and may also work for small businesses. Once accountants complete state-specific testing, like the CPA, and other educational requirements, they are certified to begin working as a certified public accountant for their state and begin serving clients. Without this certification, an accountant cannot be considered a certified public accountant, otherwise known as a CPA.
Qualities Needed for the Role
There are various traits, skills, and qualities that an individual can possess that could make them a good accounting candidate. A professional who works well as a support member for their team by completing responsibilities with a strong work ethic and is very detail-oriented would make for a good fit for the accounting profession. Individuals who are good with finance and numbers, technologically knowledgeable, communicable, adaptable, problem-solving, and trustworthy, contain all of the necessary qualities needed in order to succeed as an accountant.
Certain technical skills can be learned in order to provide an advantage in the hiring process. Skills like organization, time management, critical thinking, active learning, analytical knowledge, mathematical analysis, and proficiency with Microsoft Office Suite and Applications could all be immensely useful to know as an accountant.
Underlying Qualifications and Education
In order to become a CPA, one must have a bachelor’s degree in accounting, finance, or business in order to be knowledgeable and educated in the field. The preferred degree most accounting firms will look for in the hiring process is an accounting bachelor’s degree, as it has the most relevance for the profession. On top of education, accounting firms and businesses favor candidates who obtain their CPA license and become certified public accountants. The CPA license, or the Certified Public Accountant designation, contains a comprehensive exam that tests the knowledge needed in the accounting field. This designation allows an individual to legally serve clients before the Internal Revenue Service and also file reports with the Securities and Exchange Commission. The license also allows the accountant to use the CPA title to signify their experience with the industry. The exam is also required at many large accounting firms that specialize in bookkeeping, auditing, taxation, and payroll services, among many other facets of the accounting industry.
Knowledge of general business practices, accounting practices/regulations, proficiency in accounting software, financial and accounting analysis of data, and the ability and knowledge to prepare a financial statement are all relevant aspects of accounting many firms would expect potential candidates and professional employees to know.
Purpose and Objective of the Role
The purpose of an auditing accountant is to prepare and monitor an organization’s financial records, while the objective of a bookkeeping accountant is to calculate the cash flow of a company or a division of a company, evaluate company-wide or departmental expenses, and calculate tax expenses and obligations. Because an accounting career can involve a varied career path, accountants often have skills and job experiences encompassing various industries and specializations. While accountants can work as clerks, auditors, or managers, many choose to work in tax preparation, bookkeeping, or payroll services. Some responsibilities accountants have include tax preparation, recordkeeping, risk assessment, internal auditing, and working out financial transactions.
Accountants are tasked to determine how much tax their company owes to the federal, state, and local governments. This can also include noting any tax deadlines, preparing all necessary paperwork, and ensuring all tax deadlines are followed. They also track all funds that enter and leave the organization by assessing company cash flow and debt to ensure the company keeps an accurate bookkeeping record.
Another side of accounting can be seen on the audit side. This is where an accounting firm can perform an internal audit and examine their company’s financial records in detail to detect financial risk or fraudulent activity. Lastly, accountants can also administer payroll, pay vendors, communicate with them about billing issues, and collect payments from other companies or clients.
Financial Manager
What is a Financial Manager?
A financial manager is a finance professional responsible for the leadership of a finance team and maintaining the financial health of an organization. A financial manager does this by developing strategies and plans for long-term financial growth by producing financial reports based on financial analysis from financial statements or investment activities. They also oversee finances to ensure all legal requirements are met and supervise other employees who do financial budgeting and reporting.
Qualities Needed for the Role
In order to be a financial manager, one has to also be a great leader. There are various traits, skills, and qualities that financial managers possess. A professional who is tech-savvy, understands forecasting and budgeting, has good strategic and analytical skills, and is very knowledgeable in the financial industry, is set up well to become a successful financial manager. Individuals who are good with finance and numbers, communicability, adaptability, problem-solving, and trustworthiness contain all of the necessary qualities in order to succeed as a financial manager.
Certain technical skills can be learned in order to provide an advantage in the hiring process. Skills like organization, time management, critical thinking, active learning, analytical knowledge, mathematical analysis, and proficiency with Microsoft Office Suite and Applications could all be immensely useful to know as a financial manager.
Underlying Qualifications and Education
In order to become a financial manager, one must have a bachelor’s degree in either accounting, finance, or business in order to be knowledgeable and educated in the financial field. However, a master’s degree in either finance, business, economics, or business administration is often needed in order to display the strong analytical and acquired leadership skills needed for the financial management role. On top of education, financial managers also have around five or more years of experience as an entry-level accountant or financial professional in order to build that professional and leadership experience. Although not required, having a designation such as the Chartered Financial Analyst (CFA) or the Certified Public Accountant (CPA) certification adds credibility that you have the knowledge to do well in your role as a financial manager.
Read more: How to Become a Financial Planner
Purpose and Objective of the Role
The purpose of a financial manager is to oversee the financial health of an organization and help ensure its viability by supervising the financial team. Depending on the size of the company or firm, financial managers are tasked with overseeing the finances of an entire organization or a specific department, monitoring cash flow, determining company-wide or investment-specific profitability, managing expenses, and providing accurate financial information that complies with governmental regulations.
The main principles and objectives all financial managers share are to maximize financial growth, maximize profit, minimize cost, and avoid bankruptcy. In order to accomplish this, financial managers need to plan profitable strategies through financial projections and models. These strategies must include long-term money management and investment plans that will make a positive financial impact on the company. Analyzing investment opportunities, expansion opportunities, and minimizing risk are all other alternative ways for a financial manager to contribute to the overall financial strategy. They want to also keep all finances under control and report all metrics written in financial reports to legal reporting authorities for compliance.
In some instances, financial managers also are in charge of raising funds for the company, the allocation of resources, and advice of senior management of the company’s current financial situation. Some other administrative work included in the role could be administrative paperwork, payroll management, and assisting the accounting team with tax work.
Difference Between a Certified Public Accountant and a Financial Manager?
Accountants and financial management professionals have similar educational degrees such as accounting, business, or finance; however, these careers have various differences. Financial managers possess both accounting and finance experience and have a more significant impact on long-term decision-making and leadership. At the same time, accountants are readily sought after with a high job outlook and are always finding new integrations with other micro industries within accounting or finance. Accounting professionals focus more on day-to-day transactions and reporting aspects of finance.
Shared responsibilities for accountants and financial managers include creating financial reports, offering advice to improve the organization’s finances, and performing financial analysis. However, a financial manager’s role is more strategic and focuses on helping the company make decisions that improve cost-cutting strategies and the company’s value while providing leadership over other financial employees. In contrast, an accountant’s work focuses on recording and computing day-to-day financial calculations, ensuring regulatory compliance, preparing taxes, and checking for financial errors or fraudulent activity in financial data.
FAQs
- American Institute of CPAs. “Getting Started.”. Accessible From: https://us.aicpa.org/becomeacpa/gettingstarted.html
- American Institute of CPAs. “150 Hour Requirement for Obtaining a CPA License.”. Accessible From: https://us.aicpa.org/becomeacpa/licensure/requirements
- CFP Board. “The Certification Process.”. Accessible From: https://www.cfp.net/get-certified/certification-process
- Payscale. “Average Financial Planner Salary.”. Accessible From: https://www.payscale.com/research/US/Job=Financial_Planner/Salary
- U.S. Bureau of Labor Statistics. “Accountants and Auditors.”. Accessible From: https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm
- U.S. Bureau of Labor Statistics. “Personal Financial Advisors.”. Accessible From: https://www.bls.gov/ooh/business-and-financial/personal-financial-advisors.htm
