What Does an Accounting Executive Do?
An accounting executive performs several tasks that are crucial in order to accurately advise the managerial departments of a company about how to best maximize profits and achieve their long-term goals.
Duties of accounting executives include:
- Preparing financial statements, forecasts, and activity reports
- Ensuring legal requirements are satisfied
- Liaising with employees in finance departments to increase company transparency
- Identifying opportunities for company expansion
- Working with business owners and internal management to make final decisions
Simply put, the role of an accounting executive is to support a business by facilitating good accounting measures. This is crucial, as at the core of any attractive business — especially from an investor’s point of view — lies competent, accurate, and transparent accounting data.
An accounting executive is also valuable as the role indirectly diminishes any risk of fraudulent behavior within a business. Most US fraud cases, for example, have been discovered by persons within an organization who understood numbers and determined that something was wrong.
Initiatives carried out by accounting executives increase a business’s transparency, financial literacy, and internal management.
Other responsibilities of accounting executives include:
1. Organizing Taxes
Accounting executives are responsible for ensuring businesses’ tax forms are filed correctly, in due time, and with the correct information.
If your business fails to file its taxes correctly — even if this is done unintentionally — you may be subjected to strict fines or even have your assets frozen by the Internal Revenue Service (IRS).
Having an accounting executive in your business is a way of decreasing the possibility of this occurring, as you will have a qualified, experienced, and financially literate person overseeing your business’s tax preparation and filing on a regular basis.
2. Budget Preparation
An accounting executive is in charge of preparing your business’s annual budget.
Business owners will still obviously have the “final say” and — depending on the business entity in question — they may also retain full discretion in relation to any other departmental managers that they may wish to give such a role to.
Regardless, the value of an accounting executive lies in the holistic management of a company’s finances. An accounting executive can:
- Review departmental budgets and suggest changes based on your company’s most desirable annual budget
- Liaise with internal managers or business owners and find ways in which the budget can be improved
- Set out reasonable yearly expectations in accordance with a company’s chosen budget
3. Supervising and Reporting
An accounting executive is basically a financial manager.
This means that if your business currently has its own accounting department or if you rely on an external accounting firm or practitioner to handle your business’s finances, you will want to make sure that there’s a qualified person in place to oversee and check the effectiveness of such a party.
This can involve:
- Training staff in accordance with your business’s financial procedures
- Providing feedback and corrective measures
- If need be, firing and/or replacing accountants.
How Much Does an Accounting Executive Make?
According to statistics from the US Bureau of Labor, the median pay of an accounting executive (financial manager) in the US is $134,180 per year, or $64.51 per hour.
The lowest-paid executive accountants (bottom 10%) earn less than $70,830, whereas the highest-paid (top 10%) can bring in more than $208,000 per year.
The job outlooks for this role are really optimistic. Accounting executives are projected to experience a growth of 17% between 2020 and 2030. This is likely to be the case as a result of the increasing shift towards cash flow of businesses (triggered by globalization) that has inadvertently increased the demand for financial analysts and accounting executives, which can “guide” business owners in recording and managing their company’s cash efficiently.
The Difference Between an Accounting Executive and a Controller
Even though an accounting executive and a controller are both involved with the financial health of a business, their roles can vary quite significantly. The biggest difference is that — unlike accounting executives — financial controllers are not in charge of managing a business’s finances holistically.
More accurately, they act as a “head” accountant, which involves:
- Overseeing all accounting activities
- Ensuring that all recorded data is accurate and quantifiable
- Ensuring that any financial statement produced accurately reflects the business’s current financial standing
- Reporting to upper management.
Having said that, accounting executives and controllers do share several similarities:
- Both require a degree in finance, accounting, statistics, or business
- Both can work in a vast range of organizations — including banks, private firms, nonprofit organizations, and governmental bodies
- Both require excellent financial literacy
How Do I Become an Accounting Executive?
Accounting executives are usually required to have a Bachelor’s degree in finance, accounting, or business administration. Individuals with statistics or management degrees are generally also very strongly suited for accounting executive roles.
This is by no means a legal requirement, however, so subject to your experience, talent, and capabilities, you may be able to progress into an accounting executive role regardless.
You will need to have obtained several years of experience as a financial analyst and/or as an accountant, have excellent financial literacy, and possess prolific knowledge of your business’s long-term goals, prospects, and potential.
As an accounting executive also adopts a variety of managerial and executive responsibilities, you will also need to have superb communication, leadership, and organizational skills.
Desirable skills to have as an accounting executive include:
- Dispute resolution and negotiations experience
- Cross-industry experience as a financial analyst (for a broader understanding of the role)
- Presentation skills
Frequently Asked Questions
Do I need an accountant or a bookkeeper?
Bookkeepers record your business’s transactions on a daily basis in an efficient, consistent, and transparent manner, whereas accountants rely on financial data to produce analytical models that you can then use to make long-term decisions about your business. This means accounting is inherently more subjective.
Ultimately, what you will need for your business will be highly dependent on your business’s size, industry, and budget.
Do I need an accountant for my small business?
If you are wondering whether you need an accountant as a matter of law, then the answer is no, and in theory business owners are entirely free to handle their company’s accounting individually and without the assistance of any qualified financial expert.
Having said that, the requirement to hire an accountant for business owners is usually rooted in practical reality rather than in law. As a business owner, you will want to make sure that you can spend your valuable time on the most important and pressing matters, and this is unlikely to be accounting, especially once you start to scale.
What is GAAP and should I follow it?
Generally Accepted Accounting Principles (GAAP) is a “guiding mechanism” through which business owners and accountants can ensure that the ways in which they are recording their business’s transactions remain consistent, quantifiable, and fully transparent.
Even though complying with GAAP is not a legal requirement for privately traded companies, doing so can bring in several structural advantages for your business, and so generally speaking, it is very highly recommended.
What is the difference between finance and accounting?
Finance is identifying and analyzing your business’s “numbers'' and data and consequently making managerial decisions based on those numbers. These decisions could relate to managing cash flow, expansion projects, etc.
Accounting, on the other hand, involves recording information about a business’s financial history, which finance departments will then use to make business decisions.
This means that if you do not have good accounting, you will inevitably have poor financial analysis and will place yourself in a disadvantageous position when electing to rely on that data to make decisions about your company’s future.
What is a contingent asset?
A contingent asset is, as the name suggests, an asset that is “contingent” on a potential event that:
- Has not occurred yet
- Is completely out of the company’s control
In accordance with GAAP, uncertain assets (meaning those that may not materialize) cannot be recorded on a business’s financial records. They can, however, be recorded in the footnotes of financial statements if certain conditions are satisfied.
Keep in mind that contingent assets are not treated the same way as contingent liabilities, which should be recorded at the time when they are most probably in accordance with the conservative accounting principle in GAAP.