Chief Accounting Officer at BlackLine, providing finance and accounting automation solutions.
The digital transformation of enterprises has been underway for some time, cycling forward at moderate speed until the pandemic kicked it into high gear. Across organizations in different industry sectors, CFOs are focused on long-term strategic growth and forecasts, and CIOs are engrossed in providing digital data toward these ends. In between, someone must take the handoff from the CIO to ensure accurate financial data and metrics before passing the baton to the CFO.
Who is that person? I believe it should be the chief accounting officer (CAO). No one is better positioned for this critical intermediary responsibility, given the CAO’s process-driven data analytical skills. Accounting chiefs and the accounting department are most qualified to develop the agile controls and processes needed to provide validated predictive data insights for near-real-time CFO decision-making and reporting purposes.
Accounting chiefs and the controllers who often report to them know how a company operates. They also deeply understand the data needed to support the three primary pillars of corporate growth strategy: mergers and acquisitions, international expansion and product development. Unlike the CIO and the IT department, whose talents lie in developing technology systems and inputting internal financial data from these systems into data warehouses, accountants are wired to know if this data is authentic, credible, complete and designed to assist long-term strategic decisions.
This role marks a new responsibility for accounting teams, but the shoe fits. For one thing, CAOs and controllers are on the front lines each day on behalf of the CFO. We’re in charge of SEC reporting, tax compliance, financial systems and ensuring our internal controls are effective under the rules of Sarbanes-Oxley. We are accustomed to devising long-term strategic financial plans, and we appreciate the criticality of up-to-date information in running the company, a need magnified over the past year and a half.
The uncertainty over the pandemic and the upheaval presented to companies’ short-term and long-term financial performance made it nearly impossible for many CFOs to provide earnings guidance to investors. More than a few CFOs were compelled to offer two or three alternative scenarios, or no forecast at all. To obviate this possibility in the future, CAOs, controllers and the accounting organization must step in to provide more timely and refined predictive data insights, improving the CFO’s capital allocation deliberations, enhancing operating efficiencies and giving investors a truer sense of the future.
Critics might argue that numbers-focused accountants may lack the “work ingenuity” to effectively collaborate with sales and marketing and the IT department on their technology systems and processes to garner timely and accurate data-driven insights. There is some truth to this characterization: Just 10 years ago, few accountants or CAOs were heavily involved in data and the systems and processes used to create it.
Now they simply must have this capability. Accountants already have the data analytics skills; what they generally lack, in my experience, is a refined knowledge of technology systems. Through training and a close partnership with IT, CAOs, controllers and accountants can acquire the expertise needed to understand technology systems and processes across the enterprise.
Much like we regularly refresh our knowledge, obtaining continuing professional education (CPE) credits regarding new technical tax and accounting matters and evolving trends in SEC reporting, training in technology systems can be another requirement to maintain a CPA license. Or not; the point is the result of the training: A good accountant becomes a better accountant, and the CAO is joined at the hips to the CFO and the CIO in leading the organization’s digital transformation.
The good news is many basic accounting tasks are automated these days. This means CAOs, controllers and accountants have more time to learn all they can about the technology systems their company uses. Once they have, they can focus their analytical expertise and judgement on the metrics driving enterprise growth in a more compressed time frame.
As a CAO, you are one leg of a three-legged stool: Your CFO is focused on financial forecasting, corporate strategy and investor realities; your CTO is responsible for the technology systems that gather and store the internal financial data in data warehouses; and you are the person who must make sure the data feeding the metrics is relevant, accurate and aligned with enterprise strategy. By performing these roles, you’ll be a relay team, each one of you running one leg of the race, smoothly passing the baton to the next runner.