Confessions of a Senior Accountant: Surprising Gaps in Our New finance Director’s Knowledge

It’s been about six weeks since our company welcomed a new finance Director, and as a senior accountant who reports directly to her, I’ve encountered some remarkable moments that have left me both puzzled and concerned. This individual brought with her a wealth of experience, boasting over 20 years in corporate finance—including a Big 4 firm background and an MBA from a respected institution. On paper, it seemed like a perfect match for our team.

However, during a recent discussion about our monthly close process, I was taken aback by a question that seemed to challenge foundational Accounting principles: she inquired why we “waste money every month on depreciation expenses” when nothing is actually being spent. Initially, I assumed she was testing my knowledge, but as I proceeded to explain the concept of depreciation—essentially allocating the cost of an asset over its useful life—her response indicated she was genuinely perplexed. Despite my attempts to clarify that depreciation is a fundamental concept under Generally Accepted Accounting Principles (GAAP) designed to match expenses with corresponding revenue, she remained confused, insisting, “But we already paid for the equipment. Why are we expensing it again?”

As our conversation progressed, I aimed to demystify basic Accounting concepts—jargon that is introduced in introductory courses. Unfortunately, this was met with confusion rather than clarity. For instance, when I addressed her question about why we couldn’t simply expense a new $50,000 server for an immediate tax write-off rather than capitalizing it, her suggestion to “check with the tax guy” further illustrated a misunderstanding of capitalization thresholds and the critical distinction between assets and expenses.

Adding to my concerns, she asked how it was possible that our cash flow statement didn’t align with the profit and loss (P&L) statement, appearing genuinely bewildered by the explanation that net income does not equate to cash flow.

With our company generating $15 million in revenue, these lapses in basic financial understanding are alarming, particularly as she is tasked with reviewing our financial statements for accuracy before they are presented to the board next week. It raises significant questions about how someone with two decades of experience in finance seems unaware of these foundational aspects. Is it possible she has been in environments where essential tasks were handled by others, or might there be exaggerations in her credentials?

As we navigate this challenging dynamic, it forces me to reflect on the importance of