Navigating Financial Fundamentals: A Surprising Situation with Our New finance Director

Recently, our organization welcomed a new finance Director, whose impressive credentials included over 20 years in corporate finance, a background at a prestigious Big 4 firm, and an MBA from a well-regarded program. As a Senior Accountant directly reporting to her, I was eager to collaborate and learn from her extensive experience. However, my initial excitement soon turned into bewilderment.

In the midst of our monthly closing activities, a curious incident occurred. During our discussion, she posed a question that left me momentarily speechless: “Why are we wasting money on depreciation expenses when we aren’t spending anything?” Initially, I assumed it was a test of my knowledge. However, as I began to explain the concept of depreciation—how it represents the allocation of an asset’s cost over its useful life to align expenses with their corresponding revenue—I was met with a blank stare. “Why are we expensing it again when we’ve already paid for the equipment?” she asked, displaying a fundamental misunderstanding of a critical Accounting principle.

As I further detailed the basics of Generally Accepted Accounting Principles (GAAP) and demonstrated the corresponding journal entries, she requested a step-by-step walkthrough, suggesting the process seemed unnecessarily complicated. This was a shock, given the straightforward nature of these concepts, typically covered in an introductory Accounting course.

Our conversation took another surprising turn when she questioned why we couldn’t expense a new $50,000 server outright to realize a tax benefit in the current year instead of capitalizing it over time. When I explained capitalizing assets versus expensing them and delineated the relevant thresholds, she responded with skepticism and mentioned we should consult with the tax advisor, as it “didn’t seem right.”

Compounding my concerns, she is expected to review our financial statements for accuracy prior to submission to the board next week.

To provide additional context, our company generates $15 million in revenue; we aren’t just a small startup where one might anticipate a more relaxed approach to formal accounting practices. Furthermore, during our discussions, she expressed confusion as to why our cash flow statement did not align with the Profit & Loss statement—a fundamental distinction between net income and cash flow.

It’s genuinely perplexing how someone could navigate two decades in finance while remaining unaware of these essential principles. This situation raises questions about whether she might have been reliant on others for the technical details in her previous roles or if there is a potential issue of resume embellishment at