A Surprising Gap in Financial Expertise: My Experience with a New finance Director

Six weeks ago, our company welcomed a new finance Director, and I, as a senior accountant reporting directly to her, was eager to collaborate with someone touting an impressive background—over 20 years in corporate finance, a history with a Big 4 firm, and an MBA from a highly regarded institution.

However, a recent encounter left me astounded. While I was guiding her through our monthly close process, she posed a question that initially struck me as a surprising attempt at humor. She wanted to know why we include depreciation expenses in our reports, calling it a “waste of money” since we aren’t “actually spending anything.”

Thinking she might be testing my knowledge, I explained the concept of depreciation: how it allows for the allocation of asset costs over their useful lives, helping to match expenses with the revenue generated from those assets during specific Accounting periods. Rather than grasping the rationale, she looked perplexed and countered with, “But we already paid for the equipment. Why do we expense it again?”

When I referenced Generally Accepted Accounting Principles (GAAP) and provided the necessary journal entries, I was met with skepticism as she requested a detailed walk-through, claiming this process seemed overly complicated. I found myself stuck in an unexpected 30-minute crash course on concepts that are typically covered at the introductory level of Accounting.

Another enlightening moment arose when she questioned the practice of capitalizing our new $50K server instead of fully expensing it up front for a tax deduction. I attempted to explain the rationale behind capitalization thresholds and the distinction between assets and expenses, only to have her suggest we “check with the tax guy” to verify that this made sense.

What’s particularly concerning is that her responsibility entails reviewing our financial statements for accuracy ahead of their presentation to the board next week.

For context, our company is a reputable manufacturing entity generating around $15 million in annual revenue—not a small startup where one might expect some informal accounting practices.

Adding to my bewilderment, she also expressed confusion over why our cash flow statement did not align with the profit and loss statement, demonstrating a clear misunderstanding of the fundamental distinction between net income and cash flow.

It’s difficult not to question how someone can progress through two decades in finance without mastering such essential concepts. Could it be that she has been fortunate enough to operate in positions where others carried the workload, or is there an unsettling reality of inflated resumes