Navigating Challenges with Leadership: A Senior Accountant’s Experience

In the fast-paced world of finance, every new hire brings unique perspectives and skills to the table. However, not every addition is a smooth fit. Recently, our company welcomed a new finance Director with an impressive background—over 20 years of experience, credentials from a top-tier MBA program, and a strong history in corporate finance. As a senior accountant reporting directly to her, I assumed her expertise would enhance our operations. That assumption was quickly put to the test.

While guiding her through our monthly close procedures just yesterday, a startling realization emerged. When I mentioned our depreciation expenses, she posed a perplexing question: “Why are we wasting money each month on depreciation when we’re not actually spending anything?” Initially, I thought it was a clever test of my Accounting acumen, but her blank stare said otherwise.

I took the time to explain that depreciation is a fundamental aspect of financial reporting. It allows us to allocate the cost of our assets over their useful lives, thus aligning expenses with the revenue generated from those assets. Instead of the understanding nod I expected, I received the bewildered response, “But we’ve already paid for the equipment. Why do we need to expense it again?”

That moment ignited a 30-minute crash course on basic GAAP principles, complete with journal entries. Unfortunately, her confusion only deepened. When discussing the treatment of our new $50,000 server, she inquired about the possibility of immediately expensing it instead of spreading the cost over several years for tax benefits. Again, I explained the importance of capitalization thresholds and the distinction between assets and expenses. She considered my rationale, but then suggested I consult our tax advisor, feeling that something didn’t sit right with that explanation.

To top it all off, she is responsible for reviewing our financial statements for accuracy ahead of their presentation to the board next week. This is no small task given that we operate a manufacturing company with a revenue of $15 million, and the stakes are certainly high.

As if the day wasn’t challenging enough, she raised another critical point of confusion. She wanted to know why our cash flow statement didn’t align with our profit and loss statement. I explained the fundamental difference between net income and cash flow, but she appeared genuinely baffled.

With over two decades in finance, I find myself questioning how someone could progress through the ranks without grasping such essential concepts. The only explanations I can muster are either