Navigating the Challenges of Leadership: Insights from a Surprising Encounter with Our New finance Director

Six weeks ago, our company welcomed a new finance Director. With an impressive background that includes over 20 years in corporate finance, experience with a Big Four firm, and an MBA from a well-respected institution, there were high expectations. As a senior accountant directly reporting to her, I was eager to collaborate and support her vision for our financial operations.

However, during a routine discussion about our monthly close process, I was taken aback by her unfamiliarity with some fundamental Accounting concepts. For instance, she raised a question that left me momentarily speechless: “Why are we wasting money on depreciation expenses every month? We’re not spending anything, right?” Initially, I thought she was testing my knowledge, but her puzzled expression told a different story.

I took the time to explain that depreciation is a method of allocating the cost of tangible assets over their expected useful lives, aligning expenses with the revenue generated during those periods. Yet, even after my detailed explanation, she seemed unconvinced, responding, “But we already paid for the equipment. Why do we have to expense it again?”

When I presented the journal entries and referenced Generally Accepted Accounting Principles (GAAP), her confusion deepened. She requested a step-by-step breakdown, expressing that this process seemed overly complicated. What should have been a straightforward discussion about basic Accounting principles turned into an extensive lesson that harked back to the fundamentals covered in introductory accounting courses.

Her questions continued to raise concerns. For example, she asked why we couldn’t simply expunge the cost of our new $50,000 server in the current year to capitalize on a tax write-off, rather than spreading the expense over several years. When I clarified the importance of capitalization thresholds and the distinctions between assets and expenses, she suggested consulting with our tax advisor, indicating that our approach might be erroneous.

Perhaps most alarming was her inquiry regarding our cash flow statement, which she claimed did not align with the Profit and Loss statement. When I explained that net income does not equate to cash flow, the confusion lingered in her eyes, creating a moment of disbelief that I couldn’t quite understand.

As I reflect on these interactions, I find myself questioning how someone can navigate a two-decade career in finance without grasping such essential concepts. It’s possible that my new boss has occupied roles where she relied heavily on others to manage the technical details, or perhaps her