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Accountants as Problem Solvers

August 01, 2020

By: Linda McCann , DBA, CMA, CPA ; David Horn , CPA ; Jennifer Dosch , CMA

why is problem solving important in accounting

Managers often complain that accounting graduates aren’t prepared for today’s business environment. The complexity of our global economy and the increasing influence of, and reliance on, technology leads to practitioners and instructors questioning if undergraduate accounting programs focus on the right curriculum to prepare students for careers.

One soft skill that can help prepare accounting students for their careers is problem solving. Management accountants need to be able to work cross-functionally to solve problems and provide meaningful analyses. Many colleges, universities, and accrediting bodies in academia incorporate strategic goals requiring curriculum that facilitates problem-solving skills.

As instructors, we teach technical accounting skills by demonstrating and providing practice with accounting concepts and structured problems, which we assess via homework and exams. Teaching soft skills, such as unstructured problem solving, poses greater challenges that are more difficult to incorporate into the curriculum. How can students learn and approach unstructured problem solving?

A SLOW-THINKING APPROACH

Recent scientific discoveries into the brain reveal that humans employ fast and slow thinking to solve problems. The brain especially prefers making decisions and solving problems quickly based on recognized patterns, visual and verbal cues, prior knowledge, routines, familiar preferences, prejudices, and emotions.

In contrast, decision making and problem solving often require slow thinking to digest new information, hypothesize alternatives, employ quantitative mathematical and statistical analysis, overtly recognize and break free from cognitive biases, challenge preconceived notions, synthesize ideas, and create new knowledge. To support this kind of slow, rational thinking, accountants can learn a methodical process for problem solving (see Table 1).

why is problem solving important in accounting

Many common business models—such as Six Sigma, A3 Lean, and Appreciative Inquiry—and the Association of American Colleges and Universities value problem solving, and critical-thinking grading rubrics describe specific steps for rational (i.e., slow thinking) problem solving. Business students, however, learn and apply these models in various courses, typically with no thread that ties them specifically to the accounting profession. Students learn bits and pieces of rational thinking throughout their undergraduate coursework, but instructors often don’t teach a common framework to apply these skills in a relevant and value-added way (see “Survey of Practitioners”).

why is problem solving important in accounting

To help address this issue, we developed a problem-solving rubric for accounting students (see Table 2). The three of us are faculty members from Metropolitan State University in Minneapolis/St. Paul, Minn., and represent three different parts of the curriculum (auditing, business taxation, and management accounting), so it was important that it could be used across the entire accounting program.

why is problem solving important in accounting

The rubric assesses learning in an organized way, providing a common framework (criteria) for students to consistently approach problem solving. The criteria include problem identification, analysis, and communication of results. It guides students through a series of problem-solving steps using terms and vocabulary specific to the accounting profession. The rubric also reminds us, as instructors, to create a learning environment where problem solving can occur (see “Setting the Tone”).

why is problem solving important in accounting

STEP 1: PROBLEM IDENTIFICATION

The iterative and looping nature of problem solving confounds inexperienced accountants. Where does one begin? Students tell us using a rubric provides a starting point.

To implement the rubric, we assign students projects with unclear goals, incomplete information, and more than one possible solution. Assignment topics vary. It could have students develop a cost-benefit analysis between adding employees or adopting Lean manufacturing techniques, analyze tax outcomes of business decisions, create a risk assessment and audit response for a fictitious client, or some other accounting-related issue.

Students begin by developing one or several hypotheses as to the nature of the problem. To generate ideas, we assist students in their brainstorming discussions. The rubric leads students to consider the environment, strategy, unexpected observations, overall importance, and risk assessment. At this stage, the identified problem may change, but the original hypothesized problem gives direction for next steps. Upon completing the assignment, we assess students on how they identified the problem.

Metropolitan State University’s business taxation course used the rubric in a case study that involves assessing the implication of the Wayfair v. South Dakota U.S. Supreme Court decision on a company’s sales tax collection. Prior to Wayfair , companies operated under a physical presence nexus established in Quill v. North Dakota . The Quill decision required companies to have a physical presence in a taxing jurisdiction in order to require collection and remittance of sales taxes on transactions.

In Wayfair , the U.S. Supreme Court overturned Quill in favor of an economic nexus standard, where companies only needed to have a certain level of economic activity. For example, in South Dakota, the threshold economic activity is 200 transactions or $100,000 in sales. The change from Quill to Wayfair was a major development in how companies operate and collect sales tax. It required companies to assess all jurisdictions in which they operate and evaluate how the change in the nexus standards impact its operations.

To apply this rubric to the change, students learn about a fictitious company that sells inventory to multiple states and collects and remits sales tax under the Quill physical presence nexus standard. We give students a subledger with all sales data for the given year. The rubric leads students to ask about implications of the Wayfair decision on the company, how the ruling impacts the company’s strategic objectives, and risks to the company because of the change in the law. Using the rubric, students are guided to discover the issue at hand, which is whether the company will have a significant number of new sales tax jurisdictions requiring collections and remittance from its customers.

Students tell us that without the rubric, they often feel like they have no road map at the beginning of a project or case study; identifying the problem seems too big and undefined to tackle. Many students initially resist engaging with unstructured problem-solving assignments because they differ from past assignments. Similar to what one might find in cross-functional teams opposed to change, students show their displeasure with crossed arms and distant body language.

Many college courses still rely on testing facts and use formulas and calculations, an approach that doesn’t put the student in the decision-making role but is familiar to them. With a rubric, students see smaller doable steps, where the assignment is heading, and how they can move forward and loop backward, when necessary. The rubric breaks down the initial intimidation students feel with unstructured problems.

STEP 2: ANALYSIS

Next, the rubric guides students through analyzing the problem using accounting-specific skills they’ve acquired in each course. For example, students consider tax laws, financial reporting and audit principles, or cost accounting techniques.

Continuing the sales and use tax example, at this stage, students apply the rubric to perform a complete analysis, enabling them to form a conclusion to communicate. What are the relevant facts to determine Wayfair ’s impact? What facts are irrelevant? What primary and secondary tax authority is needed to conduct research? Are there alternatives and exceptions to applying Wayfair ? Have all states adopted an economic nexus standard? Have all states adopted South Dakota’s transactional thresholds? What’s the quantitative impact to the company? Are there financial accounting implications to the Wayfair decision? What’s the scope of the necessary research, and are there limitations, constraints, and so on? Through the rubric, students formulate and answer questions and perform analysis to solve the problem at hand.

We assess students on their ability to gather and identify relevant facts, research any applicable rules and laws, assess alternatives, and perform any needed qualitative and quantitative analyses. At this stage, students apply theories and best practices learned in specific course fields, such as management accounting, taxation, and auditing.

To encourage elaboration, the rubric uses words such as curious, skeptical, model, assumption, authoritative, best practices, relevant, and sufficient sources. Like many accountants, students want to get their work done quickly, but problem solving takes time and slow thinking. Thanks to the rubric, more students turned in papers with greater depth, less “cut and paste,” and more relevant supporting details.

As in the real world, students often discover their original hypothesis or identified problem is incorrect, incomplete, or irrelevant. They confront the iterative nature of problem solving as they work through the analysis stage and build evidence to support their hypothesis. When evidence doesn’t support an identified problem, students go back and redefine their problem, gather new evidence, explore new alternative solutions, and build a case for their conclusion.

STEP 3: COMMUNICATION

Finally, students present their results in a memorandum to a hypothetical manager or audit partner. The memorandum mirrors common styles, such as IFRAC (issues, facts, rules, analysis, and conclusion) and BLUF (bottom line up front). Students state the problem and include the conclusion (i.e., solution) up front along with a summary of relevant facts and assumptions. Supporting documentation presents additional in-depth analysis.

This format familiarizes students with a presentation style that allows management to quickly understand conclusions while also providing more depth to support the up-front conclusion. We expect students to write and present findings in a clear and concise manner as if in a professional accounting setting. The rubric grading criteria helps students solve problems using rational thinking and delivering a memorandum that directly supports management decision making.

In the Wayfair case study, students draft a memorandum to management addressing the implications of the sales tax nexus precedence change. The facts section should discuss the company’s current sales and use tax policies. Students identify the issue as the change from physical presence nexus to economic nexus. The up-front conclusion should identify new jurisdictions from which the company needs to register and collect sales tax and quantify the volume of sales tax it expects to collect. Finally, the analysis provides an in-depth discussion of the change from Quill to Wayfair . Students should discuss how they determined new jurisdictions, limitations, and further required resources for the company.

PREPARING STUDENTS FOR THEIR CAREERS

We use the rubric format for projects or cases at different stages throughout the accounting curriculum. The problem-solving rubric measures student learning and reinforces rational thinking with each assignment. The projects that use the rubric vary in length, depth, and complexity as students move from management accounting to tax and then finally to audit. We find the rubric flexible enough to adapt to an instructor’s needs, yet it provides consistent core steps—identify the problem, analyze, and communicate—to solve problems.

The rubric helps students organize their communication through the memorandum. Setting up a memorandum so the problem and solution appear “up front” highlights mismatches between the problem, evidence, and conclusion. Further, it encourages students to decide—rather than ramble and include information that isn’t relevant. We find students often get to the communication stage and realize that their analysis doesn’t support their conclusion or identified problem. Fortunately, the rubric allows them to loop back and redefine and reanalyze.

By using the same grading criteria in multiple courses, we provide students with a familiar approach to problem solving that turns fast thinking to slow, rational thinking. The process and steps become routine and less daunting for the student. While each step still requires arduous thinking, the approach itself is a recognized pattern for students.

From our point of view as accounting instructors, the rubric helps provide consistent and fair grading. We provide separate points for milestones in problem identification, analysis, and communication, which further encourages students to go through each step of the process. Metropolitan State University plans to expand the use of this rubric in the accounting curriculum. This common framework provides students with a process to identify problems, research and investigate facts, conduct analyses, and communicate results across all accounting disciplines.

This process reinforces the problem-solving skills that students will need in their professional careers. These capabilities will help them perform their roles in today’s strategic, fast-paced business environment. Solving problems is critical for today’s management accountant. Through implementing the rubric, instructors can help students systematically apply a problem-solving process that they can take with them as they move from student to management accountant.

About the Authors

why is problem solving important in accounting

August 2020

  • Strategy, Planning & Performance
  • Decision Analysis
  • Negotiation
  • Metropolitan State University

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  • The joys of problem solving
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Many accountants enjoy problem solving more than number crunching. So what typical problems can you look forward to cracking at work? Iwona Tokc-Wilde reports

job-satisfaction

Problem solving is something that accountants and finance professionals deal with virtually every working day. In fact, a recent survey by Robert Half shows it is this part of working in the profession that they like best: 41% of accountants say solving problems gives them the most job satisfaction, compared to just 22% who prefer working with numbers.

‘Accountants are usually excellent at dealing with detail and spotting patterns, which makes them good at – and enjoy – problem solving,’ comments Andi Lonnen, founder and director of Finance Training Academy.

If you are at the beginning of your journey into the profession and enjoy tackling problems, you have a head start. Problem solving is also a skill that is one of the 10 most sought-after trainee skills globally (see 'Related links').

Why problem-solving skills are so important

‘The role of accountancy and finance has shifted from a pure focus on fiscal control to one where it has an impact on the business,’ says Phil Sheridan, managing director at Robert Half.

‘The requirement for problem-solving skills is part of this transition as, by mining data and analysing trends, accountants are now translating numbers into actionable insights for the business and are increasingly being seen as strategic partners.’ By putting their data skills and their problem-solving skills to work together, they also help uncover potential areas for concern.

It is vital for accountants in practice to correctly identify, analyse and solve problems too.

‘As trusted advisers, it’s our role to look at everything in detail to pick-up anomalies, patterns and correlations in order to advise our clients on how to take things forward,’ says Shahzad Nawaz of AA Accountants. If they fail to pick up and analyse problems correctly, the accounts could be wrong.

‘This means the business owner would be relying on incorrect data, which could have a detrimental effect on the future of the business. And, of course, if external stakeholders are relying on the data, then we could potentially be misleading them too.’

Incorrect accounts could also have other serious knock-on effects.

‘If the accounting figures are incorrect, then the tax payments relating to the company will be incorrect too. Later on, the client could find themselves with additional tax to pay – with interest,’ says Tanya Addy of BHP Chartered Accountants. 

‘Inaccurate accounting can also land businesses in serious commercial difficulties especially if, as a result, directors/owners have been taking more salary or dividends from the business than they were entitled to. In the worst case scenario, it could even lead to closure of the business.’

Problem solving at work

There are many areas where trainee and new accountants can practise solving problems, depending on the job you are doing.

‘If it’s accountancy, you’ll be looking at helping a business with cash flow, debtors and improving their record-keeping,’ says Nawaz.

At the nitty-gritty level, you will be reconciling control accounts, trying to understand why an account might not be balancing and investigating and clearing old items on reconciliations.

‘The work to balance an account involves finding out what the problem is and then resolving it, for example identifying and correcting transposition errors,’ says Lodden.

If you work in tax, you’ll be involved in advising a client on how much tax they will need to pay (and how much tax they can save) in a particular year.

‘This will require a review of the information provided by the client, such as bank statements and expenses, analysing which expenses incurred are allowable and disallowable for taxation, quantifying the results and communicating them to the client and to tax authorities,’ explains Carolyn Napier, senior ACCA tutor at London School of Business and Finance. 

You will also be dealing with tax implications, and tax cost for both employer and employee, of providing benefits.

‘You will need to ascertain which benefits are taxable and which are tax-free, and then you’ll need to "solve the problem" of which tax or taxes are due and payable, and by what date,’ says Napier.

In industry, you may be given the opportunity to help analyse projects, and communicate your findings to various parts of the business.

‘This is where new and trainee accountants will need to be prepared to utilise their problem-solving skills – noting anomalies and seeking clarification on areas of uncertainly will ensure that a clearer picture can be obtained,’ says Sheridan.

Deborah Adigun-Hameed is an accountant and junior financial analyst at BlueBay Asset Management. By utilising her problem-solving aptitude and skills, she has been involved in major decisions that shape the company she works for.

‘I’ve contributed to key strategic discussions about which market and products are profitable, what we should be selling and how we compare with our competitors,’ says Adigun-Hameed.

‘I may be newly qualified, but my informed opinions and advice are really valued by the management.’

Both in practice and in industry, accountants are also increasingly called upon to help solve technology problems – for example, when a business intends to implement new business software solutions. They help with the evaluation and selection of a solution, and with planning and execution of the implementation process. They also assist in testing the new system and facilitate going live when the system is ready.

Hone your problem-solving skills

Problem solving is about using logic and your technical expertise to assess a situation and to come up with a workable solution. It is connected to other skills such as level-headedness and resilience, analytical skills and good teamworking skills.

It also requires creativity, which is best learnt through collaboration – brainstorming with others to clarify the problem, generate ideas and create as many potential solutions as possible. When putting forward ideas, be confident in your contributions.

‘Everyone, including those newly-qualified, has something to offer,’ says Adigun-Hameed.  ‘Always think outside of the box, as cliché as that may sound. No new idea is insignificant. Innovation can be incremental; change can be small or radical.’

Improving your listening and communication skills will also make you a better problem solver.

‘Learning to communicate well is vital as you need to build rapport with clients. If you have a good rapport with someone, you are confident to ask questions, which is how you can pin down problems and find answers to those problems,’ says Nawaz.

Above all else, getting practical on-the-job experience is how you can get really good at problem solving.

‘The first control account a trainee tends to tackle and perfect is the bank control account; every trainee accountant has had to look for that 1p difference – as painful as that sounds, it certainly helps you learn,’ says Lauren Burt, client manager at EST Accountants and Tax Advisers.

"Everyone, including those newly-qualified, has something to offer. Always think outside of the box, as cliché as that may sound. No new idea is insignificant. Innovation can be incremental; change can be small or radical" Deborah Adigun-Hameed - BlueBay Asset Management

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Problem Solving Skills For Accountants

Problem solving skills for accountants are so valuable because businesses are full of problems that need solving – and almost all business problems have some kind of financial impact.

Therefore accountants with problem solving skills are highly valuable.

As a technically proficient accountant you understand many technical solutions to finance problems and issues.

You know what complies with the rules, what is possible and what is not.

However there comes a time when you are faced with problems that are difficult, eiether because they aren’t well-formed, are ambiguous or complex.

Complex problems

These are problems where there is no right answer and the issues span multiple disciplines and departments.

Developing problem-solving skills will set you apart from your colleagues, as you will be able to help solve these complex problems.

For instance, you will be a vital resource for developing the finance function.

You’ll also become a valued partner to other non-financial managers.

You will be able to propose solutions that work for you and them.

You can also ensure that they work within the financial constraints that you understand well.

Understanding business problems

The first step is to understand the problem thoroughly. To examine it from every relevant angle and understand it in context.

This means understanding the business, what is important and what would be right for the business – not just finance.

Lateral thinking for problem solving

Solving a business problem often requires lateral thinking – coming at things from a new perspective.

With your financial and analytical mind you can bring a valuable perspective that your colleagues may lack.

If you are able to develop lateral thinking skills you can make a significant contribution to the debate. Particularly when you use these alongside and combined with your technical and analytical approach.

Creative ideas

Accountants aren’t always noted for their creative thinking. Therefore being able to suspend judgement and think creatively and imaginatively can give you an edge over others. Because this enables you to bring something unique and different to the discussion.

Learning to think creatively can be liberating and fun. But it can also produce some new insights and innovations.

These can make everyone’s lives more productive and set you apart from your colleagues.

Proposing solutions

Having great ideas is one thing, but arguing the case for them and presenting your proposed solutions to your colleagues and decision-makers is another.

Being able to see – and sell – the benefits of a solution requires an insight into the business, your colleagues and the office politics that inevitably exist.

Why are problem solving skills for accountants so important?

Most business problems have a financial dimension and as accountant you have unrivalled expertise.

An accountant who can proactively solve business problems will be a highly valuable asset for any business..

Being a creative problem-solver may not be your natural strength, but these skills can be learnt and developed.

You have a huge opportunity to become a highly valued member of the team if you can develop your problem solving skills.

How are you developing your problem solving skills?

Do you have sufficient understanding of the business to propose solutions that will be accepted, how adept are you at persuading others of the merits of your solution, which of the  other key soft skills for accountants  do you need to develop, discover the seven essential soft skills for accountants download the report now.

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There are some key soft skills to focus on as your finance career progresses.

Find out which they are by downloading the free report.

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10 Accounting Problem Solving Skills and How To Improve Them

Discover 10 Accounting Problem Solving skills along with some of the best tips to help you improve these abilities.

why is problem solving important in accounting

Accounting is an important skill for anyone who wants to be financially successful. Without a basic understanding of accounting, it can be difficult to make sound financial decisions. However, even if you have a strong understanding of accounting principles, you may still encounter occasional accounting problems.

When these problems arise, it is important to have strong problem solving skills in order to find a resolution. In this guide, we will discuss some tips for solving accounting problems. We will also provide an overview of some common accounting problems so that you can be prepared in the event that one arises.

Financial Statements

Regulatory filings, revenue projections, account reconciliation, general ledger, business knowledge, problem solving.

Financial statements are important because they provide a snapshot of a company’s financial health. They can be used to make decisions about whether or not to invest in a company, and they can also be used to track a company’s performance over time. Financial statements include the balance sheet, income statement, and cash flow statement.

Payroll is an important skill for accountants because it allows them to process and manage employee compensation and benefits. Payroll processing includes calculating gross wages, deductions, and net wages; preparing payroll tax returns; and managing benefits such as health insurance, retirement plans, and paid time off.

Accountants who can effectively manage payroll can help businesses save time and money. They can also help businesses comply with federal and state tax laws and regulations.

Regulatory filings are important because they are required by law. Companies must file certain documents with government agencies in order to operate. These filings include tax returns, annual reports, and shareholder communications. Failure to file these documents can result in penalties or even the closure of a company.

Regulatory filings are important because they provide transparency. By law, companies must file certain documents with government agencies. These filings are public, which means that anyone can access them. This transparency allows investors and other stakeholders to see how a company is operating.

Revenue projections are important for businesses because they help businesses plan for future income. Revenue projections can be used to determine how much money a business will need to operate and grow. Revenue projections can also be used to help businesses raise money from investors.

Revenue projections are important because they help businesses plan for future income. Revenue projections can be used to determine how much money a business will need to operate and grow. Revenue projections can also be used to help businesses raise money from investors.

Account reconciliation is the process of ensuring that all transactions in a company’s books are accurate. This process is important because it helps ensure that the company’s financial statements are accurate and can be relied upon by investors, creditors and other stakeholders.

Account reconciliation involves comparing the company’s books with the records kept by its banks, vendors and other parties with whom it does business. If there are any differences, they need to be investigated and resolved. This process can be time-consuming, but it is important to ensure that the company’s books are accurate.

Compliance is the process of ensuring that you are in compliance with the laws and regulations that apply to your business. It is important for businesses to be compliant because it helps to protect them from penalties and fines. Compliance also helps to build trust with customers and regulators.

To be compliant, businesses need to understand the laws and regulations that apply to them and then take the necessary steps to ensure that they are following the rules. For example, businesses that sell products to consumers need to be aware of the consumer protection laws that apply to them. Businesses that operate in certain industries, such as healthcare, need to be aware of the regulations that apply to them.

General ledger is an important accounting problem solving skill because it is used to track and report financial information for a business. The general ledger is a summary of all of the accounts that make up the financial statements, and it is used to keep track of the money coming in and going out of the business. The general ledger is also used to prepare financial statements, and it is important that the information in the general ledger is accurate and up to date.

Quickbooks is an important skill for anyone in the accounting field. Quickbooks is a software program that helps accountants and business owners keep track of their finances. Quickbooks can help you track invoices, manage payroll, and create financial reports. Quickbooks is a valuable skill because it can save you time and make your job easier.

Business knowledge is important for accounting problem solving because it helps accountants understand the context of the problem they are trying to solve. It also helps them identify the root cause of the problem and develop a solution that will be effective in the real world.

Accounting problem solving often involves looking at a company’s financial statements and trying to identify where the company is spending too much money or where it is making mistakes in its accounting practices. To do this, accountants need to understand the company’s business and the industry in which it operates. They also need to be familiar with the latest accounting standards and best practices.

Problem solving is an important skill for accountants because they often have to solve complex problems. Problem solving requires the ability to identify the problem, gather information, develop a plan and implement the plan. Accountants must be able to think critically and creatively to solve problems.

Problem solving often requires good communication skills. Accountants must be able to explain the problem, gather information and develop a plan with the client. They also need to be able to follow up to make sure the plan is working and to troubleshoot if there are any issues.

How to Improve Your Accounting Problem Solving Skills

1. Understand the basics of accounting If you want to improve your accounting problem solving skills, it is important to have a strong foundation in accounting principles. You should be able to read and understand financial statements, as well as have a working knowledge of payroll, regulatory filings, revenue projections and account reconciliation.

2. Be well-versed in accounting software In order to be an effective problem solver, you need to be well-versed in accounting software. This will allow you to quickly and efficiently find solutions to accounting problems.

3. Stay up-to-date on accounting news and changes It is also important to stay up-to-date on accounting news and changes. This will help you anticipate problems and find solutions more quickly.

4. Be proactive in solving problems When you encounter an accounting problem, it is important to be proactive in solving it. This means taking the time to understand the problem and researching potential solutions.

5. Communicate effectively with your team When you are working on a team, it is important to communicate effectively. This means being clear about what you need from your team members and keeping them updated on your progress.

6. Be organized and efficient When solving accounting problems, it is important to be organized and efficient. This means having a system in place for tracking your progress and keeping your work area tidy.

7. Practice problem solving One of the best ways to improve your accounting problem solving skills is to practice. This can be done by working on practice problems or by taking on small projects in your personal life.

8. Seek out feedback When you are working on solving accounting problems, it is important to seek out feedback. This can be done by asking for feedback from your team members or by seeking out feedback from a mentor.

10 Linguistic Skills and How To Improve Them

10 stakeholder management skills and how to improve them, you may also be interested in..., what does a building manager do, what does a metrologist do, what does a security escort do, what does a food safety auditor do.

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Problem Solving in Accounting

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accounting department focusing on problem solving

Problem-solving in accounting is a critical skill that can always be improved upon. Master problem-solver and CFO at Musselman & Hall Contractors LLC, Adam Porter, shares his insight and experience with us in the latest episode of CFO Weekly.

What Makes a Great Problem-solver?

adam porter quote

If you know, you know, right? Adam instinctively knew he was a problem-solver when he was younger. Something as simple as going from point A to point B became an opportunity to experiment with which route got him to his destination quicker. And his quest for discovery hasn't stopped.

“If we don’t understand the ‘why’ behind the actions we take, how do we know if we’re really doing the right thing,” Porter said.

To solve is to correct or optimize, and none of us can do that if we don’t first recognize an opportunity to get involved. Problem-solving goes hand in hand with the willingness to roll up your sleeves and get stuck in, take an active role in, and see through the potential outcome. Adam empowers each of his team members to become (and grow as) problem-solvers, by recognizing them and their contributions to identifying and solving issues.

Involving people in the problem-solving process and connecting the dots for them, showing them how they make the business a better organism, is how you create more great problem-solvers and amplify your ability to tackle problems as they appear.

Accounting Problem-solving in Action

Accounting problem-solving quote

Problem-solving is a term that gets thrown around in interviews and on resumes quite a bit. When the time comes, real problem-solvers like Adam approach things in a specific way.

System Upgrades

If you’ve navigated a system change and survived to tell the tale, some would say you have superpowers. Upgrading something like an ERP system is a mammoth task, even for a seasoned team of executives. During a project like this, you’re reviewing and possibly amending every single organizational process.

You’re also required to identify how everything you do during this project starts to affect other areas of the business: finance, accounting, HR, IT and so on.

Adam’s own experience with one such project led him through a GL restructure. At the end of a six-month series of efforts, with the support of a Controller whom he had brought it to, Adam succeeded and was able to present information back to the business, which could be used to inform business decisions.

The domino effect: once more information became available, and it was clear how it related to each portion of the business, the people in charge of those respective portions became more engaged and more curious and more willing to work with that information.

Problem-solving is just one of those skills where nobody needs to formally identify the need for it. It’s the problem-solvers who are constantly on the lookout for opportunities to apply themselves.

The result is that everybody benefits.

The Problem-solving Process in Accounting

Adam’s very first step in his problem-solving process is to absorb as much information from as many sources as he can. Whether it’s listening to the news every day or speaking with different people inside the business, there’s this ongoing effort to find out more, learn about topical challenges that others might be facing, and use that to drive questions internally about further opportunities to solve problems.

It doesn’t necessarily need to reach the state of being a ‘problem’ to receive attention for optimization. You just need to listen and pay attention to where things might be slower, costing more than usual or requiring manual input from too many people.

Once you have this information, you can gather the right people into the room to start looking at that information, gathering more of it from different sources.

One of the key components of fully resolving any issue is to understand the full scope and depth of its current and future impact: What happens if you leave it alone, or if it gets worse, or if it’s completely resolved? Who gets more time in a day when you resolve something? Whose budget gets some breathing room? Can you reduce the amount of manual input that everybody’s required to give?

Finding the Right People to Solve the Problem in Your Accounting Department

So, once you know what the problem is, you need to get the right people in to solve it.

How do you know who that is? The team behind your solution is critical. As a CFO, you have the responsibility of setting your team up for success when they’re working on solving problems. All execs have this responsibility.

In any organization, cross-functional training is the quickest way to widen perspectives when approaching any problems. If your execs are regularly making time to get down to the operational level, and understand how and why things work a certain way, it becomes so much easier to strategically recommend a resolution when one is needed.

Problem-solving isn’t a one-way road.

Solve the Problem, Not the Symptom

How do you know when you’re solving the right thing? So many times, we see something blatantly creating a bottleneck in an operation and we’ll head right toward that point to clear the blockage. Is that really solving the problem, though?

Most times, it isn’t. Once you clear the blockage, if you don’t look a little deeper or follow it upstream, it’s probably going to reappear not long after you put in all that effort.

Adam explains that sometimes, you already know what the real root cause is, of one or more bottlenecks in the business. Sometimes it’s trial and error. Always, though, it requires you to dig deeper, uncover more detail, more links and connections to other parts of the business operation or the stakeholder network.

Adam goes on to say that getting to the root of the issue can also be achieved by just getting the right people in the room with you. Musselman & Hall Contractors does a great job of this, getting executives together at least once weekly, to just help others on the team evaluate elements, ask more questions, different questions, and gain a different perspective on things that can be missed during the daily routine.

Dealing with Resistance

Resistance is natural. Inertia affects every company in the world to some degree. When problem-solving, it’s likely that this will occur too.

You need to follow the process and listen as much as you convey messages. Cultivate the mindset within your business that someone else learning about your job is a positive thing. Take the time to explain that it’s because a fresh pair of eyes and a fresh mind might ask a different question that can enable you to work faster, reduce manual input, take on more responsibility, and actually achieve a promotion.

The right mindset about problem-solving enables it to benefit everyone on the team. No matter who is working on which problem or when, another major benefit to your business is to thoroughly document your procedures and changes thereto. It enriches the context of every issue that gets identified and resolved now and in the future, creating even greater efficiency for you as time passes.

Overcoming resistance is made possible by including and involving the right people, and enabling regular two-way communication with them through the problem-solving process.

For more interviews from the CFO Weekly podcast, check us out on Apple or Spotify or your favorite podcast player.

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The accounting industry is expanding rapidly, with massive growth projected over the coming years. The Bureau of Labor Statistics forecast that 142,400 new accounting and auditing jobs will be available by 2024, a growth rate of 11%.

If you're an aspiring accountant, or someone currently working as an accountant, this article will equip you with the skills and knowledge you need to be a part of this rapidly evolving profession.

In recent times, the job of an accountant has evolved from just crunching numbers and hard skills to a career requiring soft skills such as strategic thinking and business acumen.

This article outlines the most valuable skills you should seek to develop to succeed as an accountant.

These ten skills are just a few foundational ones that all accountants should master. Make a note of these points and see which ones resonate with you the most.

1. Effective Communication

In the pathway of learning accounting hard skills, most accountants don’t focus much on soft skills such as effective communication. But having good communication skills can help you achieve far more in your accounting career.

Can you effectively communicate with your co-workers and clients? Are there any areas that need work to improve on this skill set? Effective communication is a vital accounting skill required for success. It can be as simple as the ability to use email tools to improve virtual collaboration.

Especially if you’re a startup , you might have to handle a lot of different aspects of your work along with accounting, and good communication skills will help you in more ways than you think.

The ability to communicate well both in person and in writing will help you get new clients, be better at your job, work well with your colleagues, and ultimately advance professionally.

Additionally, well-developed interpersonal skills are helpful for networking . The first impression is often the one that counts. If you can express yourself freely when meeting new people and establish valuable relationships, you have a great advantage.

Your body language and visual communication play an important role as well. As you grow in your career as an accountant, you will regularly face situations where efficient communication can help you leave a lasting impression and help you professionally.

2. Knowledge of Math and Important Software

How well do you perform in math? This is an accounting skill that not many people would think of, but it can be vital to the job. You need to combine mathematical thinking with good IT management skills to effectively make use of the evolving needs in accounting.

For those who are aiming to become senior-level accountants, it is necessary to be proficient in calculus, probability, statistics, and statistical analysis.

Accountants need to be skilled in dealing with numbers to examine and interpret figures. Even if they use a computer to do the more complex calculation, the skill of understanding the basic principles based on which these tools are operating will take you a long way.

Each business process today functions smoothly with the integration of the right tools. You need to be proficient with the software and tools your organization and industry are using.

Strong accounting skills are crucial to succeed in service charge accounting , ensuring accurate financial management and compliance.

For example, integrating inventory management software with the accounting system ensures that every order, purchase, and business activity is captured in the accounting system. It removes the risks of human errors, resulting in more accurate financial reports.

Some of the essential software and programs an accountant needs to be proficient with are:

Microsoft Excel - for the good old traditional accounting

QuickBooks or similar - for advanced and automated

QuickBooks is one of the top accounting software for small businesses. It is used to track expenses, payroll management, and other vital accounting processes.

It is pretty common to find a company using Quickbooks, and an accountant will probably end up working with it. You can compare QuickBooks Pro and premier to see the differences and how to use each version.

But, since many other alternatives to Quickbooks are surfacing very fast, it is necessary to adjust quickly or learn using more than one program. Your job might also require you to use invoice generator tools, so make sure you have a strong grasp of these as well.

3. Use Emotional Intelligence in Your Line of Work

Emotional intelligence is the ability to understand, use, and manage your own and others’ emotions and impact them positively. This particular ability can help an accountant to collaborate, influence, and build trust with colleagues and clients.

Emotional intelligence (EQ) is becoming an essential skill. In fact, one study found that emotional intelligence is responsible for 58% of job performance, and that 90% of top performers have a high EQ.

An accountant with emotional intelligence can stand out from the crowd and attract new opportunities in his/her career.

Emotional intelligence includes the following abilities:

Self-awareness : The ability to understand oneself, including behavior and emotions.

Self-management and self-regulation : The ability to control emotions and responses.

Self-motivation : The ability to keep oneself motivated, and continuously perform, act, and move toward goals.

Empathy : The ability to feel others’ feelings and relate with them effectively.

4. Learn Persuasion skills

Persuasion is often thought of as the ability to convince others to do what we want. For an accountant, this particular skill can be the ability to gain trust and build a relationship.

Accounting is a highly trust-intensive job and you need to persuade your clients/employer to trust your skills and expertise. It is about self-confidence and the ability to analyze a situation and come up with a plan that people have trust in.

Persuasion can help an accountant in the follows ways:

Control your reputation

Enlist support for controversial decisions

Ensure that accountability is located appropriately

Build alliances that can help you

Help others appreciate your levels of performance

5. Have Great Negotiation Skills

Negotiation skills are vital for accountants. Most people may carry the wrong perception that accountants have to deal only with papers and numbers. While in reality, good negotiation skills help you at each step of the career.

Especially if you’re just starting out, good negotiation skills will help you capture the opportunities you deserve. Whether it is an external negotiation with potential clients or internally with co-workers, negotiation skills determine how successful your interactions with others are.

If you think of it, an accountant is negotiating all the time, for example discussing budgets or dealing with banks and clients’ payments. Good use of negotiation skills can secure some of the best long-term relationships.

Here are some of the things that you can do with good negotiation skills:

  • Increase the bottom line
  • Build better relationships
  • Resolve conflicts
  • Enhance communication

6. Knowledge of Data Analysis and Interpretation Skills

Data analysis is the ability to read raw data and present it so that others can easily understand it. Using this, one can draw conclusions and make relevant business decisions.

Each business needs to make data-driven decisions, and it is where data analysis and interpretation skills come into play. Accountants need to work with data to make strategic business decisions and meet client’s demands.

Here are some essential things an accountant can do with data analysis:

Improve business performance : Accountants work in various industries, but each business needs to evaluate its performance and constantly improve it. Accountants can use data analysis to ensure a company is running well, meeting its targets, and constantly improving performance.

Manage risks : Accountants can read data to identify various risk points, and they can use predictive analysis to provide a company with a more clear future.

7. Critical Thinking and Problem-Solving Skills

You might face new challenges and unexpected errors in your accounting career. Playing with numbers is not so easy, after all. Additionally, an accounting practice may focus more on advisory services for clients. This is why a problem-solving attitude is necessary to perform such a job.

Today’s businesses are looking for problem solvers and not only number-crunchers. They want to have people who can analyze different situations and interpret solutions for them.

Critical thinking is the ability to solve problems, add value to data, interpret trends within a business, and overall take a broader commercial outlook that benefits a company. An accountant with this skill can evaluate complicated situations, consider different options, and reach logical conclusions.

Critical thinking can come naturally to people, or it can be developed over time. Here some tips for developing critical thinking:

Take inputs : Try to question how and why you do things the way you used to do.

Look for opportunities : How can you grow and improve? Consider alternative solutions to solve the problem you encounter in your line of work.

Communication : Talk through your reasoning and conclusions with colleagues each time you can.

Independent mindset : Think outside the box and challenge the current state of affairs. Make well-thought-out decisions. A critical thinker should be logical as well as creative.

Knowledge : Improve your knowledge by keeping an open mind for new things. There is always something new to learn that can help to solve problems.

8. Leadership, Management, and Supervisory Abilities

As much as these qualities are self-explanatory, there’s a need to have them ingrained in your work right from the start. Even if you’re just starting your career in accounting, good leadership skills will put you in a position to grow.

Leadership involves a series of skills and qualities, such as:

Organization skills : An accountant needs to manage many tasks and responsibilities and have excellent team management skills . One has to set deadlines, follow them, and, if necessary, use software to manage different tasks like handling transactions, creating reports, and more.

Time-management skill : You need to know the most important things to do for every task in hand, prioritize tasks, and work accordingly.

Adaptability: Industries and technologies are changing and evolving. You have to be able to adapt quickly. An accountant handles different types of clients and accounts, and adaptability helps you make specific decisions for each of them.

Initiative: Part of leadership is to take the initiative and be able to work without supervision while at the same time show you can supervise other people. An accountant has to be able to work with a team and guide them on the way forward.

You might handle the complete finance and accounting department of your organization going forward. Strong leadership skills will prepare you for the journey.

9. Teamwork or Interpersonal Communication Skills (Especially with Clients)

Being an accountant is not anymore just about reporting and working independently on sheets. With businesses becoming more complex, the need to communicate with other accounting departments or even interact with clients to explain accounting insights is rising.

Today, businesses want a strong involvement of the accountant in business processes and decision-making. In fact, they are required to analyze raw data and advise a business decision. As an accountant, you must develop a set of skills that help you in better team management and collaboration like clear communication skills, empathy, and problem-solving.

But, above all, it is vital to work and collaborate with other people within and outside your organization. You have to understand business situations, understand the other party’s needs, and deliver on them. It may involve working with other departments and collaborating with new people on each task.

What are the common challenges of working with other departments? It involves a set of skills to deal with departments with different priorities, people with different personalities, and maybe deal with conflicts between people.

Part of developing a successful skill teamwork to establish and maintain a credible and trusting partnership with colleagues in other departments so that everyone can work on common goals.

10. Attention to Detail

As an accountant, you have a huge financial responsibility on your shoulder. Strong attention to detail will help you avoid mistakes and errors.

It minimizes errors in accounting which could lead to audits and investigations by government agencies. Even a tiny mistake can multiply and lead to significant consequences.

When there are many tasks at hand that you need to work on and even delegate, consider using task management software to effectively track work for your team and for yourself.

Attention to detail is not a natural skill for everyone; yet it is one of the most crucial skills to your success in accounting. The key is to stay as organized as possible.

You could use a note-taking app to help you remember tasks, remove distractions, and do one task at a time. Improving focus can help becoming more detail-oriented and avoid mistakes.

An accountant needs many skills to be successful. It is not just about numbers and correct report formats anymore.

It is necessary to have interpersonal skills such as communication and working with other people, leadership, and attention to detail.

The above points are the most important to focus on for a successful accounting career. Use these and climb the ladder of success in your accounting journey. Good luck!

About the Author

Monica a self-driven person and loves to spend her leisure time reading interesting books that come her way. She is passionate about writing and collecting new books. She believes in hard work and it is her persistence that keeps her doing better. She is a perfectionist and doesn’t let go off things that don’t appear perfect to her. She loves traveling whenever she needs time off of her busy schedule. Her favorite holiday destination is Hawaii.

Continue to: Self-Motivation Writing a Business Case

See also: Managing Money: Budgeting The Skills You Need to Build a Career in Finance

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How to develop critical thinking skills in finance & accounting

Stephen Moir, Director, Moir Group

Stephen Moir

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When it comes to finance and accounting roles, employers are increasingly looking for problem solvers, not a number-crunchers. Over recent years, we have seen an increasing demand for people who can analyse and interpret data and think critically.

What is critical thinking.

A critical thinker is a problem solver. They are able to evaluate complex situations, weigh-up different options and reach logical (and often quite creative) conclusions.

Critical thinkers are highly-valued by employers as they innovate and make improvements, without taking unnecessary risks. Chartered Accountants Australia and New Zealand recently identified that it was in the top 10 attributes that will help you get noticed in the job market.

Why are critical thinking skills important?

Once you have learnt how to develop critical thinking skills you will be better able to add value to data, interpret trends within the business, understand how people and performance intersect and take-on broader commercial outlook that benefits the business.

How to develop critical thinking skills

Critical thinking comes naturally to some people, but it is also a skill than can be practiced. Here are some tips for how to develop your own critical thinking skills :

  • Examine: Self-awareness is the foundation of critical thinking. It allows you to play to your strengths and address your weaknesses. Question how and why you do things the way you do.
  • Analyse: Look for opportunities to grow and improve. Consider alternative solutions to the problems you encounter in your work.
  • Explain:  Clear communication is key. Get into the habit of talking through your reasoning and conclusions with colleagues.
  • Innovate: Develop an independent mind-set. Find ways to think outside the box and challenge the status quo. Make sure your decisions are well-thought out. A critical thinker is logical as well as creative.
  • Learn: Keep an open and well-oiled mind. Brush-up on your problem-solving skills by doing brain-teasers or trying to solve problems backwards. Keep up-to-date with professional learning opportunities . You may also need to unlearn past mindsets in order to grow and move forward.

How to apply critical thinking skills in your current role

Could you implement a new process or procedure that enhances performance or profitability? You might also consider volunteering for a new project or responsibility that gives you the opportunity to innovate and take on a new challenge. It’s a great way to broaden your skillset and gain exposure to other parts of the business.

Surround yourself with other critical thinkers in the organisation and work together towards achieving a problem-solving culture. Ask questions, and always look for opportunities for continual learning.

Changing roles to develop critical thinking skills 

At Moir Group, we are passionate about finding the right cultural fit between people and the organisations they work with. If you are a critical thinker, it’s worth looking for a stimulating work environment that encourages innovation and non-conformist thinking when considering your next role.

How to demonstrate critical thinking skills at an interview

During an interview, use examples from your past experiences to demonstrate your problem-solving abilities. Show that you can be analytical, weigh-up pros and cons, consider other view points and be creative in your solutions. Clearly articulating your thought process is key.

Sometimes an interviewer will ask you to simplify the complex as a way of determining your clarity of thought. For example: “How would you explain the state of the economy to a kindergarten child?” In instances like these, the focus will be on how you explain your reasoning, rather than achieving a ‘right’ answer. Learn more here.

If you’re looking to take that next step in your career, we can help. Get in touch with us here .

2 Responses to “How to develop critical thinking skills in finance & accounting”

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Hi Stephen,

The above is very useful and very valuable for employers. However my understanding of critical thinking is slightly different from above. I recently listened to a course in critical thinking by Professor Steven Novella of Yale School of Medicine. To keep it simple it is to do with assessing the veracity of views and statements made by oneself, others and media being constantly aware of the many biases, the flaws and fabrications of memory, half truths, unspoken truths, and even lies. So it becomes key to adopt an inquisitive mindset, to look for external evidence that supports argument and not just wishful or hopeful thinking.

Just wanting to add to the debate as this is a really important area.

' src=

Hi Richard,

We are pleased that found this article useful. Thanks for your sharing your thoughts about critical thinking.

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why is problem solving important in accounting

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why is problem solving important in accounting

Developing your problem-solving skills

Problem Solving has emerged as one of the key skills that accountants will need in the future. As we are increasingly called upon to help solve problems, both in business and in practice, so it's vital that we hone our skills in this area so that we can continue to add value to our organisations in the future. In this extract from his new course, Problem Solving for Accountants , Alan Nelson describes how we can develop our problem-solving skills.

Before we elaborate on why accountants should be interested in developing their problem-solving skills, let's go back to basics.

The most obvious sign of a problem is that something is not working as well as you would like it to be.

What is a problem?

What are the signs that there is a problem? A downturn in reported sales for the period?

Whether it is a financial reporting issue, a timing issue, a sales issue or a business performance problem, the most obvious sign of a problem is that something is not working as well as you would like it to be.

What are examples of typical accounting problems?

Accountants and finance professionals deal with problems on a daily basis. You might:

  • Spot that some creditors are taking longer to pay
  • Reconcile accounts
  • Notice that an important KPI is off target
  • Identify an increase in production costs
  • Uncover errors in tax returns
  • Foresee a cash shortage before it becomes critical

As accountants, it's vital that you notice the finer details, meaning you are able to spot errors and patterns with figures. Not only do you have the skills to identify these kinds of problems, but you have the technical knowledge to make the numbers right.

How is the nature of problem-solving changing in accounting?

Emerging technologies are causing the accounting industry to change. Computer programmes are starting to rectify the nitty-gritty numbers issues that accountants traditionally dealt with, meaning you will be faced with new problems to solve.

As those of you in practice attempt to move towards becoming trusted business advisers, and those in business towards being finance business partners, rather than being asked to solve problems to do with the accounts, you will be asked to seek out � and provide solutions to � issues in the wider business.

How will I need to develop my problem-solving skills then?

With the rise of automation, accountants of the future will be required to focus less on highlighting these sorts of issues with the numbers, and become much better at thinking up alternative solutions to a range of issues across the organisation.

Your job will be to bring problems to senior management and highlight how they present an opportunity for the business to improve � provide a better service, make better products, satisfy more customers, make more money... the list goes on.

And there are two different sets of skills that you can develop to help you do this.

Traditionally, the strategies used to get to the cause of a problem can be seen as being either creative or analytical. So it's developing your problem-solving skills in these areas that the new course focuses on.

Alan Nelson is an author for accountingcpd. To see his courses, click here .

why is problem solving important in accounting

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The 5 Whys of Problem Solving in Finance

problem solving in finance

Many Finance professionals are faced with the daily task of solving problems. Whether they come from IT Services, the Business Intelligence team, or even the next cube over, we can never seem to fix enough.

The first, and most important step in solving problems is to identify them, otherwise known as Root Cause Analysis. The “5 Whys” methodology is far and away one of the most efficient methods for honing in on and conceptualizing the root cause of any dilemma you might come across.

This technique requires five iterations of asking “why” to probe continuously deeper into the root cause of an event. (“Why 5 ?” you might ask? It was found through years of experimentation at Toyota to be the usual number of whys it takes to get oneself to the crux of the issue.)  1

problem solving in finance

The best way to understand the “5 Whys” methodology is through an example. As many of us are well aware, finance departments are plagued with an inability to submit their budgets on time. When managers ask themselves why this happens, the first answer tends to be “well, we’re not working fast enough” or “we don’t have enough resources.” When a follow-up “why” is asked, there is often some flustered arm-flapping and muttering. The reason the root-cause analysis stops early is because people inherently focus on what they can see and touch. The key, however, is to focus on “why did the process fail” and not on “why did my people fail.”

When we focus on the process, we begin to dig into the infrastructure of our tools and methodologies. I was brought onto a client project to build a financial planning model . When building the organization dimension, I was given a temporary file containing a hierarchy that could change at any given moment; the source database holding the hierarchy was going through a complete revamp while I was building the model that relies on it.

So I started the following question and answer thread:

Q1: Why are we running the source database upgrade now?

A1: This was the earliest the database upgrade could start.

Q2: Why are we running these upgrades in tandem?

A2: There was not enough communication between internal projects and consulting groups.

Q3: Why the breakdown of communication?

A3: There is no process in place.

Q4: Why is there no process?

A4 : We have never run an upgrade this large before and do not have experience with it.

Q5: Why do you not have experience with it?

A5: Ah, well…therein lies the root cause of the issue; we should have brought in someone with experience and process knowledge.

In this scenario, we ended up having to take special care to avoid going over budget or losing out on key functionality. However, if a better process for coordinating the two upgrades had been in place, the extra time and effort put into keeping the project on task could have been put toward adding extra functionality.

Upgrading infrastructure, such as tools and processes, and bringing in experience and education keeps us at the top of our game and allows us to work in unison instead of at odds. Next time you are looking at improving your business , consider looking at workflow, methodology, training, and technology options as key areas of improvement. But, never forget to ask yourself “why?”

1  Ohno, Taiichi. Toyota Production System: beyond Large-Scale Production. Productivity Press, 1988.

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why is problem solving important in accounting

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What is problem solving and why is it important

why is problem solving important in accounting

By Wayne Stottler , Kepner-Tregoe

  • Problem Solving & Decision Making Over time, developing and refining problem solving skills provides the ability to solve increasingly complex problems Learn More

For over 60 years, Kepner-Tregoe has been helping companies across industries and geographies to develop and mature their problem-solving capabilities through KT’s industry leading approach to training and the implementation of best practice processes. Considering that problem solving is a part of almost every person’s daily life (both at home and in the workplace), it is surprising how often we are asked to explain what problem solving is and why it is important.

Problem solving is at the core of human evolution. It is the methods we use to understand what is happening in our environment, identify things we want to change and then figure out the things that need to be done to create the desired outcome. Problem solving is the source of all new inventions, social and cultural evolution, and the basis for market based economies. It is the basis for continuous improvement, communication and learning.

If this problem-solving thing is so important to daily life, what is it?

Problem-solving is the process of observing what is going on in your environment; identifying things that could be changed or improved; diagnosing why the current state is the way it is and the factors and forces that influence it; developing approaches and alternatives to influence change; making decisions about which alternative to select; taking action to implement the changes; and observing impact of those actions in the environment.

Each step in the problem-solving process employs skills and methods that contribute to the overall effectiveness of influencing change and determine the level of problem complexity that can be addressed. Humans learn how to solve simple problems from a very early age (learning to eat, make coordinated movements and communicate) – and as a person goes through life problem-solving skills are refined, matured and become more sophisticated (enabling them to solve more difficult problems).

Problem-solving is important both to individuals and organizations because it enables us to exert control over our environment.

Fixing things that are broken

Some things wear out and break over time, others are flawed from day-1. Personal and business environments are full of things, activities, interactions and processes that are broken or not operating in the way they are desired to work. Problem-solving gives us a mechanism for identifying these things, figuring out why they are broken and determining a course of action to fix them.

Addressing risk

Humans have learned to identify trends and developed an awareness of cause-and-effect relationships in their environment. These skills not only enable us to fix things when they break but also anticipate what may happen in the future (based on past-experience and current events). Problem-solving can be applied to the anticipated future events and used to enable action in the present to influence the likelihood of the event occurring and/or alter the impact if the event does occur.

Improving performance

Individuals and organizations do not exist in isolation in the environment. There is a complex and ever-changing web of relationships that exist and as a result, the actions of one person will often have either a direct impact on others or an indirect impact by changing the environment dynamics. These interdependencies enable humans to work together to solve more complex problems but they also create a force that requires everyone to continuously improve performance to adapt to improvements by others. Problem-solving helps us understand relationships and implement the changes and improvements needed to compete and survive in a continually changing environment.

Seizing opportunity

Problem solving isn’t just about responding to (and fixing) the environment that exists today. It is also about innovating, creating new things and changing the environment to be more desirable. Problem-solving enables us to identify and exploit opportunities in the environment and exert (some level of) control over the future.

Problem solving skills and the problem-solving process are a critical part of daily life both as individuals and organizations. Developing and refining these skills through training, practice and learning can provide the ability to solve problems more effectively and over time address problems with a greater degree of complexity and difficulty. View KT’s Problem Solving workshop known to be the gold standard for over 60 years.

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The Importance of Communication in Accounting

Finance professionals communicating in meeting

  • 29 Jun 2022

When you hear the phrase “financial accounting skills,” you likely think of creating and analyzing financial statements , poring over spreadsheets, and using formulas to calculate ratios.

These are all vital skills for finance professionals. Yet, one accounting skill that’s often overlooked is communication.

Communication is the act of relaying information; some argue it’s accounting’s core purpose. Your work creating and drawing insights from financial statements—including balance sheets , cash flow statements , and income statements —is most impactful when you effectively communicate it to others.

Here’s a breakdown of key communication skills, why they’re important for accounting, and how you can build yours.

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4 Communication Skills for Finance Professionals

1. explaining complex topics.

If you’re an accountant or other financial professional, you likely have strong financial literacy and have adopted finance terms into your vocabulary. Effective communicators break down complex topics into easily understood language to relay important information to those with less experience.

For instance, when communicating financial statements’ content, refrain from using acronyms, give brief definitions of technical terms (when appropriate), explain which line items factored into your calculations, and be open to questions.

2. Understanding Your Audience

Along the same lines, a successful communicator must take their audience’s perspective into account to distill information and determine the most effective method for communicating with them.

Questions to ask include:

  • What’s their level of financial knowledge?
  • What do they need to know to do their jobs effectively?
  • What information is unnecessary?
  • What method of communication would be most helpful to them?

For example, if your audience is fellow finance employees, sending a financial statement in an email with a brief note about what you want to highlight may suffice.

If your audience is your firm’s marketing and sales teams, the best way to communicate with them may be by creating a slide deck with visuals highlighting points on each financial statement. You could present how each metric impacts the company’s overall financial health and what that means for those teams.

3. Providing Context

When communicating financial trends and ratios to non-finance professionals, it’s important to provide context. For example, what does a decline in return on assets mean for their daily work? How do their specific team goals impact the line items you’re presenting?

When everyone understands accounting information’s context, the meaning behind the numbers can come through.

4. Data Storytelling

Data storytelling is the ability to take raw numbers and communicate insights through narrative and visualization. This is an effective communication skill because it prompts you to consider key ideas:

  • What’s the context?
  • Who are the stakeholders?
  • What’s the problem?
  • How do you suggest the problem be solved?

This action-oriented narrative structure can be helpful for non-finance professionals who need a big-picture perspective.

Related: 7 Finance Skills Employers Look for on a Resume

Why Is Communication Important in Accounting?

1. aligns your internal team.

As the keeper of your organization’s finances, you’re uniquely responsible for aligning your internal team. Regular, clear communication can help all managers have an accurate picture of their company’s financial health, which informs how they communicate with their teams, formulate strategies, and make decisions.

This can happen verbally and visually, such as when presenting at your company’s all-staff meeting, or in writing, such as sending a periodic email update.

2. Informs Company Goals and Benchmarks

Financial statements hold key information for goal- and benchmark-setting on organizational, team, and individual levels. By providing everyone with accurate, up-to-date information about your organization’s finances, you can enable them to make decisions that consider its current standing and the broader impact of their specific goals.

Additionally, you can communicate progress toward those goals over time, articulating how efforts impact the company’s financial metrics. Having this deeper understanding of how goals affect the organization can empower employees at any level.

3. Reports Financial Health to Stakeholders

As an accountant, you must relay information about your organization’s financial health to its stakeholders, including executives, board members, and investors.

In the online course Financial Accounting , Harvard Business School Professor V. G. Narayanan notes why it’s important to use accounting to communicate with investors.

“Accounting is how we represent—in a concrete way—the past performance, future potential, and value of an organization,” Narayanan says. “It’s crucial to gaining investor trust.”

Summarizing and highlighting important financial information both verbally and in writing enables you to effectively communicate with stakeholders whose decisions impact your company’s future.

4. Stands Out in the Job Market

Communication skills can not only help you excel in your current role but land a new job.

Graph shows increasing demand for communication skills

Data from Emsi Burning Glass shows a steady increase in finance job postings over the past year that require strong communication skills. Having both hard and soft accounting skills can increase your job prospects and set you apart from other candidates.

A Manager's Guide to Finance and Accounting | Access Your Free E-Book | Download Now

How to Improve Financial Communication Skills

Although it may seem contradictory, accounting knowledge and communication go hand-in-hand in business. To become a better financial communicator, Narayanan says it’s imperative to build basic accounting skills .

“A sound understanding of accounting is essential to successfully communicating in the business world, regardless of the job function you’re performing,” Narayanan says in Financial Accounting .

A strong foundation in accounting fundamentals can give you the confidence to communicate effectively.

With your accounting knowledge, you can practice breaking down complex topics, considering your audience’s perspective, and telling actionable stories with financial data to inform your colleagues and boost your career.

Do you want to take your career to the next level? Explore Financial Accounting —one of three online courses comprising our Credential of Readiness (CORe) program —which can teach the key financial topics you need to understand business performance and potential. Not sure which course is right for you? Download our free flowchart .

why is problem solving important in accounting

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  1. Accountants as Problem Solvers

    STEP 1: PROBLEM IDENTIFICATION The iterative and looping nature of problem solving confounds inexperienced accountants. Where does one begin? Students tell us using a rubric provides a starting point. To implement the rubric, we assign students projects with unclear goals, incomplete information, and more than one possible solution.

  2. The joys of problem solving

    Why problem-solving skills are so important 'The role of accountancy and finance has shifted from a pure focus on fiscal control to one where it has an impact on the business,' says Phil Sheridan, managing director at Robert Half.

  3. Problem Solving Skills For Accountants

    Problem solving skills for accountants are so valuable because businesses are full of problems that need solving - and almost all business problems have some kind of financial impact. Therefore accountants with problem solving skills are highly valuable.

  4. How Problem Solving Skills Prevent Accounting Mistakes

    Problem solving skills are essential for Accounting professionals who deal with complex and dynamic financial data on a daily basis. Mistakes in Accounting can have serious consequences for...

  5. 10 Accounting Problem Solving Skills and How To Improve Them

    Problem Solving Expand + Financial Statements Financial statements are important because they provide a snapshot of a company's financial health. They can be used to make decisions about whether or not to invest in a company, and they can also be used to track a company's performance over time.

  6. Problem-Solving Skills for Accounting Auditors

    Problem-solving skills are essential for accounting auditors, who need to examine financial records, identify errors or fraud, and recommend solutions. Auditing is a complex and dynamic...

  7. Problem Solving in Accounting

    February 4, 2022 Mimi Torrignton Problem-solving in accounting is a critical skill that can always be improved upon. Master problem-solver and CFO at Musselman & Hall Contractors LLC, Adam Porter, shares his insight and experience with us in the latest episode of CFO Weekly. What Makes a Great Problem-solver? If you know, you know, right?

  8. 5 soft skills that every accountant needs

    Here are some significant accounting soft skills that will mean the difference to a hiring manager when employing the right accountant for their team: 1. Business and commercial acumen. The business world outside of accountancy and finance is vast but having that knowledge will definitely set you apart. More and more accounting and finance ...

  9. Critical thinking in accounting education: Status and call to action

    Definition: CPAs draw on strong problem-solving and decision-making skills, including the ability to utilize technology and data analytics. CPAs capacity for analytical and integrative thought enables them to identify important issues, use evidence and analytics to thoroughly and objectively evaluate alternatives, apply appropriate decision criteria, and develop implementation and change ...

  10. Skills You Need to Succeed in Accounting

    7. Critical Thinking and Problem-Solving Skills. You might face new challenges and unexpected errors in your accounting career. Playing with numbers is not so easy, after all. Additionally, an accounting practice may focus more on advisory services for clients. This is why a problem-solving attitude is necessary to perform such a job.

  11. How to Solve Problems as an Accounting Manager

    Problem-solving skills are essential for accounting managers, who need to deal with complex financial data, multiple stakeholders, and changing regulations. In this article, we will explore...

  12. Why Do Accountants Love Their Jobs? It's Not Just Numbers

    One of the best problem-solving strategies is to leverage data from a wide range of sources. As Paul McDonald, senior executive director for Robert Half, points out, "Accounting and finance professionals regularly mine data to identify historical trends and make projections based on those findings.

  13. Accounting Research and Problem Solving

    Accounting and management practice as well as accounting research would benefit by shifting more of the scholarly attention towards external matters — solving problems of practice — while retaining its emphasis on rigor and validity. William W. Cooper, Yuji Ijiri, and Robert S. Kaplan, for example, addressed scores of important problems of ...

  14. Analytical Skills

    Analytical skills refer to an individual's ability to identify a problem, investigate to find out relevant facts, and find a logical solution. They are considered important skills in many different fields; however, it is especially important in finance when evaluating financial securities. Analytical skills are the ability to collect ...

  15. PDF The Application of Critical Thinking in Accounting Education:

    2. Literature Review. There are six important critical thinking skills delivered by Facione (1990) namely; (1) Interpretation, (2) Analysis, (3) Evaluation, (4) Inference, (5) Explanation and (6) Self-Regulation. The study which analysed critical thinking for purposes of educational assessment and instruction further highlighted sub-skills ...

  16. How to develop critical thinking skills in finance & accounting

    Innovate: Develop an independent mind-set. Find ways to think outside the box and challenge the status quo. Make sure your decisions are well-thought out. A critical thinker is logical as well as creative. Learn: Keep an open and well-oiled mind. Brush-up on your problem-solving skills by doing brain-teasers or trying to solve problems backwards.

  17. Developing your problem-solving skills

    Problem Solving has emerged as one of the key skills that accountants will need in the future. As we are increasingly called upon to help solve problems, both in business and in practice, so it's vital that we hone our skills in this area so that we can continue to add value to our organisations in the future.

  18. Why Problem-Solving Skills Are Essential for Leaders

    Problem-solving is the process of systematically removing barriers that prevent you or others from reaching goals. Your business removes obstacles in customers' lives through its products or services, just as you can remove obstacles that keep your team from achieving business goals. Design Thinking

  19. 7 Problem-Solving Skills That Can Help You Be a More ...

    1. Analysis As a manager, you'll solve each problem by assessing the situation first. Then, you'll use analytical skills to distinguish between ineffective and effective solutions. 2. Communication Effective communication plays a significant role in problem-solving, particularly when others are involved.

  20. The 5 Whys of Problem Solving in Finance

    The 5 Whys of Problem Solving in Finance May 11, 2018 by Ironside Group Many Finance professionals are faced with the daily task of solving problems. Whether they come from IT Services, the Business Intelligence team, or even the next cube over, we can never seem to fix enough.

  21. What Is Creative Problem-Solving & Why Is It Important?

    Its benefits include: Finding creative solutions to complex problems: User research can insufficiently illustrate a situation's complexity. While other innovation processes rely on this information, creative problem-solving can yield solutions without it. Adapting to change: Business is constantly changing, and business leaders need to adapt.

  22. What is problem solving and why is it important

    Seizing opportunity Problem solving isn't just about responding to (and fixing) the environment that exists today. It is also about innovating, creating new things and changing the environment to be more desirable. Problem-solving enables us to identify and exploit opportunities in the environment and exert (some level of) control over the future.

  23. The Importance of Communication in Accounting

    In the online course Financial Accounting, Harvard Business School Professor V. G. Narayanan notes why it's important to use accounting to communicate with investors. "Accounting is how we represent—in a concrete way—the past performance, future potential, and value of an organization," Narayanan says. "It's crucial to gaining ...