problem solving accounting meaning

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.

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.

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Problem Solving in Accounting

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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? 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

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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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 .

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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

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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Accountants as Problem Solvers

August 01, 2020

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

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).

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”).

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.

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”).

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.

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What is Problem Solving? (Steps, Techniques, Examples)

What is problem solving, definition and importance.

Problem solving is the process of finding solutions to obstacles or challenges you encounter in your life or work. It is a crucial skill that allows you to tackle complex situations, adapt to changes, and overcome difficulties with ease. Mastering this ability will contribute to both your personal and professional growth, leading to more successful outcomes and better decision-making.

Problem-Solving Steps

The problem-solving process typically includes the following steps:

• Identify the issue : Recognize the problem that needs to be solved.
• Analyze the situation : Examine the issue in depth, gather all relevant information, and consider any limitations or constraints that may be present.
• Generate potential solutions : Brainstorm a list of possible solutions to the issue, without immediately judging or evaluating them.
• Evaluate options : Weigh the pros and cons of each potential solution, considering factors such as feasibility, effectiveness, and potential risks.
• Select the best solution : Choose the option that best addresses the problem and aligns with your objectives.
• Implement the solution : Put the selected solution into action and monitor the results to ensure it resolves the issue.
• Review and learn : Reflect on the problem-solving process, identify any improvements or adjustments that can be made, and apply these learnings to future situations.

Defining the Problem

To start tackling a problem, first, identify and understand it. Analyzing the issue thoroughly helps to clarify its scope and nature. Ask questions to gather information and consider the problem from various angles. Some strategies to define the problem include:

• Brainstorming with others
• Asking the 5 Ws and 1 H (Who, What, When, Where, Why, and How)
• Analyzing cause and effect
• Creating a problem statement

Generating Solutions

Once the problem is clearly understood, brainstorm possible solutions. Think creatively and keep an open mind, as well as considering lessons from past experiences. Consider:

• Creating a list of potential ideas to solve the problem
• Grouping and categorizing similar solutions
• Prioritizing potential solutions based on feasibility, cost, and resources required
• Involving others to share diverse opinions and inputs

Evaluating and Selecting Solutions

Evaluate each potential solution, weighing its pros and cons. To facilitate decision-making, use techniques such as:

• SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
• Decision-making matrices
• Pros and cons lists
• Risk assessments

After evaluating, choose the most suitable solution based on effectiveness, cost, and time constraints.

Implementing and Monitoring the Solution

Implement the chosen solution and monitor its progress. Key actions include:

• Communicating the solution to relevant parties
• Setting timelines and milestones
• Assigning tasks and responsibilities
• Monitoring the solution and making adjustments as necessary
• Evaluating the effectiveness of the solution after implementation

Utilize feedback from stakeholders and consider potential improvements. Remember that problem-solving is an ongoing process that can always be refined and enhanced.

Problem-Solving Techniques

During each step, you may find it helpful to utilize various problem-solving techniques, such as:

• Brainstorming : A free-flowing, open-minded session where ideas are generated and listed without judgment, to encourage creativity and innovative thinking.
• Root cause analysis : A method that explores the underlying causes of a problem to find the most effective solution rather than addressing superficial symptoms.
• SWOT analysis : A tool used to evaluate the strengths, weaknesses, opportunities, and threats related to a problem or decision, providing a comprehensive view of the situation.
• Mind mapping : A visual technique that uses diagrams to organize and connect ideas, helping to identify patterns, relationships, and possible solutions.

Brainstorming

When facing a problem, start by conducting a brainstorming session. Gather your team and encourage an open discussion where everyone contributes ideas, no matter how outlandish they may seem. This helps you:

• Generate a diverse range of solutions
• Encourage all team members to participate
• Foster creative thinking

When brainstorming, remember to:

• Reserve judgment until the session is over
• Encourage wild ideas
• Combine and improve upon ideas

Root Cause Analysis

For effective problem-solving, identifying the root cause of the issue at hand is crucial. Try these methods:

• 5 Whys : Ask “why” five times to get to the underlying cause.
• Fishbone Diagram : Create a diagram representing the problem and break it down into categories of potential causes.
• Pareto Analysis : Determine the few most significant causes underlying the majority of problems.

SWOT Analysis

SWOT analysis helps you examine the Strengths, Weaknesses, Opportunities, and Threats related to your problem. To perform a SWOT analysis:

• List your problem’s strengths, such as relevant resources or strong partnerships.
• Identify its weaknesses, such as knowledge gaps or limited resources.
• Explore opportunities, like trends or new technologies, that could help solve the problem.
• Recognize potential threats, like competition or regulatory barriers.

SWOT analysis aids in understanding the internal and external factors affecting the problem, which can help guide your solution.

Mind Mapping

A mind map is a visual representation of your problem and potential solutions. It enables you to organize information in a structured and intuitive manner. To create a mind map:

• Write the problem in the center of a blank page.
• Draw branches from the central problem to related sub-problems or contributing factors.
• Add more branches to represent potential solutions or further ideas.

Mind mapping allows you to visually see connections between ideas and promotes creativity in problem-solving.

Examples of Problem Solving in Various Contexts

In the business world, you might encounter problems related to finances, operations, or communication. Applying problem-solving skills in these situations could look like:

• Identifying areas of improvement in your company’s financial performance and implementing cost-saving measures
• Resolving internal conflicts among team members by listening and understanding different perspectives, then proposing and negotiating solutions
• Streamlining a process for better productivity by removing redundancies, automating tasks, or re-allocating resources

In educational contexts, problem-solving can be seen in various aspects, such as:

• Addressing a gap in students’ understanding by employing diverse teaching methods to cater to different learning styles
• Developing a strategy for successful time management to balance academic responsibilities and extracurricular activities
• Seeking resources and support to provide equal opportunities for learners with special needs or disabilities

Everyday life is full of challenges that require problem-solving skills. Some examples include:

• Overcoming a personal obstacle, such as improving your fitness level, by establishing achievable goals, measuring progress, and adjusting your approach accordingly
• Navigating a new environment or city by researching your surroundings, asking for directions, or using technology like GPS to guide you
• Dealing with a sudden change, like a change in your work schedule, by assessing the situation, identifying potential impacts, and adapting your plans to accommodate the change.
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31 examples of problem solving performance review phrases

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You're doing great

You should think of improving

Tips to improve

Use these practical examples of phrases, sample comments, and templates for your performance review , 360-degree feedback survey, or manager appraisal.

The following examples not only relate to problem-solving but also conflict management , effective solutions, selecting the best alternatives, decision making , problem identification, analyzing effectively, and generally becoming an effective problem-solving strategist. Start using effective performance review questions to help better guide your workforce's development. 

Problem solving appraisal comments: you're doing great

• You always maintain an effective dialogue with clients when they have technical problems. Being clear and articulate makes sure our customers' faults are attended to promptly.
• You constantly make sure to look beyond the obvious you never stop at the first answer. You’re really good at exploring alternatives. Well done!
• Keeping the supervisors and managers informed of status changes and requests is important. You’re really good at communicating the changes to the projects at all times. Keep it up!
• You stay cool and collected even when things aren’t going according to plan or up in the air. This is a great trait to possess. Well done!
• You’re excellent at giving an honest and logical analysis. Keep it up! Effectively diagnosing complex problems and reaching sustainable solutions is one of your strong points.
• Your ability to ability to make complex systems into simple ones is truly a unique skill to possess. Well done!
• You often identify practical solutions to every roadblock. You’re a real asset to the team! Great job.
• You always listen actively and attentively to make sure you understand what the exact problem is and you come up with solutions in an effective manner.
• You have an amazing ability to clearly explain options and solutions effectively and efficiently. Well done!
• When driving projects, you can shift to other areas comfortably and easily. making sure the project runs smoothly. Great job!

Problem solving performance review phrases: you should think of improving

• You always seem too overwhelmed when faced with multiple problems. Try to think of ways to make problems more manageable so that they can be solved in a timely and effective manner.
• Avoiding conflicts constantly with people is not a good idea as you will only build up personal frustration and nothing will be done to remedy the situation. Try to face people when there are problems and rectify problems when they occur.
• Don’t allow demanding customers to rattle your cage too much. If they become too demanding, take a step back, regulate your emotions , and try to make use of online support tools to help you rectify problems these tools can help a lot!
• It’s necessary that you learn from your past mistakes . You cannot keep making the same mistakes , as this is not beneficial to the company.
• You tend to ask the same questions over and over again. Try to listen more attentively or take notes when colleagues are answering!
• Providing multiple solutions in an indirect and creative approach will allow you to be more effective at problem-solving . if you struggle with this typically through viewing the problem in a new and unusual light.
• You fail to provide staff with the appropriate amount of structure and direction. They must know the direction you wish them to go in to achieve their goals .
• You need to be able to recognize repetitive trends to solve problems promptly.
• You tend to have problems troubleshooting even the most basic of questions. As a problem solver and customer support person, it’s imperative that you can answer these questions easily.
• Read through your training manual and make sure you fully understand it before attempting questions again.

Performance review tips to improve problem solving

• Try to complain less about problems and come up with solutions to the problems more often. Complaining is not beneficial to progression and innovation.
• As a problem solver, it’s important to be able to handle multiple priorities under short deadlines.
• You need to be able to effectively distinguish between the cause and the symptoms of problems to solve them in an efficient and timely manner.
• Try to anticipate problems in advance before they become major roadblocks down the road.
• Try to view obstacles as opportunities to learn and thrive at the challenge of solving the problem.
• Remember to prioritize problems according to their degree of urgency. It's important that you spend the majority of your time on urgent tasks over menial ones.
• When putting plans into place, stick to them and make sure they are completed.
• When solving problems, try to allocate appropriate levels of resources when undertaking new projects. It is important to become as efficient and as effective as possible.
• Try to learn to pace yourself when solving problems to avoid burnout . You’re a great asset to the team and we cannot afford to lose at this point.
• Meeting regularly with your staff to review results is vital to the problem-solving process.
• Staff that has regular check-ins understand what it is that is required of them, what they are currently achieving, and areas they may need to improve. Try to hold one-on-one meetings every week.

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Madeline Miles

Madeline is a writer, communicator, and storyteller who is passionate about using words to help drive positive change. She holds a bachelor's in English Creative Writing and Communication Studies and lives in Denver, Colorado. In her spare time, she's usually somewhere outside (preferably in the mountains) — and enjoys poetry and fiction.

25 performance review questions (and how to use them)

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What Is Problem Solving? How Software Engineers Approach Complex Challenges

From debugging an existing system to designing an entirely new software application, a day in the life of a software engineer is filled with various challenges and complexities. The one skill that glues these disparate tasks together and makes them manageable? Problem solving . 

Throughout this blog post, we’ll explore why problem-solving skills are so critical for software engineers, delve into the techniques they use to address complex challenges, and discuss how hiring managers can identify these skills during the hiring process. 

What Is Problem Solving?

But what exactly is problem solving in the context of software engineering? How does it work, and why is it so important?

Problem solving, in the simplest terms, is the process of identifying a problem, analyzing it, and finding the most effective solution to overcome it. For software engineers, this process is deeply embedded in their daily workflow. It could be something as simple as figuring out why a piece of code isn’t working as expected, or something as complex as designing the architecture for a new software system. 

In a world where technology is evolving at a blistering pace, the complexity and volume of problems that software engineers face are also growing. As such, the ability to tackle these issues head-on and find innovative solutions is not only a handy skill — it’s a necessity. 

The Importance of Problem-Solving Skills for Software Engineers

Problem-solving isn’t just another ability that software engineers pull out of their toolkits when they encounter a bug or a system failure. It’s a constant, ongoing process that’s intrinsic to every aspect of their work. Let’s break down why this skill is so critical.

Driving Development Forward

Without problem solving, software development would hit a standstill. Every new feature, every optimization, and every bug fix is a problem that needs solving. Whether it’s a performance issue that needs diagnosing or a user interface that needs improving, the capacity to tackle and solve these problems is what keeps the wheels of development turning.

It’s estimated that 60% of software development lifecycle costs are related to maintenance tasks, including debugging and problem solving. This highlights how pivotal this skill is to the everyday functioning and advancement of software systems.

Innovation and Optimization

The importance of problem solving isn’t confined to reactive scenarios; it also plays a major role in proactive, innovative initiatives . Software engineers often need to think outside the box to come up with creative solutions, whether it’s optimizing an algorithm to run faster or designing a new feature to meet customer needs. These are all forms of problem solving.

Consider the development of the modern smartphone. It wasn’t born out of a pre-existing issue but was a solution to a problem people didn’t realize they had — a device that combined communication, entertainment, and productivity into one handheld tool.

Increasing Efficiency and Productivity

Good problem-solving skills can save a lot of time and resources. Effective problem-solvers are adept at dissecting an issue to understand its root cause, thus reducing the time spent on trial and error. This efficiency means projects move faster, releases happen sooner, and businesses stay ahead of their competition.

Improving Software Quality

Problem solving also plays a significant role in enhancing the quality of the end product. By tackling the root causes of bugs and system failures, software engineers can deliver reliable, high-performing software. This is critical because, according to the Consortium for Information and Software Quality, poor quality software in the U.S. in 2022 cost at least $2.41 trillion in operational issues, wasted developer time, and other related problems.

Problem-Solving Techniques in Software Engineering

So how do software engineers go about tackling these complex challenges? Let’s explore some of the key problem-solving techniques, theories, and processes they commonly use.

Decomposition

Breaking down a problem into smaller, manageable parts is one of the first steps in the problem-solving process. It’s like dealing with a complicated puzzle. You don’t try to solve it all at once. Instead, you separate the pieces, group them based on similarities, and then start working on the smaller sets. This method allows software engineers to handle complex issues without being overwhelmed and makes it easier to identify where things might be going wrong.

Abstraction

In the realm of software engineering, abstraction means focusing on the necessary information only and ignoring irrelevant details. It is a way of simplifying complex systems to make them easier to understand and manage. For instance, a software engineer might ignore the details of how a database works to focus on the information it holds and how to retrieve or modify that information.

Algorithmic Thinking

At its core, software engineering is about creating algorithms — step-by-step procedures to solve a problem or accomplish a goal. Algorithmic thinking involves conceiving and expressing these procedures clearly and accurately and viewing every problem through an algorithmic lens. A well-designed algorithm not only solves the problem at hand but also does so efficiently, saving computational resources.

Parallel Thinking

Parallel thinking is a structured process where team members think in the same direction at the same time, allowing for more organized discussion and collaboration. It’s an approach popularized by Edward de Bono with the “ Six Thinking Hats ” technique, where each “hat” represents a different style of thinking.

In the context of software engineering, parallel thinking can be highly effective for problem solving. For instance, when dealing with a complex issue, the team can use the “White Hat” to focus solely on the data and facts about the problem, then the “Black Hat” to consider potential problems with a proposed solution, and so on. This structured approach can lead to more comprehensive analysis and more effective solutions, and it ensures that everyone’s perspectives are considered.

This is the process of identifying and fixing errors in code . Debugging involves carefully reviewing the code, reproducing and analyzing the error, and then making necessary modifications to rectify the problem. It’s a key part of maintaining and improving software quality.

Testing and Validation

Testing is an essential part of problem solving in software engineering. Engineers use a variety of tests to verify that their code works as expected and to uncover any potential issues. These range from unit tests that check individual components of the code to integration tests that ensure the pieces work well together. Validation, on the other hand, ensures that the solution not only works but also fulfills the intended requirements and objectives.

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Evaluating Problem-Solving Skills

We’ve examined the importance of problem-solving in the work of a software engineer and explored various techniques software engineers employ to approach complex challenges. Now, let’s delve into how hiring teams can identify and evaluate problem-solving skills during the hiring process.

Recognizing Problem-Solving Skills in Candidates

How can you tell if a candidate is a good problem solver? Look for these indicators:

• Previous Experience: A history of dealing with complex, challenging projects is often a good sign. Ask the candidate to discuss a difficult problem they faced in a previous role and how they solved it.
• Problem-Solving Questions: During interviews, pose hypothetical scenarios or present real problems your company has faced. Ask candidates to explain how they would tackle these issues. You’re not just looking for a correct solution but the thought process that led them there.
• Technical Tests: Coding challenges and other technical tests can provide insight into a candidate’s problem-solving abilities. Consider leveraging a platform for assessing these skills in a realistic, job-related context.

Assessing Problem-Solving Skills

Once you’ve identified potential problem solvers, here are a few ways you can assess their skills:

• Solution Effectiveness: Did the candidate solve the problem? How efficient and effective is their solution?
• Approach and Process: Go beyond whether or not they solved the problem and examine how they arrived at their solution. Did they break the problem down into manageable parts? Did they consider different perspectives and possibilities?
• Communication: A good problem solver can explain their thought process clearly. Can the candidate effectively communicate how they arrived at their solution and why they chose it?
• Adaptability: Problem-solving often involves a degree of trial and error. How does the candidate handle roadblocks? Do they adapt their approach based on new information or feedback?

Hiring managers play a crucial role in identifying and fostering problem-solving skills within their teams. By focusing on these abilities during the hiring process, companies can build teams that are more capable, innovative, and resilient.

Key Takeaways

As you can see, problem solving plays a pivotal role in software engineering. Far from being an occasional requirement, it is the lifeblood that drives development forward, catalyzes innovation, and delivers of quality software. 

By leveraging problem-solving techniques, software engineers employ a powerful suite of strategies to overcome complex challenges. But mastering these techniques isn’t simple feat. It requires a learning mindset, regular practice, collaboration, reflective thinking, resilience, and a commitment to staying updated with industry trends. 

For hiring managers and team leads, recognizing these skills and fostering a culture that values and nurtures problem solving is key. It’s this emphasis on problem solving that can differentiate an average team from a high-performing one and an ordinary product from an industry-leading one.

At the end of the day, software engineering is fundamentally about solving problems — problems that matter to businesses, to users, and to the wider society. And it’s the proficient problem solvers who stand at the forefront of this dynamic field, turning challenges into opportunities, and ideas into reality.

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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.

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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Accounting Problems (& Answers): How to Avoid Accounting Issues

Keeping up with technology and regulatory changes are significant concerns of 51% and 24%, respectively, of CPA and accounting firm survey participants, according to Accounting Today’s survey, The Year Ahead: 2022 in Numbers . 

Delays in advanced software technology adoption and failures in regulatory compliance can lead to accounting challenges and problems for businesses. These accounting issues include errors in financial statements, fraud and security risks, and the potential for massive fines and imprisonment for regulatory non-compliance.

Trained business finance teams using advanced software technology that also automates regulatory compliance can overcome typical (and new) accounting problems.

What are Accounting Problems?

Accounting problems are issues resulting in material financial statement errors, undetected fraud due to inadequate internal control, misapplication of generally accepted accounting principles (GAAP accounting standards), regulatory noncompliance, and cybersecurity risks. Accounting problems may have unfavorable cash flow impacts and misstate business profitability. 

What Causes Accounting Problems?

Some accounting problems are caused by using outdated software technology for accounting. Intentional fraud due to greed and poor internal control causes other financial issues. Low staffing levels can cause accounting problems. Not training the financial team causes accounting problems related to improperly applying GAAP.

The business must defend itself against cybersecurity attacks and stay up-to-date on changing regulatory compliance issues. 

How do Businesses Solve Accounting Problems?

Financial professionals in businesses should use software with advanced technology capable of handling current accounting standards, including revenue recognition and lease accounting, and regulatory requirements to avoid or solve significant accounting problems.

Requiring CPA employees and accountants to take relevant continuing education courses regularly can also help businesses solve accounting problems. Adequate staffing levels help accountants solve accounting issues.

Top management must communicate an ethical tone, corporate values, employee empowerment, and key expectations.

11 Common Accounting Problems

In its fiscal year 2021, the SEC received 1,913 whistleblower complaints relating to corporate disclosures and financials, signaling possible accounting problems in these publicly-held businesses. The SEC also received whistleblower complaints related to the Foreign Corrupt Practices Act. 

11 common accounting problems are:

• Revenue recognition
• Lease accounting 
• Missing impairment write-downs
• Payroll errors
• Cash flow statement
• Outdated accounting software technology
• Not enough financial analysis
• Inadequate internal control
• Regulatory non-compliance
• Inadequate security

1. Revenue Recognition 

Improperly applying GAAP revenue recognition standards, creating fraudulent revenue schemes, including improper accounting for consignments and third-party inventory shipments beyond the level of possible usage, and using unreasonable estimates, are revenue recognition problems. 

CFODive published an article on August 20, 2020 (based on an Accounting Today analysis) titled Improper revenue recognition tops SEC fraud cases . This article highlights the significance of revenue recognition as an accounting problem. 

Find an accounting software or ERP solution that helps your company achieve proper revenue recognition. Your accounting and finance teams need adequate training on FASB accounting standards to comply with GAAP revenue recognition. Excel spreadsheets are popular. But spreadsheets are error-prone and inefficient. If possible, seek a different software solution. 

2. Lease Accounting 

Changes to GAAP lease accounting standards require lessee companies to capitalize their operating leases with tenant right of use (ROU) and a term of over twelve months. Shorter operating leases (including office space leases) can still be recorded monthly as rent expenses. The leases are amortized over time. 

Accounting standards are codified by the Financial Accounting Standards Board (FASB). Accountants must also follow other changes to the Lease accounting standard.

Business accounting teams need adequate training to follow the latest GAAP standards on Lease accounting. And they will benefit greatly by using specialized lease accounting software.

3. Impairment Write-downs and Fair Market Valuation 

Accountants may miss making impairment write-downs or required adjustments for recording required assets or liabilities at a fair market valuation. 

Changing economic and business conditions require accountants to periodically assess whether asset valuations have been impaired (to recognize the loss of value). Accountants must also consider adjustments to the fair value of certain assets and liabilities. Accounting professionals make adjustments through journal entries and financial statement disclosures when GAAP requires.

Supply chain backlogs and economic conditions resulting from the COVID-19 pandemic triggered accounting issues to watch for, including impairment and fair value accounting, according to EY, a top-tier accounting firm. 

Examples of asset impairment include:

• Assessing goodwill from M&A transactions annually for impairment
• Considering capitalized lease asset impairment
• Recording inventory at the lower of cost or market (LCM), where market value is constrained by an upper range not exceeding net realizable value and a lower range of net realizable value less a normal profit margin. 

Examples of fair market valuation include:

• Trading securities (debt and equity) held as short-term investments; gains or losses on trading securities flow to Net Income on the income statement
• Available-for-sale securities (debt and equity) held as investments to be sold before maturity; net gains or losses are included in Shareholders’ Equity as Other Comprehensive Income (Loss), listed below Retained Earnings 
• Liabilities measured under ASC 820 Fair Value Measurements and Disclosures  

Accountants must have adequate training to properly record asset impairments and fair market valuation when required by GAAP and make necessary financial statement disclosures. Research financial statement areas subject to accounting issues with impairment. 

4. Payroll Errors

If a small business decides to calculate its own payroll, payroll taxes, and benefits, it’s possible that payment errors and accounting problems will occur. Payroll problems like miscalculating paychecks for salary expenses and hourly wages hurt employee morale and productivity.

Outsource payroll to a very experienced company providing those services, like ADP or Paychex. If the right number of hours and payroll information is provided, payments and taxes withheld should be correctly computed and compliant with tax laws. You can expect accurate reports to account for those items. Your business can make payroll tax remittances on time when due.

5. Cash Flow Statement

The cash flow statement may include errors in classification by activity type and may not include restricted cash, a newer GAAP requirement. 

Cash flow statement classification errors may include misclassifying the type of activity for interest and dividends received and paid. Interest received and paid is an operating activity in the cash flow statement. Dividends received are an operating activity, and dividends paid are a financing activity in the cash flow statement. 

The CPA firm, RSM, summarizes U.S. GAAP (vs IFRS) classification for certain items in the cash flow statement, including interest and dividends and restricted cash. 

Cash flow statement problem solving requires keeping up to date with FASB updates and training topics related to cash flow statement preparation to understand the basics. 

6. Outdated Accounting Software Technology

Outdated accounting software technology isn’t efficient, doesn’t provide real-time results for visibility in managing the company or its sales & marketing processes, relies on manual data entry and paper documents for business transaction processing and recording, and doesn’t automate regulatory compliance. 

Outdated ERP systems may not be cloud-based. On-premises software systems cause inefficiencies in accessing the software and require more IT department resources to update the system and address software and hardware problems at the company’s location. These ERP systems not deployed on the cloud aren’t ideal for the changed reality of remote or hybrid work situations. 

Upgrade outdated software technology in accounting software or ERP systems by changing to modern cloud-based software. If you don’t have the budget for an ERP system overhaul, consider integrating third-party add-on software to meet your needs for:

• AP automation and global mass payments software, also automating regulatory compliance 
• Subscription billing (applicable to a SaaS , publishing, or utilities business model)
• Forecasting, planning, and cash management software
• Customer relationship management (CRM) software to increase efficiency and better track the sales and marketing process 
• Lease accounting specialty software
• Revenue recognition software functionality, if not included in your ERP 
• Data visualization software for data analytics and business intelligence

7. Not Enough Financial Analysis

An accounting team without efficient accounting systems is spending too much time closing the books, leaving less time for value-added work. Financial analysis adds value by calculating ratios, spotting and managing business trends, and providing decision support for new opportunities.

Use enhanced cloud-based ERP systems and third-party add-on software with built-in artificial intelligence/machine learning that automates accounting processes and financial analysis to the extent possible. You need real-time dashboards with your company’s KPIs (key performance indicators), including trend analysis that all functional areas with authorization privileges can access. 

Supplement these systems with data visualization software like Tableau or Microsoft Power BI for data analytics with real-time capabilities and periodic automated report runs for data your company follows as timeline trends. Data visualization software embeds machine learning tools to deliver business intelligence. 

8. Inadequate Internal Control 

Small businesses may not have enough staffing to attain the separation of duties needed for adequate internal control. Their accounting systems may be inadequate to prevent fraud and duplicate payment errors. 

When segregation of duties isn’t being achieved, get the business owner involved in the approval process as a matched vendor invoice document reviewer and second signature. 

The finance and accounting department needs the human capital and software resources required to perform its duties and achieve results. Is the accounting department getting its fair share of company resources? 

Custody of Assets

Custody of assets includes recorded balance sheet assets and assets not yet recorded in the books like undeposited cash. 

Inventory needs controls for proper receiving, custody, secured storage with controlled access, and physical inventory in full annually and via periodic cycle counts. Office equipment should also be tagged upon receipt and subject to a physical inventory. As stated earlier, inventory should be tested for any loss in value requiring a write-down. 

Discrepancies in the balance of fixed assets may result from a physical fixed asset count. Set a proper cutoff for recording fixed asset purchases. 

If a fixed asset isn’t recorded, look for the purchase documents and invoice to record it. If another fixed asset isn’t counted, investigate where it may be or if it was sold. For accounting purposes, record the difference between the book value of fixed assets net of accumulated depreciation and sale proceeds, computing gain or loss on the sale of fixed assets. Write off missing fixed assets if necessary after your investigation. 

Fraud, including embezzlement, may result from inadequate internal control and employee collusion. 

Use modern cloud-based automation software that helps you find fraud and errors like duplicate payments. Use variance analysis and followup on significant differences for budget vs actual expenses. Review vendor master files, perform 3-way document matching for invoices, and validate vendors for authenticity before paying them. 

Strive to achieve adequate segregation of duties with employee task assignments. Control or custody of assets and recording transactions in the books need to be performed by different employees. 

10. Regulatory Non-Compliance

Regulatory compliance covers different areas, including taxation, data privacy and security, sanctions lists like OFAC, and the Foreign Corrupt Practices Act (FCPA). 

The Foreign Corrupt Practices Act covers not making bribes in foreign countries. And the FCPA’s scope goes far beyond preventing bribes. 

Violations of the Foreign Corrupt Practices Act and other regulations could result in:

• Massive fines for companies and convicted individuals
• Imprisonment
• Tarnishing a company’s and convicted individual’s business reputation and ethics

Familiarize your company, including the financial and accounting staff, with regulatory issues applying to your industry and company. Perform a project to document regulatory concerns and distribute the results widely. Hold a training session for company employees. Emphasize company values that include being ethical and empowering employees to act as the “conscience of the company.”

Find an automation software solution handling regulatory compliance. Tipalti AP automation software includes automated regulatory compliance features. 

11. Inadequate Security

Cybersecurity is a significant issue that can compromise business intellectual property and customer data and employee records in your system. 

Implement the most advanced cybersecurity software. Create and distribute an up-to-date company policy on required steps for achieving adequate cybersecurity. Train employees on how to avoid email and other scans that can result in hacks compromising company security. 

Using Automation to Solve Accounting Problems

You can solve some accounting problems and become more efficient by applying accounting automation software. AP automation will provide significant benefits for your business.

Accounting Automation Software Applications

Businesses can deploy accounting automation in several areas to improve accounting processes and results. Accounting systems automation includes efficient financial technology (FinTech) applied to vendor invoice processing and payments and customer billing and accounts receivable. 

Automate subscription billing, if applicable to your business model. Use automated customer credit decision solutions to decide which customers will be offered accounts receivable instead of requiring cash payments upfront. 

Integrate CRM and marketing automation software like Salesforce and Marketo to improve sales & marketing processes and convert more new customers. 

Automate forecasting, budgeting, business planning, and cash flow management. 

AP Automation Software Benefits

Gain time to perform financial analysis by closing the books sooner. You can accomplish this by automating routine accounting processes like accounts payable and global mass payments with add-on AP automation software accessed via ERP integration. 

Automated systems provide outsized benefits in the areas of payables automation and global mass payments to suppliers, vendors, and payouts to independent contractors, including freelancers and affiliates, and royalty recipients. Automated systems improve cash flow . They increase efficiency to let your company process vendor invoices and pay in time to take lucrative early payment discounts . 

The best add-on AP automation and global mass payments software:

• Automates supplier onboarding and tax compliance
• Scans with OCR technology or uploads invoices and supporting documents electronically 
• Improves your company’s expense management
• Makes efficient batch payments using a choice of payment methods
• Automates payments reconciliation and adds more accounts payable reports
• Lets your company close its books faster during the accounting cycle
• Reduces fraud and errors
• Automates regulatory compliance

Using electronic documents instead of paper-based documents:

• Ends paper-based data entry, invoice matching, and processing costs
• Creates a relevant document repository through the supplier portal
• Creates an audit trail
• Enables automatic approvals with notifications and follow-up
• Makes efficient batch payments (or single payments)
• Ends the inefficient, unsafe, and costly use of paper checks
• Automatically reconciles batch payments

The level of resources required in accounting and bookkeeping can be leveraged by efficiencies provided by AP automation software. Efficiency is improved by up to 80%. Books are closed much more quickly, letting the finance team spend more time on value-added financial analysis and decision support. 

Cloud-based AP automation software using AI/ML and RPA and tools for regulatory compliance work in combination with ERP systems. 

Real-time SaaS automation software and ERP systems with modern technology can prevent or solve several types of accounting problems and issues, including fraud, accounting errors related to vendor invoices and payments, GAAP compliance in financial reporting, and regulatory compliance.   

And adequate training of the finance and accounting team prevents or solves accounting problems.

About the Author

Barbara Cook

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

• 01 Feb 2022

One of the biggest hindrances to innovation is complacency—it can be more comfortable to do what you know than venture into the unknown. Business leaders can overcome this barrier by mobilizing creative team members and providing space to innovate.

There are several tools you can use to encourage creativity in the workplace. Creative problem-solving is one of them, which facilitates the development of innovative solutions to difficult problems.

Here’s an overview of creative problem-solving and why it’s important in business.

Access your free e-book today.

What Is Creative Problem-Solving?

Research is necessary when solving a problem. But there are situations where a problem’s specific cause is difficult to pinpoint. This can occur when there’s not enough time to narrow down the problem’s source or there are differing opinions about its root cause.

In such cases, you can use creative problem-solving , which allows you to explore potential solutions regardless of whether a problem has been defined.

Creative problem-solving is less structured than other innovation processes and encourages exploring open-ended solutions. It also focuses on developing new perspectives and fostering creativity in the workplace . 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. Creative problem-solving helps overcome unforeseen challenges and find solutions to unconventional problems.
• Fueling innovation and growth : In addition to solutions, creative problem-solving can spark innovative ideas that drive company growth. These ideas can lead to new product lines, services, or a modified operations structure that improves efficiency.

Creative problem-solving is traditionally based on the following key principles :

1. Balance Divergent and Convergent Thinking

Creative problem-solving uses two primary tools to find solutions: divergence and convergence. Divergence generates ideas in response to a problem, while convergence narrows them down to a shortlist. It balances these two practices and turns ideas into concrete solutions.

2. Reframe Problems as Questions

By framing problems as questions, you shift from focusing on obstacles to solutions. This provides the freedom to brainstorm potential ideas.

3. Defer Judgment of Ideas

When brainstorming, it can be natural to reject or accept ideas right away. Yet, immediate judgments interfere with the idea generation process. Even ideas that seem implausible can turn into outstanding innovations upon further exploration and development.

4. Focus on "Yes, And" Instead of "No, But"

Using negative words like "no" discourages creative thinking. Instead, use positive language to build and maintain an environment that fosters the development of creative and innovative ideas.

Creative Problem-Solving and Design Thinking

Whereas creative problem-solving facilitates developing innovative ideas through a less structured workflow, design thinking takes a far more organized approach.

Design thinking is a human-centered, solutions-based process that fosters the ideation and development of solutions. In the online course Design Thinking and Innovation , Harvard Business School Dean Srikant Datar leverages a four-phase framework to explain design thinking.

The four stages are:

• Clarify: The clarification stage allows you to empathize with the user and identify problems. Observations and insights are informed by thorough research. Findings are then reframed as problem statements or questions.
• Ideate: Ideation is the process of coming up with innovative ideas. The divergence of ideas involved with creative problem-solving is a major focus.
• Develop: In the development stage, ideas evolve into experiments and tests. Ideas converge and are explored through prototyping and open critique.
• Implement: Implementation involves continuing to test and experiment to refine the solution and encourage its adoption.

Creative problem-solving primarily operates in the ideate phase of design thinking but can be applied to others. This is because design thinking is an iterative process that moves between the stages as ideas are generated and pursued. This is normal and encouraged, as innovation requires exploring multiple ideas.

Creative Problem-Solving Tools

While there are many useful tools in the creative problem-solving process, here are three you should know:

Creating a Problem Story

One way to innovate is by creating a story about a problem to understand how it affects users and what solutions best fit their needs. Here are the steps you need to take to use this tool properly.

1. Identify a UDP

Create a problem story to identify the undesired phenomena (UDP). For example, consider a company that produces printers that overheat. In this case, the UDP is "our printers overheat."

2. Move Forward in Time

To move forward in time, ask: “Why is this a problem?” For example, minor damage could be one result of the machines overheating. In more extreme cases, printers may catch fire. Don't be afraid to create multiple problem stories if you think of more than one UDP.

3. Move Backward in Time

To move backward in time, ask: “What caused this UDP?” If you can't identify the root problem, think about what typically causes the UDP to occur. For the overheating printers, overuse could be a cause.

Following the three-step framework above helps illustrate a clear problem story:

• The printer is overused.
• The printer overheats.
• The printer breaks down.

You can extend the problem story in either direction if you think of additional cause-and-effect relationships.

4. Break the Chains

By this point, you’ll have multiple UDP storylines. Take two that are similar and focus on breaking the chains connecting them. This can be accomplished through inversion or neutralization.

• Inversion: Inversion changes the relationship between two UDPs so the cause is the same but the effect is the opposite. For example, if the UDP is "the more X happens, the more likely Y is to happen," inversion changes the equation to "the more X happens, the less likely Y is to happen." Using the printer example, inversion would consider: "What if the more a printer is used, the less likely it’s going to overheat?" Innovation requires an open mind. Just because a solution initially seems unlikely doesn't mean it can't be pursued further or spark additional ideas.
• Neutralization: Neutralization completely eliminates the cause-and-effect relationship between X and Y. This changes the above equation to "the more or less X happens has no effect on Y." In the case of the printers, neutralization would rephrase the relationship to "the more or less a printer is used has no effect on whether it overheats."

Even if creating a problem story doesn't provide a solution, it can offer useful context to users’ problems and additional ideas to be explored. Given that divergence is one of the fundamental practices of creative problem-solving, it’s a good idea to incorporate it into each tool you use.

Brainstorming

Brainstorming is a tool that can be highly effective when guided by the iterative qualities of the design thinking process. It involves openly discussing and debating ideas and topics in a group setting. This facilitates idea generation and exploration as different team members consider the same concept from multiple perspectives.

Hosting brainstorming sessions can result in problems, such as groupthink or social loafing. To combat this, leverage a three-step brainstorming method involving divergence and convergence :

• Have each group member come up with as many ideas as possible and write them down to ensure the brainstorming session is productive.
• Continue the divergence of ideas by collectively sharing and exploring each idea as a group. The goal is to create a setting where new ideas are inspired by open discussion.
• Begin the convergence of ideas by narrowing them down to a few explorable options. There’s no "right number of ideas." Don't be afraid to consider exploring all of them, as long as you have the resources to do so.

Alternate Worlds

The alternate worlds tool is an empathetic approach to creative problem-solving. It encourages you to consider how someone in another world would approach your situation.

For example, if you’re concerned that the printers you produce overheat and catch fire, consider how a different industry would approach the problem. How would an automotive expert solve it? How would a firefighter?

Be creative as you consider and research alternate worlds. The purpose is not to nail down a solution right away but to continue the ideation process through diverging and exploring ideas.

Continue Developing Your Skills

Whether you’re an entrepreneur, marketer, or business leader, learning the ropes of design thinking can be an effective way to build your skills and foster creativity and innovation in any setting.

If you're ready to develop your design thinking and creative problem-solving skills, explore Design Thinking and Innovation , one of our online entrepreneurship and innovation courses. If you aren't sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

About the Author

Analytical Skills Definition

Analytical skills examples, how to show your analytical skills on your resume, how to talk about your analytical skills in an interview, how to improve your analytical skills, analytics at work: the bottom line, what are analytical skills definition and examples.

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Table of Contents

If you’re looking for a job in 2024, chances are you’ll need stellar analytical skills. Analytical skills help you assess information and facts, problem-solve, and implement the best solutions. According to LinkedIn , they’re one of the top 10 most in-demand soft skills of 2024. So, what are some analytical skills examples and how can you improve yours?

Analytical skills are the skills you use to make decisions and find solutions to problems. In the workplace, an analytical person helps the company problem-solve by breaking down information; looking through data and finding patterns, trends, and outliers; brainstorming new ideas; and making decisions on what solutions to implement.

If you’re like me, you might be thinking that analytical skills are usually just for data-heavy or analytical roles. But even as a more creative professional — working on writing and marketing — I’ve learned analytical skills are crucial to essentially any role. For example, I use analytical skills to understand which of my articles are performing well and which ones aren’t to help inform what I’ll write about next. Even though my primary role is to write content, analytical skills are key to prioritizing my work and ensuring what I’m writing is successful. 

Companies hire people to help them solve problems, and analytical skills are what you use to do just that. You can use analytical skills in the workplace:

• In marketing , to review traffic to the website and understand what is (and isn’t) driving people to the site  
• In data analytics , to identify seasonal trends in a company’s sales to understand the best time to launch a campaign
• In finance , to prepare forecasts of the company’s financial performance for the next year
• In user experience (UX) design , to understand current issues with the company’s UX while interviewing a user
• In sales, to create models to track revenue growth
• In software engineering , to see what parts of the software are performing as expected and which ones aren’t and why 
• In human resources, to understand employee performance, turnover, and engagement 
• In law, to comb through legal documents to develop legal arguments and strategies for clients.

Human Resources

Apply analytical skills in HR to analyze compensation data and make recommendations to managers about which employees should receive pay rises or adjustments.

Avg. Time: 3-4 hours

Skills you’ll build: Process mapping, empowering with insights, feedback giving, continuous improvement tools

While analytical skills are a type of soft skill, you may apply hard skills to help you become a better analytical thinker. Analytical skills examples include data analysis, logical thinking, research, creativity, and communication.

>>MORE: Discover the right career for you based on your skills with a career aptitude test .

Data Analytics

Data analytics is a hard skill where you look at data to put numbers behind answers to questions or potential solutions. For example, you might use data analytics to answer what products have had the most success during the summer vs. winter months, or to create charts or graphs that show the company’s recent financial performance. 

You don’t need to be a data analyst to use data analytics in your everyday work; in fact, it’s a valuable asset to your skill set to ensure the impact of your work, no matter what you do. Going back to my example of using data to help me understand article performance, being able to pull this data on my own and synthesize it into results and learnings is crucial for showing whether I’m performing well at work. Anyone can benefit from knowing how to pull and visualize the proof that their work is having an impact!

Examples of data analytics skills include:

• Programming languages (specifically SQL, Python, and R)
• Probability and statistical analysis
• Machine learning
• Microsoft Excel
• Data visualization

Logical Thinking

Logical thinking is when you use reason to analyze a situation and come up with a solution. There are a few different types of logical thinking, including:

• Inference: Assuming an answer based on facts we already know
• Inductive reasoning : Observing a specific pattern, then making a general conclusion
• Deductive reasoning : Observing a general premise, then applying it to a specific situation 

For example, as a writer on a marketing team, I might use logical thinking, and specifically inductive reasoning, by taking action based on a specific trend I notice about my company’s audience. I may notice a specific pattern — for instance, that our audience is clicking on stories that have investment banking skills in them. Then, I could make the general conclusion that our audience values investment banking content. I would then test my hypothesis by writing more content on that topic, and hopefully increase our audience in the process. 

Analytical people seek all the facts and information before coming to a conclusion. A smart researcher knows where to find those facts and who to ask for help to get more information. 

In the workplace, you might apply research skills to discover facts about the company’s history, like conducting a reflective analysis, and showing the company’s progress over the last five years. You could also do more qualitative research , and speak to colleagues in other departments to understand how a problem is affecting their team, or even set up an informational interview with an outside expert to learn from their experience.

Examples of research analytical skills include: 

• Report writing
• Data collection and analysis
• Critical thinking
• User interviews

Communication

Analytical skills aren’t just about facts and figures; they also require creativity to brainstorm solutions and possible answers to problems. Creativity helps analytical people move away from the small points and think big picture. 

In the workplace, you might use creative thinking to organize a brainstorm with team members, or to propose product improvements based on a client survey. You could also use it to present information to stakeholders in a new, exciting way, or to create a new brand design for your company’s website. Creative thinking can be applied to numerous industries, even in more data-heavy or analytical roles.

Examples of analytical creativity skills include:

• Active listening
• Risk-taking
• Storytelling

Introduction to Strategy Consulting

Use creative thinking skills to generate ideas to help a fictional luxury clothing company increase sales revenue.

Avg. Time: 1-2 hours

Skills you’ll build: Critical thinking, creativity, brainstorming

Your analytical thinking won’t have an impact unless you share it with the team; however, not everyone can easily understand data or analytical problem-solving. Communication skills help you translate complex analytical ideas into digestible, actionable takeaways for the rest of your team.

For example, you can use communication skills to explain a data visualization to team members and help them understand company performance, or to present high-level findings from a data exercise or statistical analysis. 

Examples of analytical communication skills include:

• Verbal communication
• Chart, graph, and data presentation
• Public speaking

There are two types of ways to show your analytical skills on your resume: listing your hard skills in a “skills” section or explaining your analytical skills in your “experience” section. 

“For early professionals, definitely showing the tools, the technical skills, and also projects you’ve worked on is important,” Kristen Rice, product manager, website growth at Sprout Social, says. “If you don’t have a particular project in mind or that you can share, showcase ideas that you do have around analytics. If you use a type of code such as SQL, Python, R etc., that is huge because businesses seek to automate analyses a lot quicker and there is an increasing need to connect data that doesn’t always share the same foundation. These different programming languages allow for the ability to do those things.”

For example, if you used your data analytics skills in a finance internship , you could write: 

Used SQL queries to extract data and create reports that helped the team decrease surplus spending by 13% MoM.

Even if you’re talking about soft skills, you should include the impact your skills had. For example, as a writer, I might write something like:

• Performed competitive research analysis to identify three key improvement opportunities for our blog, leading to 10% traffic growth in two months
• Led brainstorming sessions to produce 30 new content ideas each month
• Conducted and shared analysis of top-performing content to inform future content strategy, leading to 20% MoM traffic growth

Log in to download a customizable resume template with examples of how to include analytical skills:

You don’t need to know multiple coding languages or analytics programs to show off your analytical skills. You can also show analytical thinking through how you describe your problem-solving methods and approach at work. 

In the interview , use the STAR method to show how you apply analytical skills and the impact your skills had. Even if you’re talking about soft skills, get specific about programs, tactics, or methodology you use when solving problems. This will give the interviewer a clear picture of how you work and problem-solve.

• What do you first consult when solving a problem? Can you talk about any experience analyzing numerical results, looking at website analytics, etc.?
• What steps do you take to make sense of a problem? 
• Who or what do you consult to help you solve the problem?
• How do you test and iterate your solution?
• How do you reflect on your solution? What steps do you take after?

For example, you might be asked about your decision-making process at work. You can respond with something like:

My decision-making process usually starts with gathering all the information I know about the problem, whether that’s by researching, collaborating with other teams, or performing data analysis. Once I have a better understanding of the problem, I’ll then share this information with my coworkers and ask them to brainstorm with me. After that, I’ll perform a risk analysis of all of the solutions we brainstormed and make a final decision on the best path forward.

>>MORE: Analytical Skills Interview Questions (and Answers)

BCLP Interview Success

Practice answering some of the most common interview questions.

Avg. Time: 4-5 hours

Skills you’ll build: Public speaking, poise, presentation, communication

Even though some technical skills are involved in analytical thinking, much of analytical thinking relies on your soft skills — which means it’s harder to know how to be a better analytical thinker. However, by understanding your current problem-solving process and asking others about theirs, you’ll start to hone your analytical skills.

Document Your Current Skills

It isn’t easy to assess your current skill level if you don’t know how you currently use analytical thinking, even in your everyday life. The next time you approach a problem, even something like figuring out what to wear to dinner with friends, ask yourself:

• What facts am I considering here?
• What research do I do? Do I ask anyone for help, and who?
• How do I brainstorm solutions?
• How do I make my final decision on how to move forward?
• Do I reflect on my decision-making skills after, and if so, how does that affect my future decisions?

To use the dinner example, maybe you consider factors like the weather and the restaurant’s dress code when deciding what to wear. You might look up the weather using an app and research the restaurant online to see what the vibe is. Then, maybe you pull out a few options and try them on to see what you’re comfortable wearing. 

This decision-making process might seem simple, but it’s a true skill! Improving your analytical skills starts with understanding how you uniquely solve problems. 

Network With Other Teams

Learning from people around you can help you identify the problems they’re working on and show you how they may solve problems. You might learn about new resources or tools, or even just methods and tricks they use at work.

“ Network with people in roles that you’re interested in,” Rice recommends. “I’ve connected with people on LinkedIn who are resources for me, internally at my organization I’ve had the opportunity to learn from our data science, data engineering, and business analytics team, and I also try to attend events or webinars that are geared towards analytics to build my knowledge and connections as well.”

Create Opportunities for Yourself

An analytical thinker will take in facts, do their research, brainstorm creative solutions, narrow down to the most logical one, and reflect on their solutions after the decision was made to learn for the next time. There’s no better way to improve your skills than to put yourself into situations where you need to exercise your analytical skills — whether that’s doing something simple like logic puzzles, or even putting yourself in a professional’s shoes and pretending you have to make a big company decision. Practice walking through these steps when you problem-solve and make a decision, whether big or small.

Practice Putting Your Analytical Skills in Context

It can be hard to know what it’s like to use analytical skills in the workplace if you’ve never had a full-time job before. With Forage job simulations, you can get free access to real-world work problems to practice using your analytical skills in a professional context. 

Apply your analytical skills to real-world work situations in whatever industry interests you:

Analytical skills help you dig into problems and come out with facts-based solutions. While some technical skills like data analysis and visualization are elements of analytical skills, there are also soft skills like creativity and communication that are essential to being an effective analytical thinker. 

No matter what kinds of analytical skills you have, show them off on your resume and in the interview by detailing your unique, informative analytical problem-solving process.

Examples of analytical skills include data analytics, research, logical thinking, creativity, and communication. There are hard analytical skills, like data analytics, that help you use numbers to answer business questions, but also soft analytical skills, like creativity, that help you brainstorm potential solutions.

You can demonstrate analytical skills on your resume by either listing out data tools you use in a skills section or by describing scenarios in which you’ve used analytical skills in your experience section. In an interview, be sure to clearly outline what the problem was, who you worked with, any tools you used, and how your analytical skills led to the right solution.

Analytical skills can be hard or soft skills. Analytical hard skills are typically data or other tech tools that help you use numbers to answer questions or find solutions. Soft analytical skills are the ones you use when you’re thinking about how to solve a problem and how you figure out what strategic action to take.

Image Credit: olia danilevich / Pexels

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Problem solving

The Collins English dictionary defines it as: the act or process of finding solutions to problems, especially by using a scientific or analytical approach. It is a vital everyday skill that you will need to have for your personal and professional life.

• Why is it important

How can I get better?

How can i demonstrate this when applying for jobs, why is it important.

• Employers like to see good problem solving skills because it also helps to show them you have a range of other competencies such as logic, creativity, resilience, imagination, lateral thinking and determination.
• It is a vital skills for your professional and personal life.
• It is a key skill that is assessed at job interviews..
• It is an essential skill for managers and all senior level roles.
• Those with good problem-solving skills are a valuable and trusted asset in any team – these are the people who think of new ideas, better ways of doing things, make it easier for people to understand things or help save customers time and money.
• They are proactive thinkers who like to get things done.
• Can help you progress more quickly and boost your career opportunities.

Problem-solving and critical thinking Employers look for individuals with strong critical thinking and problem-solving skills. In this free short three-week online course from RIT you’ll learn how to develop these key skills and how to develop a framework to help you assess and analyse a situation, design a solution, and ultimately win in a competitive scenario.

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Problem-solving – it’s a process Problem-solving is a mental process that involves discovering, analysing and solving problems. The ultimate goal of problem-solving is to overcome obstacles and find a solution that best resolves the issue. This article from VeryWellMind identifies some key parts of the process.

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Problem solving is vital at all levels

We often associate the skill of problem-solving with those in senior positions. After all, they have more responsibilities, as well as the authority to tackle any issues that may arise. While it’s not very likely that you will be asked to find a solution to a major business issue on your first day of a new job, the way you handle even the smallest of problems will demonstrate to an employer how well you can deal with larger ones. If your boss doubts your ability to overcome difficulties that come your way, they may not trust you with more responsibility, or consider you for a managerial role later on.

Knowing how to solve problems is therefore of paramount importance vital. Luckily, there are many ways you can develop the skill, and learning how to demonstrate it can prove invaluable at job interviews.

Acquiring a new skill doesn’t have to feel like work. You can easily build your problem-solving ability through gaming, either online or with classic board games. How many times have you played your favourite game and got stuck on the same level for hours, before you finally found a way around it? Putting yourself in a situation, even a fictional one, where you have to think creatively will help you develop the same mind-set in your everyday life. You can then apply these skills and behaviours to your professional life, too.

Don’t run away

When the going gets tough, we all have the tendency to want to hide away instead of facing the problem and coming up with a solution. Unfortunately, wishing a problem away will not make it disappear, so dealing with it promptly can be essential in keeping you sane! Even if there is no solution, the way you handle the consequences and minimise the negative impact will make you feel more powerful and able to handle any adversities.

Welcome advice

Asking for help or advice is not a  weakness! It is actually welcomed by many employers, especially while you are still learning the ropes. Listen to what people with more experience have to say, and then try to figure out if you can apply their advice to solve your problem. This will not only help you handle it with more confidence, but it will also show that you are proactive, and not afraid to consult your seniors.

History repeats itself

Perhaps the problem you are facing has happened before. In this case, if the solution was successful, you might want to follow it. If it wasn’t, you can eliminate all the ways you can’t solve the problem.

Do your research

Having all the facts can really help you understand a problem better and even identify where something went wrong. While trusting your instinct, and proposing a solution is fine, it’s wise to have some facts in your back pocket to help you convince your team, or your boss. That way, you will not only have presented them with a solution, but you will also have the facts to justify your way of thinking if you come up against any criticism.

Don’t look for problems

While spotting mistakes is a great skill, creating problems out of nowhere is not! Sometimes the simplest solution is the answer, and trying to prove yourself by tackling a problem you created will probably give you a reputation of being a trouble maker, rather than the hero you want to be seen as.

This article by topuniversities may also help when learning how to solve problems. It describes how you should handle the problem solving process. 

Problem solving: the mark of an independent employee – this article from Targetjobs.com has some excellent guidance on how employers assess problem solving in your job applications and when you start work.

Demonstrating that you are a great problem solver is not always easy, as there is only so much you can include in your CV. However, one of the most common interview questions is designed to assess this skill. So, what do you say when an interviewer asks: ‘Give us an example of a situation where you faced a difficult problem?’

It can be very tempting to make up a situation, to try and make yourself sound like the master of problem-solving. However, it’s always best to be truthful, even if you feel like your example refers to a minor problem. Do try to think of a situation, perhaps in your student life, where you came across an obstacle and managed to tackle it effectively. It could be something like working as part of a project team, or writing your dissertation, for example. 

If you simply can’t recall having faced any major issues at university, then use your personal life as an example. Maybe you like playing chess, which will also show your ability to think strategically. Or perhaps you travelled abroad and had problems with your booking, or finding your way around in a new country where you didn’t speak the language.

Remember, the important thing is to demonstrate your ability to think on your feet, remain calm in stressful situations and contribute to finding a solution. 

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What is Problem Solving? A Comprehensive Guide

In this blog, we will explore "What is Problem Solving?" In detail. From defining the nature of Problem Solving to understanding the key process in resolving issues, this blog covers it all. So, wait no more; let’s go deeper into this fundamental concept.

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Table of contents  

1) What is Problem Solving definition?  

2) The process of Problem Solving  

3) Key skills for effective Problem Solving  

4) Strategies for enhancing Problem Solving abilities  

5) Problem Solving tools and techniques  

6) Conclusion       

What is Problem Solving definition?  

The process of Problem Solving  

Understanding the problem   

The first step in Problem Solving is gaining a clear understanding of the issue at hand. Take the time to thoroughly analyse the problem and gather relevant information. Ask yourself questions like:  

1) What is the nature of the problem?  

2) What are the factors contributing to the problem?  

3) What are the desired outcomes?  

4) Are there any constraints or limitations to consider?  

By gaining a comprehensive understanding of the problem, you lay a solid foundation for finding an effective solution.  

Generating possible solutions   

Once you have a clear grasp of the problem, it's time to brainstorm potential solutions. Encourage creativity and think outside the box. Consider all possible options without judgment or criticism. The goal at this stage is to generate a variety of ideas and alternatives.  

Evaluating and selecting the best solution   

After generating a list of possible solutions, it's important to evaluate each option based on its feasibility, effectiveness, and alignment with the desired outcome. Consider the advantages and disadvantages of each and every solution. Assess its practicality and the resources required for implementation.  

Additionally, take into account the potential risks and benefits associated with each solution. Consider any potential consequences or impacts on other aspects. Based on this evaluation, select the solution that appears most viable and promising.  

Implementing the solution   

Once you have chosen the best solution, it's time to put it into action. Develop a detailed plan outlining the necessary steps and allocate the required resources. Determine responsibilities and deadlines to ensure a smooth implementation process.  

During implementation, monitor progress and make any necessary adjustments or adaptations. Stay proactive and address any challenges or obstacles that may arise along the way. Effective communication and collaboration with others involved in the process can greatly contribute to successful implementation.  

Assessing the results   

After implementing the solution, it's essential to assess the results. Evaluate whether the problem has been properly resolved or if further adjustments are required. Analyse the outcomes and compare them against the desired goals and expectations.  

Consider whether the chosen solution has brought about the intended benefits and if any unexpected consequences have emerged. Reflect on the overall effectiveness of the Problem Solving process and identify any lessons learned for future reference.  

Remember, Problem Solving is an iterative process, and it's not uncommon to revisit and refine solutions based on ongoing evaluation and feedback. Embrace a continuous improvement mindset and be open to seeking alternative approaches if necessary.  

By following this Problem Solving process, you can approach challenges systematically and increase your chances of finding effective solutions. Remember that practice and experience play a vital role in honing your skills. 

Master the art of solving problems and become a catalyst for innovation and success with our Problem Solving Training – sign up now!  

Key skills for effective Problem Solving   

What one must do to become an effective problem solver is to develop key skills that enhance your Problem Solving abilities. The skills give you the ability to tackle challenges with a strategic mind and find the needed solutions. Below is a dive into the most important of them:

Critical thinking

Critical thinking is a skill that includes the objective analysis of information, considering different viewpoints, and being able to arrive at a sensible judgment. This helps you to assess problems with the right accuracy in judgment and also find suitable solutions. 

It means that creativity is the ability of a person to think outside the box and come up with innovative solutions. It includes pressing the mind toward new possibilities and viewing the problem in different ways.

Analytical skills

In this ability, there is the aspect of breaking down a problem into subunits that helps in identifying the patterns, relationships, and causes within the problem. 

Decision-making

Sound skills in decision making call for the assessment of the pros and cons of all solutions provided and thus choosing the best alternative. Risks must always be considered with the benefits any alternative might bring.

Strategies for enhancing Problem Solving abilities  

Practice critical thinking

Engage yourself in activities which require critical thinking, including solving puzzles, complex discussion, challenging all assumptions. This will increase your ability to enhance sharpening of your analytical skills and let you think critically at a time when problems are in your way. 

Seek feedback and learn from experience

Seek responses from your mentors, course peers, and Problem Solving experts. From the successes and failures, reflect on the reasons for the occurrences over previous experiences and point out what could be improved. Treat the opportunity of Problem Solving as one of the chances that shall be given to you to grow and develop each time you make it through a problem. 

Embrace challenges

You can redesign your problematic issues and take every challenge coming across as an opportunity for growth. Hence, it paves the way for the ability of resilience and strengthens your Problem Solving abilities. 

Collaborate with others 

In Problem Solving, collaboration is embraced by pooling different perspectives and ideas. Work with others in activities that involve groups to discuss issues and seek input from others, listening actively to various viewpoints. Working collaboratively with others helps expand your knowledge of various ways of Problem Solving and encourages innovation.

Think outside the box 

Encourage creative thinking by exploring unconventional ideas and solutions. Challenge every assumption and all its related alternatives. Shift to this kind of mindset, and it can drive innovative Problem Solving strategies, letting you uncover newer ways to solve age-old complex problems.

Problem Solving tools and techniques  

When faced with complex problems, utilising specific tools and techniques can help facilitate the solving process and lead to more effective solutions. Here are some commonly used Problem Solving tools and techniques:  

Root cause analysis   

Root cause analysis is a methodology used to detect the underlying causes of a problem. It involves investigating the problem's symptoms and tracing them back to their fundamental causes. By addressing the root causes, Problem Solvers can prevent the issue from recurring.  

Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis   

SWOT analysis is a planning tool that strategically helps measure the weaknesses and internal strengths of a situation. Moreover, it can find external opportunities and threats. By assessing these factors, Problem Solvers can gain insights into the current state and make informed decisions about potential solutions.  

Fishbone diagrams   

Fishbone diagrams, also known as cause-and-effect diagrams or Ishikawa Diagrams, visually represent the possible causes contributing to a problem. By organising causes into categories (such as people, process, equipment, and environment), Problem Solvers can systematically analyse the problem's potential sources.  

Decision matrices   

Decision matrices are used to evaluate and compare different options based on multiple criteria. This tool helps Problem Solvers weigh the importance of various factors and objectively assess each alternative, leading to an informed decision.  

Six Thinking Hats   

Six Thinking Hats is a technique initially developed by Edward de Bono that encourages parallel thinking by exploring different perspectives. Each "hat" represents a different thinking approach (e.g., logical, creative, emotional), allowing Problem Solvers to consider diverse viewpoints and generate innovative solutions.  

These are just a few examples of Problem Solving tools and techniques. Depending on the nature of the problem, other methods, such as brainstorming, mind mapping, flowcharts, or Pareto analysis, can also be applied. Choosing the appropriate tool or technique depends on the specific problem and the desired outcome. 

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Conclusion  

We hope you read and understand everything about What is Problem Solving? Developing effective skills is crucial for overcoming challenges, making informed decisions, and achieving success. By embracing problems as opportunities and applying strategic approaches, individuals can become proficient Problem Solvers in various domains of life. 

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Frequently Asked Questions

There are two major types of Problem Solving: Reflective and Creative. Regardless of the type, it focuses on understanding the issues, considering all factors and finding a solution.

Problem Solving in the workplace refers to an individual’s ability to manage difficult situations and find solutions to complex business issues.

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