Critical thinking: a critical strategy for financial executives: as accounting standards become more principles-based and global in nature, emphasizing analysis and creative thinking could lead to greater organizational success.

• Author: Karr, Susan Schott
• Position: PROFESSIONAL DEVELOPMENT

Analytical thinking, skepticism and good judgment--are increasingly the key ingredients financial executives must add to their intellectual/ educational mix to remain competitive in a world economy that now places more emphasis on critical thinking than ever before.

Indeed, executives need to hone their own ability to think creatively, critically and with curiosity to make business decisions that answer the right questions, manage risk, improve productivity and use workers' talents effectively in an evermore global and fast-paced world. As a result, the need for more finely tuned, and razor-sharp critical thinking skills and training programs to maximize them, has come to the fore.

"The essence of critical thinking is intellectual curiosity and a willingness to ask questions," says Kathy Pearson, Ph.D., an adjunct associate professor in the Operations and Information Management Department at The Wharton School of the University of Pennsylvania. "Good critical thinking skills help us to plan for the future and to think about uncertainty."

Tony Osude, acting director of professional development at the Association of Chartered Certified Accountants (ACCA), a global accounting organization, thinks critical thinking is integral to everything accountants do, from their professional training to the execution of their professional behavior.

Auditors, for example, must rely on skepticism; they can't take everything at face value. Part of the process relies on how much further and deeper they may have to dig to determine whether financial statements are reliable and representative. Critical thinking permeates the process.

Those skills will be even more essential in the future, with the potential transition to International Financial Reporting Standards (IFRS) and a greater reliance on subjectivity in applying fair value measurements and other standards. The principles-based system demands an ability to make inferences and use sound judgment.

Pearson believes the need for critical thinking training is leadership development, as people transition from middle- to senior-management roles. "There are key learning-development gaps as they move from tactical, operational work--where they used analytical models--to positions where they need to think strategically," she says. "This move is too complex to follow with a mathematical model."

"Things are moving and changing so rapidly in the world that critical-thinking skills will be necessary throughout an...