The Newsletter of the IMA Canton Chapter

August 2017

Jeff Walters, President
Cullen Bahler, Editor

In this issue:

IMA Night at the Races

Improving Critical Thinking
Through Data Analysis

Webinar Schedule

IMA Technical Sessions

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Join Us!
IMA Night at the Races

The Cleveland East Chapter invites all IMA members to join us for an evening at Northfield Park on Tuesday, August 15th for a night of fun gaming and dinner. A member of the Northfield Accounting staff will speak to our groups on Gaming in the State of Ohio, and we are offering 1 CPE.

Cost is $25 per person and individuals are encouraged to invite guests to attend. Click here to register online by August 8th.


Strategic Finance


This is an abstract from the article. For the full text, click here

Companies today expect their accounting, finance, and audit professionals to be adept critical thinkers. But what that actually entails can be difficult to describe. As noted in the October 21, 2014, article “Bosses Seek ‘Critical Thinking,’ But What Is That?” from The Wall Street Journal, there is no generally accepted definition of critical thinking. And while accountants, financial managers, and auditors must be able to improve their critical thinking over time, practical guidance on how to develop these skills is scarce.

We found that data analysis, another important skill for those in accounting, finance, and auditing, is an ideal venue for practicing critical thinking. The two concepts are intertwined: Improving one will ostensibly improve the other, and vice versa. We have formulated a straightforward, practical definition of critical thinking and, using a case study, will illustrate this connected relationship. With that understanding, it should be easier for accounting, finance, and audit practitioners and students to improve their critical thinking skills.


Due to its iterative nature, data analysis is an ideal setting for developing critical thinking. When we asked Melissa Frazier, a retired vice president for audit and controls for Comfort Systems USA, about this, she said, “Critical thinking is key through each step in the data analysis process. If you don’t do a good job on each step, your result will be flawed or useless.”

The relationship also is reciprocal: While analyzing data strengthens critical thinking, critical thinking in turn helps data analysis. Jeff Thomson explains, “Data analysis and critical thinking skills are interdependent. Data analysis requires you to think critically by probing, connecting disparate facts, synthesizing, etc. Likewise, critical thinking is enabled by the ability to think analytically and apply tools to help extract insights and actionable information from data.”

But how does critical thinking as we define it merge with diagnostic data analysis? We developed a case study (see “CASE STUDY: Fraudulent Financial Reporting”) to demonstrate how elements of critical thinking are needed at each step in the data analysis process. The case centers on Emersyn Grace, who was hired to establish an internal audit function for ACJ Company, a wholesaler. As she familiarizes herself with the company’s operations, Emersyn discovers some issues of concern that require her to employ critical thinking skills while further analyzing the company data.

Although the case study takes place within an internal audit setting, all accounting, finance, and audit professionals should be able to proficiently perform data analysis procedures like those Emersyn completed. Likewise, Emersyn exhibits critical thinking skills that all accountants, financial managers, and auditors should strive to emulate.


Diagnostic data analysis involves a basic process that requires critical thinking:

Identify data analysis opportunities,
Specify the objectives of the analysis,
Develop expectations and define anomalies,
Analyze the data and investigate anomalies,
Evaluate the results, and
Formulate a remedial action plan.

Analyzing data through this process requires accountants, financial managers, and auditors to apply their curiosity, creativity, skepticism, analysis, and logic. Let’s look at each step in more detail and see how Emersyn applied critical thinking skills in her data analysis.

Identify Data Analysis Opportunities

Accountants, financial managers, and auditors routinely analyze data as part of their day-to-day responsibilities, but they also need to be alert for and recognize unusual, unanticipated analysis opportunities. Critical thinkers’ curiosity inspires them to watch for potential analysis applications; their creativity enables them to consider what they see from different perspectives; and their skepticism empowers them to sense when what they see just doesn’t seem quite right.

Emersyn’s curiosity about ACJ Company—her eagerness to learn—prompted her to analyze its financial statements. Her creativity motivated her to analyze ACJ’s financial position and performance not only from a company-wide perspective but also from a store-by-store perspective. Her skepticism regarding the abnormalities she uncovered in the aggregated account balance data prompted her to extend her analysis by drilling down into the underlying, disaggregated transaction data.

Specify the Objectives of the Analysis

After identifying the data analysis opportunity, critical thinkers must plan the analysis. That begins with specifying appropriate objectives. For routine, day-to-day analyses, this is rather straightforward. Specifying the objectives for unforeseen data analysis projects is often driven by skepticism and requires creativity. Critical thinkers instinctively focus their attention on unusual circumstances and events they observe. Then they consider the reasons why the abnormalities may have occurred from various perspectives and set out to investigate them. The causes of unfavorable irregularities in business performance include things like operating inefficiencies, noncompliance with applicable laws and regulations, and fraud.

The objective of Emersyn’s premeditated financial statement analysis was motivated by curiosity, not skepticism; she simply wanted to enhance her understanding of ACJ Company’s financial position and performance. Her skepticism kicked in when she uncovered unanticipated abnormalities in specific account balances. Not willing to accept what she had discovered at face value and needing to be convinced that her concerns were warranted, she creatively refocused the objective of her data analysis to assessing the integrity of the underlying transactions.

Develop Expectations and Define Anomalies

Next, critical thinkers must establish expectations of data analysis outcomes and define data abnormalities that signal potential problems, such as inefficient operations, noncompliance with applicable laws, or fraud. Developing expectations and defining anomalies require analysis and logic. Critical thinkers carefully study the environmental factors that could affect the data, such as current economic conditions; the financial well-being of the company; the effectiveness of internal controls; changes in procedures, personnel, or technology; and the performance of comparable business units. Based on this inquiry, they formulate rational expectations regarding the outcomes of the data analysis and identify plausible indicators of problems they may observe during the analysis.

Emersyn’s understanding of ACJ Company was insufficient for her to establish legitimate expectations heading into her preliminary financial statement analysis. But her store-by-store comparison revealed anomalies in the aggregated account balance data of one store, which compelled her to reexamine the facts of the situation and proceed accordingly. She determined that she needed to investigate the detected anomalies by analyzing the disaggregated transaction data underlying the account balances of that store. Based on her financial statement analysis findings, Emersyn logically expected her follow-up transaction analysis to uncover anomalies.

Analyze the Data and Investigate Anomalies

Data analysis obviously involves “analysis,” which, by definition, is a key component of critical thinking. Critical thinkers systematically gather and examine relevant evidence using appropriate procedures. Skepticism compels them to assess all evidence critically, whether it corroborates or contradicts their predetermined expectations. They continuously question what they see and hear and rigorously investigate new evidence coming to their attention, including any anomalies.

Emersyn analyzed aggregated account balance data using an array of interrelated data analysis procedures: common-size financial statement analysis, ratio analysis, trend analysis, and internal benchmarking (comparing the financial position and performance of individual stores). She appropriately ascertained that some of the evidence she gathered and examined—the anomalies pertaining to particular accounts—warranted follow-up analysis. Realizing that analyzing disaggregated transaction data would provide evidence regarding the correctness of the aggregated account balance data, Emersyn used data analysis software to test the validity of transaction amounts included in the account balances.

Evaluate the Results

Next, the diagnostic data analysis results need to be evaluated, which requires logic. Critical thinkers understand that they must reach well-founded conclusions by properly interpreting evidence that’s persuasive—that is, it must be relevant, reliable, and sufficient.

Emersyn appropriately determined that her financial statement analysis hadn’t yielded evidence that was sufficient, relevant, and reliable enough for her to reasonably ascertain whether specific account balances of one particular store were incorrect. But her follow-up transaction analysis produced persuasive evidence, and she logically concluded that certain balances were misstated. Nevertheless, Emersyn wisely determined that she still didn’t have convincing evidence that the misstatements were caused by fraud.

Formulate a Remedial Action Plan

The final step is to formulate a sensible remedial action plan to address detected anomalies, which requires analysis, logic, and creativity. Critical thinkers understand that effective solutions treat the sources and causes of problems, not the symptoms. After diagnosing where and why anomalies originate, they innovatively prescribe practical, cost-effective remedies.

After detecting and uncovering control deficiencies that created an opportunity for a store manager to commit fraud, Emersyn reasonably and resourcefully prescribed controls designed specifically to effectively and efficiently reduce the risk of future fraudulent financial reporting by store managers.


Entry-level accounting, finance, and audit professionals are expected to be adept critical thinkers. Moreover, they must continue to develop their critical thinking proficiency over the course of their careers. Adopting a straightforward, practical definition of critical thinking, like the one proposed in this article, is a sensible first step.

An appropriate next step that practitioners and students can take, with assistance from their mentors and teachers, is to measure their critical thinking proficiency using simple questions. Then they can identify and proactively engage in activities conducive to critical thinking. In time, engaging in accounting, finance, and audit assignments that require curiosity, creativity, skepticism, analysis, and logic will culminate in improved overall professional and scholastic performance.



Webinar Schedule

You will earn CMA and CPE credits when you attend any live webinar. Replay webinars are available in the archive but do not earn credits. Advance registration is recommended—IMA webinars are popular and fill up quickly.

Leading Across Generations
August 1, 2017
1:00 - 2:30 pm EDT

Leading Operational Excellence as a Management Accountant
August 9, 2017
1:00 - 2:00 pm EDT

Show Me the Money - How IOT Spells Opportunity for Payments
August 14, 2017
1:00 - 2:30 pm EDT

The CMA Exam Essays: Everything You Need to Know!
August 21, 2017
10:00 - 11:00 am EDT

Inside Cash Flow
August 29, 2017
1:00 - 2:00 pm EDT

The Leader as Innovator - Designing Your Dream Job Now
September 5, 2017
1:00 - 2:30 pm EDT

Register for Any Webinar


Mark Your Calendar:
Join Us at IMA Technical Sessions

2017-2018 tech sessions will be held at Kozmo's Grille with the exceptions noted below. There are two hour-long sessions beginning at 5:00 and 6:30 and dinner in between.

§ September 19, 2017
  (Student Night, Malone University)

§ October 17, 2017

§ November 21, 2017

§ December 12, 2017

§ January 16, 2018

§ February 20, 2018

§ March 20, 2018

§ April 17, 2018

§ May 15, 2018

Cost for dinner is $30 regardless of the location. Please look for invite emails with registration information prior to each meeting.


§ Social/Networking at 4:45 pm

§ Pre-Dinner Technical Session at 5:00

§ Dinner at 6:00 pm

§ Post-Dinner Technical Session at 6:30 pm

More info:


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The mission of the Institute of Management Accountants (IMA) is to provide a forum for research, practice development, education, knowledge sharing, and the advocacy of the highest ethical and best business practices in management accounting and finance. Please join us as we promote this mission in the greater Canton, Ohio, area.

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