problem solving examples in audit

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Common Audit Problems and How to Deal with Them

by Richard A. Vincins

We often perform audits and wonder why, when they’re complete, they didn’t go very well. This article will offer insight on how to better anticipate and solve the common audit problems that all auditors face. This is going to take some personal work on the readers’ part. My hope is that after reading this article, you can apply these insights to your auditing practices to make you a better auditor and ultimately get more out of the audit process.

There are a multitude of issues and audit problems auditors will encounter during auditing that must addressed individually. As we cannot discuss every one of them, I have highlighted common audit problems that auditors experience. Throughout my auditing career, I have had the opportunity to observe different auditing styles, from Food and Drug Administration (FDA) inspectors to third-party auditors for ISO certifications. Many of the audit problems I’ve observed boil down to the following four causes:

• Management doesn’t support the audit program.
• No audit preparation
• Difficult or obtuse auditees
• Writing and publishing audit reports in a timely manner

Of course, this isn’t a complete list; you may already be thinking of other issues that you’ve encountered. The remainder of the article will discuss the listed audit problems, the resulting struggles for auditors, and some solutions on how to deal with them constructively.

Common audit problems: No management support

When starting an audit, the first question we ask ourselves is, “Why are we doing this?” We may be performing the audit for compliance reasons, financial reasons, or because a procedure tells us that we must. All of these are good reasons, though we must understand that conducting audits is business tool that improves our quality system. How do we then convey to management, the CEO, or the board of directors that audits are an essential part of business processes and not something to resent and neglect?

According to ISO 19011, the executive management team is required to set the audit criteria and support the audit program. How many of your executive managers have read ISO 19011? Probably not many. Our obligation as audit program managers is to explain this to them and help them understand the reasons for performing internal audits, supplier audits, or other quality audits.

Still, we often struggle with knowing that our managers rely on us to tell them what needs to be done. With some time, encouragement, and understanding, individual companies may change this aspect. To gain management support, we auditors must help managers understand that auditing is an important process that can help them. Below are some ways to help encourage executive managers to support the audit program.

Gaining management’s support

• Communicate the cost of audit observations.
• Explain the regulatory effects of nonconforming processes.
• Educate by stating or restating management’s role in the audit program.
• Distribute audit reports to management.
• Have a member of management participate in an audit.

Communication is key. We often perceive internal audits or supplier audits as just part of our job, but we need to understand that they play a much larger role. If we can communicate to upper management that audits lower the regulatory risk, help improve processes, find waste, and ultimately save the company money, they start to pay attention. This communication occurs in the form of audit reports. How can we make these audit reports stand out? Try to associate a cost to the observations on the report or to a specific regulatory risk. During reviews of audit findings in monthly or semi-annual management meetings, take the opportunity to re-emphasize management’s role in the audit process.

Common audit problems: No audit preparation

When the audit schedule is published in the beginning of each new year, we auditors often promise ourselves that this year’s audits will be different and better. Then the first scheduled audit comes around and we realize that the audit has to be performed tomorrow. What happened to our good intentions? This is something that even I have experienced and see often with auditors: too little audit prep time. When we’re slammed to get an audit ready, we must take the procedure(s) home and stay up all night writing a checklist and audit questions. External audits are typically easier to prepare, as we have to make travel arrangements and don’t have immediate access to the auditee’s procedures.

Audit preparation is the most crucial part of an audit program. So how do make sure that we are prepared for our audits? It all boils down to time. This is something we never seem to have enough of, especially when it comes to any type of planning. There needs to be a schedule and time allotted for conducting audit preparation. A week before the audit is to be performed, schedule time for an hour on Monday morning to prepare for the audit. Audits that are performed haphazardly are the result of no preparation, planning, or process review.

Auditees will know that proper planning wasn’t completed when you read their procedures during interviews or ask irrelevant questions. The worst that can happen is the auditor goes off on tangents outside of the audit scope. Proper audit preparation allows you to generate checklists, a list of questions, and review the procedure(s) prior to starting the audit. The first time auditing a process is generally the most difficult, as there are no checklists and its procedures must be read carefully. Below are some additional ways to properly prepare for an audit.

Preparing for an audit

• Schedule time in Outlook or another calendar program.
• Allot the time in your work schedule for preparation.
• Require checklists and questions. This forces preparation.
• Don’t let other work tasks interfere.
• Close your office door.
• Take your procedures and pad of paper to cafeteria.

Common audit problems: Dealing with difficult auditees

To get the most out of any audit, you must successfully interact with the owner of the process while reviewing his or her processes, procedures, and records. In some instances, you may encounter auditees who exhibit difficult behaviors. These can be anything from auditing a person who is “too busy” for the audit, to someone that doesn’t care about it, to someone that’s aggressive because you’re interrupting his or her schedule.

In my experience, the most difficult auditees are those who just don’t care about the audit. They answer questions with a disinterested or nonchalant “Yes” or “No,” revealing nothing insightful about the process. Audits are supposed to be preventive actions to help organizations find nonconformities and areas for improvement. If the auditees are challenging the auditor at each question or are disinterested in the process, there is no benefit to conducting the audit.

As an auditor, it may seem as through you have to receive training by the Federal Bureau of Investigation. However, you should obtain training in communication skills, dealing with difficult people, and interview techniques.

If an auditee is being negative or overly aggressive with you, stop the audit and notify the audit program manager, the auditee’s supervisor, or the company president. There is no benefit from an audit process when the situation is confrontational. Take a class from the local university or a seminar on communication skills. I have found these classes invaluable in understanding how to diffuse difficult situations, understanding nonverbal communications, and even cultural differences in worldwide business applications. There are also interview techniques that you can learn that will help you gain valuable information from the audit. For example, starting off a sentence with “Do …” almost always leads to a yes or no answer. As discussed previously, properly preparing for an audit lets you generate questions on your checklist that begin with “How do you…,” “Tell me…,” or “What does this…” An auditor must literally become an expert in communication skills to ensure that his or her interviewing techniques can overcome difficult situations.

• Take a communication class on verbal and nonverbal skills.
• Get training on dealing with difficult people.
• Understand cultural differences.
• Explain to the auditee the benefit or requirement to the company.
• Ask open-ended questions from checklist.
• Stop an audit during difficult situations with auditees.

Common audit problems: Publishing audit reports

Audit reports are often one of the least-liked aspects of an auditor’s job. Audit reports take more time to complete than was planned for, which usually results in them being published later than expected. A common expectation is that audit reports are formally published no more than a week after the audit has been performed. This may be easier for organizations that include their audit checklists in the audit report. However, for frequent supplier audits or external audits, there is an expectation of a formal report not just a checklist. The audit report must be generated to clearly communicate audit findings to managers so they can make appropriate decisions. Following are some techniques to assist in publishing an audit report in a timely manner:

• Create a standardized audit report form that can be used by all auditors. These audit reports can be “fill in the blank” so that any observations or nonconformities observed can be entered efficiently.
• Try to refrain from publishing a checklist as the audit report as these usually don’t convey the information properly. Consider generating a checklist that is the audit report, but be sure that nonconformities, observations, and opportunities for improvement are clearly identified.
• As with audit preparation, schedule plenty of time to complete the audit report. I have found that if the report is submitted more than a week after the audit, the information is usually forgotten by the auditee and doesn’t benefit the organization.

Audit reports

• Publish the audit report within a week.
• Schedule time on Outlook or another calendar program.
• Utilize a standard audit report.
• Incorporate the audit checklist into the audit report.
• Publish the audit report to the management team.

Common audit problems: Conclusion

Many auditors struggle with audit problems they encounter during the audit process without understanding how to deal with them. Hopefully this article provided some solutions and insight into ways that you can make your auditing process more productive, less stressful, and more beneficial. The key is knowing that the audit process is designed to help the organization find issues or nonconformities before someone else does or before they become major issues. These audit problems or issues could result in regulatory action by an outside agency or cost the company thousands (or millions) of dollars in wasted expense. An issue not found during an audit of a company may even result in costly recalls.

An auditor can work through getting management support, preparing for an audit, dealing with difficult auditees, properly reporting the audit results, and other audit problems in a much more proficient audit process.

About the author

Richard A. Vincins is a Certified Quality Auditor and regulatory affairs consultant with Emergo Group, a global medical device consultancy with headquarters in Austin, Texas. He is responsible for the implementation of quality systems, conducting internal audits, training on quality system tools, and providing regulatory expertise in national and international regulations. Vincins has more than 19 years of experience in the medical device industry, including worldwide regulatory compliance efforts for in vitro device, medical device, and pharmaceutical companies.

Tags: audit problems.

6 Responses

Best article with good information.Thanks

Really helpful Sir…

Great article! Answered my questions and confirmed my analysis on why being late with report writing and the issues came out of the late reporting.

Great information for handling common audit problems!

Great Article! It helped me a lot.

Loads of information with problem-solving. Not only just you stated problems of audit firms but also the solution for it thanks.

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More From Forbes

How to ensure your audit process goes smoothly (even when something goes wrong).

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Well, now you are in it. Something went wrong, and your auditor is breathing down your neck. That's not good. There are a number of reasons why this could happen, so let’s break down some potential problems and come up with a few practical solutions.

What Is An Audit?

Before we delve into problem-solving, it’s important to know what an audit actually is. At a high level, you are hiring a licensed third party to review your financial statements and attest that they are accurate to a relative degree of certainty. The most important word here is "attest." This is a fancy way of saying that the auditor is putting their and their firm’s name on the line by saying your financial statements are accurate. Audit firms and careers can be destroyed by incorrect attestations. Just look at Arthur Anderson and Enron . The point to take away is that an auditor takes their attestations seriously, so they will likely get very angry if they feel you are hiding things.

Additional Audit Pressure: Staying On Budget And Navigating Busy Season

Beyond the weight of the attestation, auditors are also held to budgets. You probably have one outlined in your letter of engagement. The audit staff is under significant pressure to get the audit done within the allotted hours budgeted. If they don’t, they either have to pass the costs onto you or eat them themselves. Both options can reflect poorly on the auditor. Furthermore, many companies conduct audits in the same date range, so if the audit takes too long, the auditor can't do as many audits, which can cause more stress. The takeaway is that the auditor doesn’t want the audit to take any longer than you do, so the more you assist them, the better it will go for both of you.

Audit Kickoff And PBCs (Provided By Client)

When an audit starts, the auditor will come up with a timeline and a list of items that they need you to provide (colloquially called PBCs, or “provided by client”). It is in your best interest to get the information to the auditor as soon as you can. When you provide your PBCs, make sure you understand what the auditor is asking for. Don’t just send them random schedules so you can check the box. This will cause a lot of problems later on.

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Audit Testing

An auditor will take your PBCs and perform various tests. A test could be as simple as making sure your accounts receivable balance matches your invoice details. Tests normally start with a small sample size, and as long as the auditor finds no issues (e.g., missing invoices), they can normally assume that things are good. When you give incomplete, outdated, incorrect or difficult-to-follow PBCs, it makes the auditor’s job harder, and they're more likely to find an error.

What Happens When An Auditor 'Finds Something'?

Okay, so the first question is whether you intentionally did something wrong. If so, we’ll tackle that later. The first thing you need to do with the auditor when they find something is understand what they were testing for. The odds are good that you provided data that wasn’t what they needed or you don’t have the data they need. This situation can play out in a couple of ways.

First, I recommend that you understand what the auditor’s issue is and see if you can solve it with a simple clarification about what they are looking at. If that fails, see if you can solve it by getting them more data. If gathering the data is a herculean task or is impossible because the data does not exist, let the auditor know that right away, and explain the situation. This happens frequently, especially for companies that are going through their first audit or are working with a new auditor. What you should ask for is an alternative testing procedure. This is very common, and as long as the issue is that data is missing for a logical reason — like not knowing you needed to keep that data — the odds are good that you can get alternative testing. If you can't, you’ll have to provide the auditor with a whole bunch more data, and things will take a lot longer.

What If You Did 'Something'?

There are levels to this. If you decided not to follow a specific Generally Accepted Accounting Principle (GAAP) guideline, like parts of ASC 606 (revenue recognition), the auditor might accept this as long as you have a rational policy and reason for the decision. Or, the auditor may give you corrective journal entries and guidance on what your accounting treatment should look like going forward.

If you intentionally manipulated numbers with the purpose of making them look more favorable or did something even worse — like committing outright fraud — you need to come clean. It will be better for you in the long run if you are honest and explain what happened. The more you push this off, sidestep the issue or obfuscate, the more the auditor will dig in their heels. There is no good ending here if you try to hide things. The issue will not go away, and the sooner you address it, the more easily and quickly everyone can move on (and hopefully there are not significant consequences).

Auditors are not bad folks and are not looking to cause trouble or “find things.” They want a smooth audit, just like you do. The more you can assist them in making their job easier, the sooner they will be out of your hair.

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How To Do a Research Problem Audit

Summary: decision-makers often don't have a clear idea of the real problem that should be researched. a problem audit can help clarify the business problem and translate it into a research problem in order to select a fit-for-purpose approach..

7 minutes to read. By author Michaela Mora on May 17, 2022 Topics: Business Strategy , Market Research

Problem definition is the most important step in the market research process . A problem audit can help define it. If a problem is misunderstood or ill-defined, all money, time, and effort spent on the research will be wasted. Serious mistakes are made when we try to act on answers to the wrong research questions.

In many cases, decision-makers have a vague idea of the problem when they ask for research. They often focus on the symptoms of a problem (e.g., high customer churn, low market share, unmet sales forecasts, etc.), but don’t know the underlying causes.

Only when underlying causes are identified can problems be successfully addressed.

For example, loss of market share can be caused by promotions from competitors, inadequate distribution, bad customer experiences due to an inadequate service blueprint, negative brand reputation due to company actions, technology changes bringing new competition, lack of a diverse product portfolio, etc.

It is not uncommon that the research takes a different direction after we take steps to clarify and define the problem in order to select a fit-for-purpose approach.

Problem Definition Tasks

To define the research problem, we often need to take on a series of tasks to help researchers understand the background of the business problem and the environmental context.

The main goals of these tasks are:

• Identify what problem the decision-maker is facing – What course of action should be taken?
• Translate the decision-maker problem into a research problem – What information is needed to justify the selected course of action?

The most common tasks involved in problem definition are:

• Discussions with decision-makers and various stakeholders connected to the problem area
• Review of secondary research
• Interviews with subject matter experts
• Qualitative research with customers and non-customers (e.g., In-depth interviews, focus groups, etc.)

Discussions with Decision Makers

Working with decision-makers on defining the problem is crucial to the success and value of the research. Decision-makers need to understand the capabilities and limitations of the research. Research provides information relevant to decisions, but decision-makers are ultimately responsible for the solutions.

By the same token, researchers need to understand the nature and impact of the decisions stakeholders responsible for solutions face.

Interacting with decision-makers may be difficult in some organizations. Lack of time, long chains of command, and internal politics may make it difficult for researchers to talk directly to decision-makers with the must say on how to implement the insights of the research.

Conflicting interests in the research outcomes from various internal groups may complicate the matter further, so communication skills and some planning are often required to engage all the stakeholders connected to the problem.

A key component of the planning is to create a discussion guide to conduct a problem audit.

Problem Audit

A problem audit is an evaluation framework that helps us interact with decision-makers to uncover what the real problem is and the areas of research we need to focus on to identify its underlying causes. The main purpose is to understand the issues the decision-makers are facing.

The actionable problem audit framework includes questions in seven major areas.

History of the problem

What events led to the realization that action is needed? Understanding what happened or has been happening that is forcing stakeholders to look for new solutions is the first step in a problem audit in market research or UX Research.

For example, the company may be losing market share to new competitors over time, despite various marketing initiatives. A key competitor may have launched a new product with an aggressive marketing campaign with promotional offers and made the problem acute.

Available Alternative Courses of Action

What solutions to the problem are currently available? Decision-makers may have considered courses of action that are available or could be available shortly. However, these courses of action may pose risks, be riddled with limitations, or be in early stages that need research to validate their viability.

Following the example above, the company could introduce new products still under development, create quickly me-too products, reduce prices, offer different promotions, launch a new campaign to reposition the brand, etc.

Criteria to Evaluate Alternative Courses of Action

What criteria and metrics are decision-makers considering making go/no-go decisions to select viable solutions?

Criteria may vary from problem to problem depending on tolerance for risk and the impact of a solution (financial, operations, personal, etc.).

For each of the currently available solutions, the company in our example could use criteria such as thresholds for sales, customer experience ratings, customer retention rates, customer acquisition rates, cost savings, profitability, brand awareness, etc.

Potential Actions that Research Findings May Suggest

What could be potential research findings, if we do the research, and what course of action would those suggest? Would they be tactical or strategic decisions?

While the previous audit areas are about what we know so far, the questions in this one deal with hypotheticals to expand our knowledge area.

Here we can discuss hypotheses that need validation. These may call for preliminary research using secondary data sources or discussions with industry and subject matter experts.

In our imaginary company, we could explore the idea that new market opportunities may exist in adjacent product and service categories not offered by competitors.

Information Needed to Answer Decision Makers’ Questions

What information do we need to answer the different questions related to the problem and its underlying causes?

As the problem is discussed, its history, potential available solutions, risks, limitations, etc. the problem itself may morph into a different problem or the focus may go to related areas where the real causes may lay. This part of the discussion guide is the most fluid and requires keeping in mind all the issues discussed so far. We may need to define the information needs through various iterations of these discussions.

In my experience, when we make a list of the information needs and decision-makers see it in writing, corrections and adjustments are made in increments when they see it articulated in concrete statements after the discussions.

This is an excellent opportunity for consensus-building exercises, so stakeholders and researchers become aligned on the research objectives.

Continuing with our example, we may have decided that the problem is not that we are losing customers, but that we are not acquiring new ones and a new generation of customers may be more interested in adjacent services (hopefully this conclusion comes from secondary research and or qualitative research).

In this case, the information needs for the current research being discussed could be related to understanding who the competitors in those adjacent product categories are, how these products and services are purchased and used, what the perceived benefits are, and how this offering will impact our brand positioning and pricing strategy.

Decision Makers’ Use of Information Vs. Intuition

How will decision-makers use the information from the research to make decisions? Do they tend to rely on evidence-based insights or their own intuition and judgment?

A lot of business decisions are based on “gut feeling,” especially if the research results go against expected conclusions. Confirmation bias wins the fight most of the time unless decision-makers are open to new perspectives.

Researchers need to consider the strength of confirmation biases among stakeholders involved in the research and call attention to how they may influence the problem definition, the information needs, and the research approach selected. Confirmation bias is likely to limit the search for new solutions to the problem.

Decision-Making Corporate Culture

In some organizations, decision-making is driven by processes, while in others is dominated by the personalities of key decision-makers.

Decision-making corporate culture is an important factor in the perceived value of the research and requires that researchers sometimes get into the thick of internal politics to be able to design actionable research.

In organizations with a decentralized and more democratic style of decision-making, researchers have to deal with many stakeholders and often play a facilitator role to bring stakeholders together, if there are no processes in place delineating decision-making steps (e.g., committees, requests forms, etc.).

In organizations where key decision-makers set the tone, regardless of processes, researchers need to find ways to involve them in the problem definition and solution development and understand how to best present research results to this audience so the insights are not disregarded in the battle with “gut-feeling” and anecdotal evidence.

Market researchers and UX researchers should be prepared to get research requests for which the problem is not well defined at best or misunderstood at worse. Do not trust that internal stakeholders have a clear idea of what the problem is. Run problem audit and probe!

It is our role to help define the business problem (focus on the action) clearly to facilitate the translation into the research problem (focus on information needs) and the selection of a fit-for-purpose research design and methodologies.

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Root Cause Analysis Is Transforming Audit Quality

The American satirist HL Mencken famously quipped that “ For every complex problem there is an answer that is clear, simple, and wrong.” This could have been tailor-made for many finance-focused professions. Ask yourself, how many times have you or your teams applied the “obvious” solution to a problem only to discover, soon enough, that the solution wasn’t quite the “fix all” we hoped for?

If your firm hasn’t encountered Root Cause Analysis (RCA) yet, the chances are you will soon. Very soon. RCA is one of a group of classic methodologies known as structured problem solving. In its various iterations it has dominated problem solving in sectors like engineering, manufacturing, supply chain, and construction for well over a half a century. Since the turn of the 21 st century, the method has become increasingly nuanced and versatile. Recently it has been adopted by many of the large international consulting firms as well as several leading tech companies, and many banking, insurance, and accountancy firms, as their primary method to uncover systemic faults and barriers to growth.

Today, we find that RCA is one of the hottest topics in the world of audit and accounting. In fact, as regulation and complexity increase across almost all professional sectors, RCA is now the go-to problem solving methodology amongst a new generation of senior professionals and strategic thinkers. This was highlighted just last year when the World Economic Forum’s Survey of Firms published a report illustrating that structured problem solving was now the single most important skill required in the modern workplace, although they also highlighted that it is a skill in all too short supply.

In fact, a growing number of professional bodies are now encouraging the accountancy profession to embrace RCA as a way to improve overall audit quality and meet the expectations of stakeholders and regulators. The International Forum of Independent Audit regulators, for example, states:

“(We) view robust Root Cause Analysis and implementation of responsive actions to be fundamental to improving audit quality. It is critical that firms have processes in place that enable a timely, thorough assessment to identify recurring root cause issues—whether positive or negative—and to take appropriate actions.”

Indeed, at Sologic, we’ve heard from regulators in associated professions who state that, “if firms cannot tell us what went wrong then we’re left with two conclusions, either there is cover-up in place or, worse still, the firm still doesn’t know why it went wrong.”

So, what exactly is an effective RCA and what does it deliver in terms of audit quality? At its core, RCA is a process for identifying the causes of problems or events in order to prevent them from recurring. It is based on the idea that effective management requires more than putting out fires for problems that develop, but finding a way to prevent them. RCA can also be a means of identifying good practice as part of continuous improvement and rewarding evidence-based decision making. The methodology assists audit professionals with:

• Identifying underlying causes of significant problems or successes
• Delivering solutions with immediate and lasting impact
• Helping establish best practice and greater efficiency
• Compliance with the expectations and guidelines of regulatory bodies
• Building a better reputation and experience for clients
• Instilling a deep-rooted positive problem-solving culture in your firm
• Automated reports for better transparency and compliance
• Creating a competitive edge for winning new business

Firms, however, do need to be effective in their RCA activities. Executed effectively, an RCA is an incredibly powerful, evidence-based method that uncovers a myriad of interrelated causes that provide previously hidden opportunities for solutions, both big and small. Most of these tend to be systemic and process driven, thus taking the spotlight off of individuals and thereby mitigating cultures of excessive blame—a significant source of stress, data corruption, and failures in overall quality. On the contrary, RCA done poorly will not only be ineffective in these areas, it will direct actions and valuable resources in the wrong direction. As the Institute of Chartered Accountants of England and Wales points out in their recent paper, Improving Audit Quality , “RCA that is not sufficiently robust may not identify the real root causes for findings. If the wrong cause is identified, the wrong remedial action will be taken.”

At Sologic we have been delivering world-class RCA training and consultancy alongside the most effective problem solving and reporting software in the marketplace for almost 20 years. As both Managing Director of Sologic (EMEA) and someone who has background as a financial director in the financial services industry, I was quick to see how RCA could be transformative in accountancy and audit. Although we’ve seen a number of new markets for RCA, we have developed a strong position with financial industry regulators and many of the leading organizations in banking, financial services, and accountancy in particular. As a result, we have adapted our training, development, and software products to meet the exacting needs of these sectors. Nowadays, our trainers really understand the audit sector and our case studies and learning materials are derived from real-life accountancy challenges.

I feel a great benefit of RCA is that it encourages businesses to be evidence based and realistic. We know every organization has problems that come in all shapes and sizes. But it’s the recurring problems that really hold them back. And as organizations become more complex, work across more sectors, and hold more data, finding and applying solutions has become a greater and greater challenge. Firms that embed an effective process and culture of RCA experience a significant improvement in areas as diverse as compliance and continual improvement, client satisfaction and employee engagement, not to mention profit and efficiency. Firms discover that structured problem solving and investigation underpin many areas that allow genuine growth.

I’ve seen that once RCA methods become fully embedded in firms, they tend not to stop at pure problem solving. They also help underpin corporate memory and institutional learning, providing huge efficiency savings in quality, and a reduction of repeat errors. Firms who develop an RCA culture internally provide their workforce with a skillset that will transform engagement, retention, and performance. The method delivers significant improvements in evidence-based thinking, team integration, mindset, and corporate memory.

Perhaps I’ll leave the final word to the UK Financial Reporting Council:

“A key objective of RCA is to improve audit quality  by having a better understanding of how audits can improve. We expect all the firms we inspect to make continuous improvements so that, by 2019, at least 90% of FTSE 350 audits reviewed will be assessed as requiring no more than limited improvements. Effective RCA should help to achieve this.”

Jonathan Batchelor

Managing Director, Europe - Middle East - Africa (EMEA), Sologic

Jonathan Batchelor is responsible for the operational and commercial activity for the business across the EMEA region. Overseeing Root Cause Analysis focused training delivery, software deployment and facilitated investigations to clients covering a broad number of sectors and geographical locations. Prior to his appointment with Sologic, Jonathan worked for a number of years within the commercial finance sector in the UK, most noticeably as founding partner of one of the East of Englands largest commercial finance brokers. This was followed by a number of Director level positions focusing on training and development for the Oil & Gas and Renewable sectors. Jonathan holds a firm belief that effective Root Cause Analysis has a place across all industries and through all tiers of organisations.

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I. INTRODUCTION

Ii. literature review and results, background—systems-thinking research, study results, iii. practitioner takeaways and future research directions, systems-thinking in complex audit situations.

We thank David Herda, Jeffrey Lund, Wendy Savage, Ryan Siebel, Jim Suttie, and Ann Watkins for helpful comments on previous versions of this paper.

Billy E. Brewster, Texas State University, McCoy College of Business Administration, Department of Accounting, San Marcos, TX, USA; Anthony C. Bucaro, Case Western Reserve University, Weatherhead School of Management, Department of Accounting, Cleveland, OH, USA.

Editor's note: Accepted by Lisa Milici Gaynor.

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Billy E. Brewster , Anthony C. Bucaro; Systems-Thinking in Complex Audit Situations. Current Issues in Auditing 1 September 2020; 14 (2): P40–P46. https://doi.org/10.2308/CIIA-19-017

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This article summarizes three academic studies ( Brewster 2011 ; Brewster 2016 ; Bucaro 2019 ) that investigate the effects of a specific form of critical thinking, systems-thinking, on audit judgments. Systems-thinking emphasizes taking a holistic “big picture” perspective and understanding how parts of complex processes interact and function. Collectively, the three studies find that systems-thinking can lead to auditors better understanding the risk of material misstatement through improved risk assessment and information processing. Ultimately, these improvements in critical thinking also increase the likelihood of identifying incorrect management explanations and incorporation of comprehensive information into audit decisions. Importantly, these studies find that systems-thinking can be instilled through short tutorial sessions, which may be embedded directly into the audit process.

Public accounting practitioners and academic researchers have long recognized the importance of an accountant's ability to “think critically” regarding the complex, but often unstructured, judgments necessary in the auditing profession. In fact, accounting firms have devoted entire publications describing the need for both experienced auditors and young professionals to understand the complexities of how their clients interact with their industry and overall economy ( Bell, Marrs, Solomon, and Thomas 1997 ; Bell, Peecher, and Solomon 2005 ; Managing Partners of the Big Eight Accounting Firms 1989 ; PwC 2003 ). Despite this need for critical thinking skills, there has been little guidance regarding the type of skills needed and how one should obtain such skills.

Over 20 years ago, Baril, Cunningham, Fordham, Gardner, and Wolcott (1998) interviewed public accounting professionals to understand how they defined critical thinking. Not surprisingly, practitioners had widely varying views on how to define the concept. Practitioners generally seem to use the term critical thinking to describe undefined characteristics that lead to quality judgments and decision making. There were several characteristics, however, that arose repeatedly, including ability to see the “big picture,” knowing when more information is needed, and the ability to apply knowledge gained in one situation to a separate, unrelated situation. Most of these definitions of critical thinking have, however, been at the conceptual level—they describe the results of critical thinking or what critical thinking might “look like,” but have not generally identified a methodology to implement critical thinking.

We summarize a series of three recent accounting studies examining an implementable critical thinking method that incorporates a defined set of skills. Systems-thinking, taking a holistic view of an environment while still being able to focus on how the components of the environment work together, has been developed and successfully practiced in other disciplines. The three auditing studies summarized here are: “How a Systems Perspective Improves Knowledge Acquisition and Performance in Analytical Procedures” ( Brewster 2011 ), “The Effect of Client Lies on Auditor Memory Resistance and False Memory Acceptance” ( Brewster 2016 ), and “Enhancing Auditors' Critical Thinking in Audits of Complex Estimates” ( Bucaro 2019 ). Together, they examine how systems-thinking skills enhance the way individuals acquire and build knowledge that ultimately improves their information processing and audit decisions.

Management scientists suggest that systems-thinking is one critical thinking method that could improve decision making in complex business settings. Meadows (2008 , 2) describes a system as “a set of things—people, cells, molecules, or whatever—interconnected in such a way that they produce their own pattern of behavior over time.” So systems-thinking is a method that enhances people's use of their own cognitive abilities to adopt a “big picture” perspective that focuses on understanding how the complex processes comprising the multiple parts of a system (business, natural, or otherwise) interact and function as a whole. 1 A critical part of this perspective, therefore, is understanding how the often multi-directional processes and various parts interact and work together to produce an output ( Bucaro 2019 , 38; Meadows 2008 ).

For a biologist, a natural system's output could be the changing population pattern of a particular species over time. For an accountant or auditor, the output of a business system could be the fluctuation of inventory over time. The auditor must obtain an understanding of the immediate factors influencing inventory inflows (purchases, freight costs, available supply) and outflows (sales, shrinkage). More advanced analysis, such as inventory impairment, would also need to incorporate qualitative inflows (competitor products, potential regulation) from industry and economic events. The auditor must also understand the volume of each inflow/outflow and how this volume changes over time. An inability to accurately predict the time-series movement of inventory means that the auditor's expectations could be incorrect, potentially reducing the effectiveness of inventory-related audit procedures. In sum, the auditor views the client as one component of a larger “economic system,” and accurately understanding the complex processes that lead to inventory changes requires understanding the forces both inside and outside the client's environment that affect the account ( Bell et al. 1997 ).

However, research suggests that even experienced decision makers struggle when faced with such dynamically complex tasks ( Cronin, Gonzalez, and Sterman 2009 ; Diehl and Sterman 1995 ). This is because the complexity of modern business environments overwhelms individuals' abilities to process information accurately. Complex systems include circular feedback loops and time delays that are often difficult to understand. Understanding such feedback loops requires the individual to recognize multiple causal relationships and how the strength of these relationships changes over time (e.g., time delays). The result is that decision makers fail to recognize nonlinear movements of key system components (account balances or cost drivers), and how the complexity of such systems affects their decisions.

Individuals taking a systems-thinking view of a phenomena (e.g., a client industry) will have knowledge that is organized in a way that more closely resembles the actual structure of the “real world” ( Clark, Nguyen, and Sweller 2006 ). 2 The improved knowledge, information processing ability, and overall judgments resulting from systems-thinking can be applied to a variety of tasks. Hence, systems-thinking is not specific to any particular audit methodology, and it is not limited to any single audit step. Instead, it is a way to enhance a decision maker's critical thinking skills across the entire audit process. Developing systems-thinking skills provides multiple long-term advantages, including the ability to critique the deficiencies in one's own knowledge and understanding of a problem ( Richmond 2000 ). Additionally, since basic system structures are often repeated throughout nature, economics, and biology, systems-thinkers can better transfer their understanding of one context—like a business process—to other contexts—like the impact of information on investors' likely decisions ( Meadows 2008 ; Richmond 2004 ; Ruth and Hannon 2012 ).

Traditionally, management scientists thought systems-thinking skills could only develop over time with extensive training, and researchers did little to examine them in an experimental laboratory setting. The three studies we summarize here, however, successfully prompted auditors to use systems-thinking skills in experimental laboratory tasks. Participants were upper-level accounting students ( Brewster 2011 ) and professional auditors ( Brewster 2016 ; Bucaro 2019 ). In this research, certain participants (hereafter, systems-thinkers) received a brief training tutorial that emphasized system dynamics concepts using general nonbusiness topics (e.g., blowing up a balloon or filling a bathtub) and/or business topics unrelated to the audit issue to which they would soon be exposed. The tutorials emphasized taking a holistic approach to a problem and emphasized how multiple causal relationships can interact to affect the rates and levels of important components. The remaining participants (hereafter, reductionist-thinkers) were required to learn about the client and industry using only their own intuition or guided only by professional standards. All participants then drew diagrams of certain processes in order to instill the respective thinking perspectives in their minds; they then responded to case materials based on fictitious companies. The tutorials should allow the systems-thinking participants to develop knowledge about the companies and industries, including the complex aspects (i.e., feedback loops, time delays, multiple causality) of a system that are often difficult to learn. All participants in each study were exposed to identical study-specific client and industry information. They made audit-related judgments including whether and how inherent and control risks affect processes and financial statements in a complex environment ( Brewster 2011 ; Bucaro 2019 ), whether management is credible and their information is reliable ( Brewster 2011 , 2016 ), and whether large potential financial misstatements are likely to impact investors' decisions when reason suggests that the misstatements should have no impact ( Bucaro 2019 ).

The three studies summarized above provide evidence that adopting a systems-thinking perspective can improve auditors' decisions across the various stages of the financial statement audit, from planning to concluding. If the audit is viewed as an iterative process designed to reduce the risk of material misstatement and detection risk to acceptable levels (e.g., Bell et al. 2005 ; PCAOB 2010a , 2010b ), then systems-thinking improves risk assessment by allowing auditors to better (1) understand how different risk factors affect business processes and financial reporting, (2) incorporate these factors into the audit risk model and substantive procedures, and (3) recognize whether actual audit differences are likely to be material to financial statement users.

One of the greatest challenges that an auditor faces is understanding how macro-economic or industry-based events can flow down to affect a client's risk of material misstatement through its inherent risk component ( Bell et al. 1997 , 23). Brewster (2011) examined methods for improving how auditors analyze a complex client industry and then build knowledge that accurately reflects that industry. In this study, upper-level accounting students analyzed the operating environment for a fictional fast food restaurant. Results show that systems-thinking participants are better able to understand how business risks in the client industry ultimately affect the client's financial statements. Systems-thinkers identified more causal linkages between the industry forces and the financial statements, and they did it with less effort than reductionist-thinking participants. This result—better task-performance with less effort—indicates improved information processing resulting from more organized knowledge that is more easily accessible from memory ( Clark et al. 2006 ).

Bucaro (2019) builds on the previous study by showing that professional auditors using systems-thinking skills can better incorporate qualitative risk factors into risk-based judgments about a complex estimate, warranty reserve. The emphasis on an unstructured, complex accounting estimate is important since many important risk factors cannot be easily quantified—auditors need to also evaluate qualitative factors when reaching audit conclusions (e.g., Knechel, Krishnan, Pevzner, Shefchik, and Velury 2013 ; PCAOB 2001 , 2010d ). The study evaluates the effect of systems-thinking on how well auditors incorporate one such qualitative factor, the complexity of the company's estimation process, into their inherent risk assessments. This is an important result as it provides direct evidence that systems-thinking skills improve auditors' likelihood of incorporating complex risk factors into their assessments of the risk of material misstatement. And while this study evaluated auditors' risk assessments for a specific account, warranty reserve, it is not hard to see how this same thinking perspective might lead to improved risk identification in other stages of the audit process, like client acceptance and client continuance, when inherent risk can be particularly meaningful.

Systems-thinking skills can also improve how auditors implement substantive procedures, particularly analytical procedures. Brewster had both professional auditors ( Brewster 2016 ) and student participants ( Brewster 2011 ) evaluate a company's industry and then develop expectations for how a certain raw material cost (beef prices) changed over time. The key facts of the case suggested that beef prices should rise and then fall midway through the audit period. Theory and prior research suggest that it should have been difficult for the participants to recognize this nonlinear movement. Systems-thinkers, though, provided expectations for beef prices that recognized the fluctuating nonlinear movement. Reductionist-thinkers provided beef price estimates that incorrectly suggested that prices increased continually during the period. These results suggest that better organized knowledge, resulting from systems-thinking, enhanced auditors' likelihood of developing more accurate expectations of actual financial statement balances tested during substantive procedures.

Brewster (2011) next examined how the novice auditor participants used these improved expectations to evaluate management's explanations when performing analytical procedures. In particular, how the participants evaluated management's credibility when the explanations are inconsistent with industry evidence. This is an important audit judgment during the substantive testing process, as perceptions of management credibility are likely to influence auditors' skepticism (e.g., Goodwin 1999 ; Knechel and Messier 1990 ). Recall that participants were asked to determine the raw material costs (beef prices) based on a set of complex facts and circumstances, and that the estimates of systems-thinkers were more accurate than those of reductionist-thinkers. Results show that systems-thinkers were better able to identify the incorrect management explanations than were reductionist-thinkers, and lowered their evaluations of management credibility accordingly.

Brewster (2016) replicated these results using professional auditors. Additionally, auditors were told a persuasive lie intended to deceive the auditor. Systems-thinkers were able to resist management's persuasion attempt by recalling the correct industry facts. In contrast, reductionist-thinkers, although they received exactly the same case information as the systems-thinkers, appeared to struggle with resisting management's persuasion attempt, because they were more likely to recall management's lie instead of the known industry facts.

Finally, professional standards state that auditors must assess the risk of material misstatement during planning, but must also update these initial assessments in light of new information throughout the audit ( PCAOB 2010c ). Auditors must evaluate whether any potential audit differences are actually material to financial statement users, requiring a risk assessment modification. After linking systems-thinking to a better understanding of the role of process complexity in assessing inherent risk, Bucaro (2019) assessed the effects of systems-thinking on auditors' ultimate determination of whether a potential misstatement is considered material. The study found that when systems-thinking auditors are prompted to exercise professional judgment, they are more likely to appropriately consider the qualitative characteristic (i.e., the complexity of the process itself) when deciding whether a misstatement is material to the financial statement users. In other words, systems-thinking auditors thought critically about the judgment as opposed to resorting to a more mechanistic decision (i.e., simply comparing the audit difference to tolerable misstatement). In contrast, reductionist-thinkers exhibited no indication of applying critical thinking when determining the effect of the misstatement.

Critical thinking, as a concept, has been a part of the audit professional's dialog for decades. The three studies described above show recent scientific evidence of a specific, implementable method to achieve results that practitioners seek. Critical thinking has been defined as the ability to understand how local actions impact global outcomes, to view problems as components of an overall system rather than surface outcomes or events, and to see and understand complex relationships and how they fit into an overall ecosystem ( Valerdi and Rouse 2010 ). But these are outcomes, not skills that can be taught and implemented. The primary takeaway of the three summarized studies is that teaching specific systems-thinking skills can have measurable effects on actual decisions across the continuum of the audit.

With minimal training via short tutorials, auditors were able to make more thoughtful and complete decisions in several audit contexts. Systems-thinking participants included a more comprehensive set of information in their risk assessment decisions, which can impact client acceptance and continuance as well as ongoing and iterative risk assessments throughout the audit. Although not specifically tested in the three studies, better risk assessments can lead to better planned and therefore more effective substantive testing. The summarized studies did evaluate substantive analytical procedures and found that systems-thinking participants were better able to identify mistakes and even lies told by management, suggesting systems-thinkers may be more appropriately skeptical during the substantive testing process. Finally, systems-thinking auditors were able to incorporate their more advanced understanding of industry complexity into what is arguably the most critical audit decision, materiality judgments.

While the studies described here suggest evidence of improved decisions in complex accounting scenarios, it is unlikely that systems-thinking will improve every decision. For example, less complex financial statement accounts, or those that require less estimation or speculation, may be better evaluated in a linear, reductionist-thinking manner. An example of this might be physical inventory counts (although, arguably, deeper thought into the business might still lead to better valuations of, for example, obsolete inventory). Therefore, as academic researchers and professionals continue to study this critical thinking method, they should identify situations and contexts in which systems-thinking improves results and those in which it does not.

These studies have also shown, in contrast to most previous research, that the skills can be instilled through the use of short explanatory tutorial statements and graphics that can be introduced into firm documentation templates. Practitioners interested in achieving critical thinking outcomes might consider introducing some combination of formal training of systems-thinking methods and small reminders within audit documentation systems. With today's considerable advances in technology and the growing implementation of those technologies in the audit profession, practitioners should carefully consider how systems-thinking might be employed in the development of tools and the evaluation of their output, as well as how systems-thinking might be instilled in professionals through the technology itself.

Finally, although the research described here focuses on audit processes, there is no reason to believe that systems-thinking techniques will not offer similar improvements across other accounting contexts, like financial reporting, management accounting, and even advisory services, making the results and future research potentially valuable to controllers, consultants, and other financial executives as well.

Despite the title, systems-thinking does not imply a method for computer “systems” to think on behalf of humans, but for humans to better incorporate information and knowledge in their own thinking.

Brewster (2011) describes how systems-thinking developed from the field of system dynamics. System dynamics focuses on developing computerized models and simulations (e.g., predicting the population increase or decline of a species) that incorporate complexity that would typically overwhelm an individual. These models include features such a feedback loops, time delays, and multiple causality that decision makers struggle to understand. Systems-thinking attempts to incorporate such complex features into an individual's knowledge and thinking abilities in order to improve their overall decision making across different contexts.

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Strengths and Skills That Great Auditors Possess

Are you someone who is a natural problem solver, has an unquenchable curiosity, and likes to stay current on relevant business issues? Then you should think about a career as an auditor. Here are a few other valuable strengths and skills that are beneficial to a rewarding career as an auditor.

Problem-Solving Skills

Auditors need to use their analytical skills to examine information, interpret it, and present innovative and alternative solutions to a problem. Innovative thinking — not to mention responsibility, ethics, and honesty — is what will get you respect in the business world.

Tech Know-How

As an auditor, you’ll need to be adaptable to existing and emerging technologies in business environments, and understand how to use them effectively (i.e. you need to be “tech savvy”). Also, being a master of spreadsheets (e.g. Microsoft Excel, Google Sheets) is always a beneficial skill.

Teamwork & Communications Services

While business and auditing involve a lot of technical issues, strong communication – written and verbal – and people skills are a big plus. Many auditors work together in teams, so communicating well within a team environment and building relationships are also helpful skills to possess. Good listening skills also go a long way!

High Standards of Integrity

Ethics and integrity are critical to auditing. Integrity in the work of auditors helps to establish trust, which is critical to high functioning capital markets. Auditors need to be honest and have strong moral principles.

Inquisitive Mind

Inquisitive and curious people can make for great auditors. Professional skepticism (having a questioning mind), objectivity (open-minded), and good judgment are important traits to have when reviewing a company’s financial statements. One needs to assess how perpetrators of fraud can beat a company’s controls, and auditors need to design and implement a system that can effectively protect an organization’s assets.

Detail-Oriented

A detail-oriented auditor makes a conscious effort to understand causes, not just the effects. They understand the big picture and the small details, and are typically organized.

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Strengths & skills.

Interview Questions

Comprehensive Interview Guide: 60+ Professions Explored in Detail

26 Good Examples of Problem Solving (Interview Answers)

By Biron Clark

Published: November 15, 2023

Employers like to hire people who can solve problems and work well under pressure. A job rarely goes 100% according to plan, so hiring managers will be more likely to hire you if you seem like you can handle unexpected challenges while staying calm and logical in your approach.

But how do they measure this?

They’re going to ask you interview questions about these problem solving skills, and they might also look for examples of problem solving on your resume and cover letter. So coming up, I’m going to share a list of examples of problem solving, whether you’re an experienced job seeker or recent graduate.

Then I’ll share sample interview answers to, “Give an example of a time you used logic to solve a problem?”

Problem-Solving Defined

It is the ability to identify the problem, prioritize based on gravity and urgency, analyze the root cause, gather relevant information, develop and evaluate viable solutions, decide on the most effective and logical solution, and plan and execute implementation. 

Problem-solving also involves critical thinking, communication, listening, creativity, research, data gathering, risk assessment, continuous learning, decision-making, and other soft and technical skills.

Solving problems not only prevent losses or damages but also boosts self-confidence and reputation when you successfully execute it. The spotlight shines on you when people see you handle issues with ease and savvy despite the challenges. Your ability and potential to be a future leader that can take on more significant roles and tackle bigger setbacks shine through. Problem-solving is a skill you can master by learning from others and acquiring wisdom from their and your own experiences. 

It takes a village to come up with solutions, but a good problem solver can steer the team towards the best choice and implement it to achieve the desired result.

Watch: 26 Good Examples of Problem Solving

Examples of problem solving scenarios in the workplace.

• Correcting a mistake at work, whether it was made by you or someone else
• Overcoming a delay at work through problem solving and communication
• Resolving an issue with a difficult or upset customer
• Overcoming issues related to a limited budget, and still delivering good work through the use of creative problem solving
• Overcoming a scheduling/staffing shortage in the department to still deliver excellent work
• Troubleshooting and resolving technical issues
• Handling and resolving a conflict with a coworker
• Solving any problems related to money, customer billing, accounting and bookkeeping, etc.
• Taking initiative when another team member overlooked or missed something important
• Taking initiative to meet with your superior to discuss a problem before it became potentially worse
• Solving a safety issue at work or reporting the issue to those who could solve it
• Using problem solving abilities to reduce/eliminate a company expense
• Finding a way to make the company more profitable through new service or product offerings, new pricing ideas, promotion and sale ideas, etc.
• Changing how a process, team, or task is organized to make it more efficient
• Using creative thinking to come up with a solution that the company hasn’t used before
• Performing research to collect data and information to find a new solution to a problem
• Boosting a company or team’s performance by improving some aspect of communication among employees
• Finding a new piece of data that can guide a company’s decisions or strategy better in a certain area

Problem Solving Examples for Recent Grads/Entry Level Job Seekers

• Coordinating work between team members in a class project
• Reassigning a missing team member’s work to other group members in a class project
• Adjusting your workflow on a project to accommodate a tight deadline
• Speaking to your professor to get help when you were struggling or unsure about a project
• Asking classmates, peers, or professors for help in an area of struggle
• Talking to your academic advisor to brainstorm solutions to a problem you were facing
• Researching solutions to an academic problem online, via Google or other methods
• Using problem solving and creative thinking to obtain an internship or other work opportunity during school after struggling at first

You can share all of the examples above when you’re asked questions about problem solving in your interview. As you can see, even if you have no professional work experience, it’s possible to think back to problems and unexpected challenges that you faced in your studies and discuss how you solved them.

Interview Answers to “Give an Example of an Occasion When You Used Logic to Solve a Problem”

Now, let’s look at some sample interview answers to, “Give me an example of a time you used logic to solve a problem,” since you’re likely to hear this interview question in all sorts of industries.

Example Answer 1:

At my current job, I recently solved a problem where a client was upset about our software pricing. They had misunderstood the sales representative who explained pricing originally, and when their package renewed for its second month, they called to complain about the invoice. I apologized for the confusion and then spoke to our billing team to see what type of solution we could come up with. We decided that the best course of action was to offer a long-term pricing package that would provide a discount. This not only solved the problem but got the customer to agree to a longer-term contract, which means we’ll keep their business for at least one year now, and they’re happy with the pricing. I feel I got the best possible outcome and the way I chose to solve the problem was effective.

Example Answer 2:

In my last job, I had to do quite a bit of problem solving related to our shift scheduling. We had four people quit within a week and the department was severely understaffed. I coordinated a ramp-up of our hiring efforts, I got approval from the department head to offer bonuses for overtime work, and then I found eight employees who were willing to do overtime this month. I think the key problem solving skills here were taking initiative, communicating clearly, and reacting quickly to solve this problem before it became an even bigger issue.

Example Answer 3:

In my current marketing role, my manager asked me to come up with a solution to our declining social media engagement. I assessed our current strategy and recent results, analyzed what some of our top competitors were doing, and then came up with an exact blueprint we could follow this year to emulate our best competitors but also stand out and develop a unique voice as a brand. I feel this is a good example of using logic to solve a problem because it was based on analysis and observation of competitors, rather than guessing or quickly reacting to the situation without reliable data. I always use logic and data to solve problems when possible. The project turned out to be a success and we increased our social media engagement by an average of 82% by the end of the year.

Answering Questions About Problem Solving with the STAR Method

When you answer interview questions about problem solving scenarios, or if you decide to demonstrate your problem solving skills in a cover letter (which is a good idea any time the job description mention problem solving as a necessary skill), I recommend using the STAR method to tell your story.

STAR stands for:

It’s a simple way of walking the listener or reader through the story in a way that will make sense to them. So before jumping in and talking about the problem that needed solving, make sure to describe the general situation. What job/company were you working at? When was this? Then, you can describe the task at hand and the problem that needed solving. After this, describe the course of action you chose and why. Ideally, show that you evaluated all the information you could given the time you had, and made a decision based on logic and fact.

Finally, describe a positive result you got.

Whether you’re answering interview questions about problem solving or writing a cover letter, you should only choose examples where you got a positive result and successfully solved the issue.

Example answer:

Situation : We had an irate client who was a social media influencer and had impossible delivery time demands we could not meet. She spoke negatively about us in her vlog and asked her followers to boycott our products. (Task : To develop an official statement to explain our company’s side, clarify the issue, and prevent it from getting out of hand). Action : I drafted a statement that balanced empathy, understanding, and utmost customer service with facts, logic, and fairness. It was direct, simple, succinct, and phrased to highlight our brand values while addressing the issue in a logical yet sensitive way.   We also tapped our influencer partners to subtly and indirectly share their positive experiences with our brand so we could counter the negative content being shared online.  Result : We got the results we worked for through proper communication and a positive and strategic campaign. The irate client agreed to have a dialogue with us. She apologized to us, and we reaffirmed our commitment to delivering quality service to all. We assured her that she can reach out to us anytime regarding her purchases and that we’d gladly accommodate her requests whenever possible. She also retracted her negative statements in her vlog and urged her followers to keep supporting our brand.

What Are Good Outcomes of Problem Solving?

Whenever you answer interview questions about problem solving or share examples of problem solving in a cover letter, you want to be sure you’re sharing a positive outcome.

Below are good outcomes of problem solving:

• Saving the company time or money
• Making the company money
• Pleasing/keeping a customer
• Obtaining new customers
• Solving a safety issue
• Solving a staffing/scheduling issue
• Solving a logistical issue
• Solving a company hiring issue
• Solving a technical/software issue
• Making a process more efficient and faster for the company
• Creating a new business process to make the company more profitable
• Improving the company’s brand/image/reputation
• Getting the company positive reviews from customers/clients

Every employer wants to make more money, save money, and save time. If you can assess your problem solving experience and think about how you’ve helped past employers in those three areas, then that’s a great start. That’s where I recommend you begin looking for stories of times you had to solve problems.

Tips to Improve Your Problem Solving Skills

Throughout your career, you’re going to get hired for better jobs and earn more money if you can show employers that you’re a problem solver. So to improve your problem solving skills, I recommend always analyzing a problem and situation before acting. When discussing problem solving with employers, you never want to sound like you rush or make impulsive decisions. They want to see fact-based or data-based decisions when you solve problems.

Next, to get better at solving problems, analyze the outcomes of past solutions you came up with. You can recognize what works and what doesn’t. Think about how you can get better at researching and analyzing a situation, but also how you can get better at communicating, deciding the right people in the organization to talk to and “pull in” to help you if needed, etc.

Finally, practice staying calm even in stressful situations. Take a few minutes to walk outside if needed. Step away from your phone and computer to clear your head. A work problem is rarely so urgent that you cannot take five minutes to think (with the possible exception of safety problems), and you’ll get better outcomes if you solve problems by acting logically instead of rushing to react in a panic.

You can use all of the ideas above to describe your problem solving skills when asked interview questions about the topic. If you say that you do the things above, employers will be impressed when they assess your problem solving ability.

If you practice the tips above, you’ll be ready to share detailed, impressive stories and problem solving examples that will make hiring managers want to offer you the job. Every employer appreciates a problem solver, whether solving problems is a requirement listed on the job description or not. And you never know which hiring manager or interviewer will ask you about a time you solved a problem, so you should always be ready to discuss this when applying for a job.

Related interview questions & answers:

• How do you handle stress?
• How do you handle conflict?
• Tell me about a time when you failed

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Quality Auditing pp 188–203 Cite as

Problems during the audit

• David Mills MIQA  

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In performing audits, auditors at all levels will encounter various problems. These will vary from those inherent in the process to those introduced by auditee’s staff who are anti-audit.

From the planning stage to the final reporting, the types of problem that can be encountered are described, and methods for resolving them proposed.

Problems are considered, bearing in mind that many will occur disingenuously, while others may be deliberate attempts to distract auditors or to hide potential problems from the examining team.

The common forms of these are listed and methods to overcome the potential disturbances to the audit suggested.

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Mills, D. (1993). Problems during the audit. In: Quality Auditing. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-0697-9_14

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DOI : https://doi.org/10.1007/978-94-011-0697-9_14

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Mastering 8d problem solving: a comprehensive guide for businesses.

Table of contents

• What is 8D Problem Solving?
• The 8 Disciples of Problem Solving
• Implementing 8D Problem Solving Methodology

Example of Successful 8D Problem Solving

• Common Challenges and Best Practices

Measuring the Effectiveness of 8D Problem-Solving Efforts

Problem solving is a vital skill for any business that wants to survive and thrive in today’s competitive and dynamic environment. However, not all problems are created equal. Some are simple and straightforward, while others are complex and multifaceted. How can businesses effectively tackle these challenging problems and prevent them from recurring?

One of the most powerful and proven problem-solving methodologies is 8D problem solving. 8D stands for eight disciplines, which are a series of steps that guide teams through the process of identifying, analyzing, resolving, and preventing problems. 8D problem solving can help businesses improve their quality, reduce their costs, and enhance their customer satisfaction.

What is 8D Problem Solving

8D problem solving is a structured and systematic approach to solving complex problems that require cross-functional collaboration and root cause analysis. It was developed by Ford Motor Company in the late 1980s as a way to address customer complaints and improve product quality. Since then, it has been widely adopted by many organizations across various sectors.

The core principles and objectives of 8D problem solving are:

• Focus on the customer’s needs and expectations
• Involve a multidisciplinary team with relevant expertise and authority
• Use data and facts to support decision making
• Identify and eliminate the root causes of the problem
• Implement corrective actions that prevent reoccurrence
• Document and communicate the problem-solving process and results

The 8D methodology differs from other problem-solving approaches in several ways. First, it emphasizes team-oriented problem-solving. Second, it follows a sequential and logical order of steps that ensures thoroughness and consistency. Third, it uses various tools and techniques to facilitate analysis and action. Fourth, it incorporates feedback loops and verification methods to ensure effectiveness and sustainability.

The Eight Disciples of Problem Solving

D1: establish the team.

The first step in the 8D approach is to form a team that will work on the problem. The team should consist of members who have knowledge, experience, or involvement in the problem area. The team should also have a leader who will coordinate the activities and communicate with stakeholders.

The purpose of establishing the team is to:

• Define the roles and responsibilities of each team member
• Establish the scope and boundaries of the problem
• Set the goals and expectations for the problem-solving process
• Allocate the resources and time required for the process

D2: Describe the Problem

The second step in this problem-solving method is to define and describe the problem in detail. The team should use data and facts to describe the problem as accurately as possible. The team should also use tools such as the 5W2H method (who, what, where, when, why, how, how much), Six Sigma, or an IS/IS NOT matrix to clarify the aspects of the problem.

Defining and describing the problem allows businesses to:

• Establish a common understanding of the problem among the team members
• Identify the symptoms, effects, and impacts of the problem
• Quantify the magnitude and frequency of the problem
• Specify the criteria for evaluating potential solutions

D3: Develop Interim Containment Actions

The third step in 8D problem solving is to develop interim containment actions that will prevent or minimize the negative consequences of the problem until a permanent solution is found. The team should identify and implement actions that will isolate, control, or eliminate the causes or sources of variation that contribute to the problem.

When you develop interim containment actions, you:

• Protect the customer from defective products or services
• Reduce the risk of further damage or harm
• Maintain operational continuity and stability
• Buy time for root cause analysis and corrective actions

D4: Determine Root Causes

The fourth step in the 8D method is to determine the root causes responsible for creating or allowing the problem to occur. The team should use data analysis tools such as Pareto charts, histograms, scatter plots, or fishbone diagrams to identify possible causes. The team should also use root cause analysis techniques such as 5 Whys, fault tree analysis, or Failure Modes and Effect Analysis (FMEA) to verify or validate the causes.

The purpose of determining root causes is to:

• Understand why the problem happened
• Identify all possible factors that influence or contribute to the problem
• Eliminate superficial or symptomatic causes
• Prevent jumping to conclusions or making assumptions

D5: Choose Permanent Corrective Actions

The fifth step in 8D problem solving is to choose permanent corrective actions that will address or remove root causes permanently. The team should generate multiple possible solutions using brainstorming techniques such as SCAMPER (substitute, combine, adapt, modify, put to another use, eliminate, reverse) or TRIZ (theory of inventive problem solving). The team should also evaluate each solution using criteria such as feasibility, effectiveness, cost, risk, or impact.

Choosing permanent corrective actions helps to:

• Select the best solution that meets customer needs and expectations
• Ensure that root causes are eliminated or prevented from recurring
• Consider trade-offs between different solutions
• Plan for implementation challenges or barriers

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D6: implement permanent corrective actions.

The sixth step in 8D problem solving is to implement permanent corrective actions that were chosen in D5. The team should develop an action plan that specifies who will do what by when using tools such as Gantt charts or PDCA cycles (plan-do-check-act). The team should also execute the action plan according to schedule using tools such as checklists or standard operating procedures.

The purpose of implementing permanent corrective actions is to:

• Put the chosen solution into practice
• Monitor progress and performance during implementation
• Resolve any issues or problems that arise during the implementation
• Document changes or modifications made during implementation

D7: Prevent Recurrence

The seventh step in 8D problem solving is to prevent recurrence by ensuring that permanent corrective actions are effective and sustainable. The team should verify that root causes have been eliminated using tools such as control charts or statistical process control (SPC). The team should also validate that customer requirements have been met using tools such as surveys or audits.

Preventing reoccurrence helps to:

• Confirm that permanent corrective actions have solved the problem
• Evaluate customer satisfaction with products or services after implementation
• Identify opportunities for further improvement or optimization
• Standardize best practices or lessons learned from implementation

D8: Recognize Team Efforts

The eighth step in 8D problem solving is recognizing team efforts by acknowledging their contributions and achievements throughout the process. The team should celebrate their success by sharing their results with stakeholders using tools such as reports or presentations. The team should also appreciate their efforts by rewarding them with recognition or incentives.

The purpose of recognizing team efforts is to:

• Motivate team members for future challenges
• Build trust and rapport among team members
• Enhance team morale and cohesion
• Promote a culture of continuous improvement

Implementing 8D Problem-Solving Methodology

Implementing an 8D problem-solving methodology can be challenging for many businesses due to various factors such as organizational culture, resources, or complexity. However, with proper planning, preparation, and execution, it can be done successfully.

Here is some practical guidance on how businesses can effectively implement the 8D process:

Define clear roles & responsibilities for each discipline

One of the key factors for successful implementation is having clear roles & responsibilities for each discipline within the 8D process. Each discipline requires specific skills, knowledge, or authority that may not be available within a single person or department.

Therefore, it is important to assign appropriate roles & responsibilities for each discipline based on their expertise & involvement in the problem area.

Some examples of roles & responsibilities are:

By defining clear roles & responsibilities for each discipline, businesses can ensure accountability, transparency, and collaboration throughout the process.

Establish a common language & framework for communication

Another key factor for successful implementation is having a common language & framework for communication among team members & stakeholders. Communication is essential for sharing information, ideas, or feedback during the process.

However, communication can also be challenging due to different backgrounds, perspectives, or expectations among team members & stakeholders. Therefore, it is important to establish a common language & framework for communication that can facilitate understanding, alignment, and agreement throughout the process. Some examples of common language & framework are:

• Using standard terminology & definitions for the 8D process
• Implementing visual tools & templates to document & present the 8D process
• Using common metrics & criteria to measure & evaluate the 8D process
• Establishing feedback mechanisms & channels to communicate & collaborate during the 8D process

By establishing a common language & framework for communication, businesses can ensure clarity, consistency, and quality throughout the process.

Provide adequate training & support for team members

A third key factor for successful implementation is providing adequate training & support for team members who are involved in the 8D process. Team members need to have sufficient knowledge, skills, or confidence to perform their roles & responsibilities effectively. However, team members may not have prior experience or exposure to the 8D process or its tools & techniques. Therefore, it is important to provide adequate training & support for team members that can enhance their competence & capability during the process. Some examples of training & support are:

• Providing formal training sessions or workshops on the 8D process or its tools & techniques
• Offering coaching or mentoring from experts or experienced practitioners on the 8D process or its tools & techniques
• Contributing access to resources or references on the 8D process or its tools & techniques
• Maintaining feedback or recognition of team members’ performance or improvement during the 8D process

By providing adequate training & support for team members, businesses can ensure effectiveness, efficiency, and engagement throughout the process.

To illustrate the versatility and applicability of 8D problem solving across different industries and contexts, here is a hypothetical example of successful 8D problem solving:

Example: Reducing Customer Complaints in a Food Manufacturing Company

A food manufacturing company was facing a high rate of customer complaints due to foreign materials found in their products. The company used 8D problem solving to address this issue and improve product quality. Here are the steps they took within each discipline:

The company formed a cross-functional team consisting of representatives from quality assurance, production, engineering, and customer service. The team leader was the quality assurance manager who had the authority and responsibility to coordinate the activities and communicate with stakeholders.

The team defined and described the problem using data and facts from customer complaints and product inspection records. The team used the 5W2H method to clarify the aspects of the problem. The problem statement was: “In the past six months, we have received 25 customer complaints due to foreign materials such as metal shavings, plastic pieces, or wood chips found in our products.”

The team developed interim containment actions that would prevent or minimize the occurrence of foreign materials in their products until a permanent solution was found. The team identified and implemented measures such as increasing the frequency and intensity of product inspection, installing additional metal detectors and filters in the production line, and segregating and quarantining any products that were suspected or confirmed to contain foreign materials.

The team determined the root causes that were responsible for creating or allowing foreign materials to enter their products. They then used data analysis tools such as Pareto charts and fishbone diagrams to identify potential causes. Root cause analysis techniques such as 5 Whys to verify or validate the causes were also implemented.

Ultimately, they found that there were three main root causes:

• inadequate maintenance of equipment that resulted in metal shavings or plastic pieces falling off during operation;
• improper handling of raw materials that resulted in wood chips or other contaminants being mixed in during storage or transportation;
• lack of awareness or training of staff on how to prevent or detect foreign materials in products.

The team chose permanent corrective actions that would address or remove root causes permanently. The team generated multiple possible solutions using brainstorming techniques such as SCAMPER and TRIZ. They also evaluated each solution using criteria such as feasibility, effectiveness, cost, risk, or impact. Eventually, they selected the best solutions that met customer needs and expectations.

The solutions were:

• implementing a preventive maintenance program for equipment that included regular inspection, cleaning, and replacement of parts;
• establishing a quality control system for raw materials that included verification, testing, and labeling of incoming materials;
• conducting a training program for staff on how to prevent, detect, and report foreign materials in products.

The team implemented permanent corrective actions that were chosen in D5. An action plan that specified who would do what by when using tools such as Gantt charts and PDCA cycles was then developed. They then executed the action plan according to schedule using tools such as checklists and standard operating procedures.

The team prevented recurrence by ensuring that permanent corrective actions were effective and sustainable. They first verified that root causes had been eliminated using tools such as control charts and statistical process control (SPC). Next, they validated that customer requirements had been met using tools such as surveys and audits. After implementing permanent corrective actions, the rate of customer complaints due to foreign materials dropped by 90%.

Team efforts were recognized by acknowledging their contributions and achievements throughout the process. The team celebrated their success by sharing their results with stakeholders using tools such as reports and presentations. Management also appreciated their efforts by rewarding them with recognition or incentives such as certificates, gift cards, or bonuses.

Common Challenges and Best Practices in 8D Problem Solving

Despite its benefits and advantages,

8D problem solving can also pose some challenges for businesses that want to implement it effectively. Some of these challenges are:

• Resistance to change from staff or management who are used to existing processes or practices
• Lack of commitment or support from senior leaders who do not see the value or urgency of problem-solving
• Difficulty in defining or measuring problems
• Insufficient data or information to support analysis or decision making
• Conflicts or disagreements among team members or stakeholders due to different opinions or interests

To overcome these challenges and ensure successful 8D problem solving, businesses can adopt some best practices such as:

• Communicating the benefits and objectives of 8D problem solving to staff and management
• Securing the buy-in and sponsorship of senior leaders who can provide direction and resources
• Using clear and objective criteria to define and measure problems
• Collecting and analyzing relevant and reliable data or information
• Resolving conflicts or disagreements through constructive dialogue and compromise

To ensure that 8D problem-solving efforts are not wasted or forgotten, businesses need to measure the effectiveness and impact of their initiatives. Measuring the effectiveness of 8D problem-solving efforts can help businesses:

• Assess whether they have achieved their goals and expectations
• Evaluate whether they have improved their performance and customer satisfaction
• Identify areas for further improvement or optimization
• Demonstrate their value and credibility to stakeholders

To measure the effectiveness of 8D problem-solving efforts, businesses can use various methods such as:

• Key performance indicators (KPIs) that can be used to quantify the results or outcomes of 8D problem-solving initiatives. Some examples of KPIs are customer satisfaction scores, defect rates, cycle times, or cost savings.
• Data collection and analysis tools that can be used to gather and interpret data or information related to 8D problem-solving initiatives. Some examples of data collection and analysis tools are surveys, audits, control charts, or statistical process control (SPC).
• Periodic reviews and feedback mechanisms can be used to monitor and evaluate the progress and performance of 8D problem-solving initiatives. Some examples of periodic reviews and feedback mechanisms are reports, presentations, meetings, or feedback forms.

By measuring the effectiveness of 8D problem-solving efforts, businesses can ensure that they are continuously improving their quality, efficiency, and customer satisfaction.

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Four of the biggest problems facing education—and four trends that could make a difference

Eduardo velez bustillo, harry a. patrinos.

In 2022, we published, Lessons for the education sector from the COVID-19 pandemic , which was a follow up to,  Four Education Trends that Countries Everywhere Should Know About , which summarized views of education experts around the world on how to handle the most pressing issues facing the education sector then. We focused on neuroscience, the role of the private sector, education technology, inequality, and pedagogy.

Unfortunately, we think the four biggest problems facing education today in developing countries are the same ones we have identified in the last decades .

1. The learning crisis was made worse by COVID-19 school closures

Low quality instruction is a major constraint and prior to COVID-19, the learning poverty rate in low- and middle-income countries was 57% (6 out of 10 children could not read and understand basic texts by age 10). More dramatic is the case of Sub-Saharan Africa with a rate even higher at 86%. Several analyses show that the impact of the pandemic on student learning was significant, leaving students in low- and middle-income countries way behind in mathematics, reading and other subjects.  Some argue that learning poverty may be close to 70% after the pandemic , with a substantial long-term negative effect in future earnings. This generation could lose around $21 trillion in future salaries, with the vulnerable students affected the most.

2. Countries are not paying enough attention to early childhood care and education (ECCE)

At the pre-school level about two-thirds of countries do not have a proper legal framework to provide free and compulsory pre-primary education. According to UNESCO, only a minority of countries, mostly high-income, were making timely progress towards SDG4 benchmarks on early childhood indicators prior to the onset of COVID-19. And remember that ECCE is not only preparation for primary school. It can be the foundation for emotional wellbeing and learning throughout life; one of the best investments a country can make.

3. There is an inadequate supply of high-quality teachers

Low quality teaching is a huge problem and getting worse in many low- and middle-income countries.  In Sub-Saharan Africa, for example, the percentage of trained teachers fell from 84% in 2000 to 69% in 2019 . In addition, in many countries teachers are formally trained and as such qualified, but do not have the minimum pedagogical training. Globally, teachers for science, technology, engineering, and mathematics (STEM) subjects are the biggest shortfalls.

4. Decision-makers are not implementing evidence-based or pro-equity policies that guarantee solid foundations

It is difficult to understand the continued focus on non-evidence-based policies when there is so much that we know now about what works. Two factors contribute to this problem. One is the short tenure that top officials have when leading education systems. Examples of countries where ministers last less than one year on average are plentiful. The second and more worrisome deals with the fact that there is little attention given to empirical evidence when designing education policies.

To help improve on these four fronts, we see four supporting trends:

1. Neuroscience should be integrated into education policies

Policies considering neuroscience can help ensure that students get proper attention early to support brain development in the first 2-3 years of life. It can also help ensure that children learn to read at the proper age so that they will be able to acquire foundational skills to learn during the primary education cycle and from there on. Inputs like micronutrients, early child stimulation for gross and fine motor skills, speech and language and playing with other children before the age of three are cost-effective ways to get proper development. Early grade reading, using the pedagogical suggestion by the Early Grade Reading Assessment model, has improved learning outcomes in many low- and middle-income countries. We now have the tools to incorporate these advances into the teaching and learning system with AI , ChatGPT , MOOCs and online tutoring.

2. Reversing learning losses at home and at school

There is a real need to address the remaining and lingering losses due to school closures because of COVID-19.  Most students living in households with incomes under the poverty line in the developing world, roughly the bottom 80% in low-income countries and the bottom 50% in middle-income countries, do not have the minimum conditions to learn at home . These students do not have access to the internet, and, often, their parents or guardians do not have the necessary schooling level or the time to help them in their learning process. Connectivity for poor households is a priority. But learning continuity also requires the presence of an adult as a facilitator—a parent, guardian, instructor, or community worker assisting the student during the learning process while schools are closed or e-learning is used.

To recover from the negative impact of the pandemic, the school system will need to develop at the student level: (i) active and reflective learning; (ii) analytical and applied skills; (iii) strong self-esteem; (iv) attitudes supportive of cooperation and solidarity; and (v) a good knowledge of the curriculum areas. At the teacher (instructor, facilitator, parent) level, the system should aim to develop a new disposition toward the role of teacher as a guide and facilitator. And finally, the system also needs to increase parental involvement in the education of their children and be active part in the solution of the children’s problems. The Escuela Nueva Learning Circles or the Pratham Teaching at the Right Level (TaRL) are models that can be used.

3. Use of evidence to improve teaching and learning

We now know more about what works at scale to address the learning crisis. To help countries improve teaching and learning and make teaching an attractive profession, based on available empirical world-wide evidence , we need to improve its status, compensation policies and career progression structures; ensure pre-service education includes a strong practicum component so teachers are well equipped to transition and perform effectively in the classroom; and provide high-quality in-service professional development to ensure they keep teaching in an effective way. We also have the tools to address learning issues cost-effectively. The returns to schooling are high and increasing post-pandemic. But we also have the cost-benefit tools to make good decisions, and these suggest that structured pedagogy, teaching according to learning levels (with and without technology use) are proven effective and cost-effective .

4. The role of the private sector

When properly regulated the private sector can be an effective education provider, and it can help address the specific needs of countries. Most of the pedagogical models that have received international recognition come from the private sector. For example, the recipients of the Yidan Prize on education development are from the non-state sector experiences (Escuela Nueva, BRAC, edX, Pratham, CAMFED and New Education Initiative). In the context of the Artificial Intelligence movement, most of the tools that will revolutionize teaching and learning come from the private sector (i.e., big data, machine learning, electronic pedagogies like OER-Open Educational Resources, MOOCs, etc.). Around the world education technology start-ups are developing AI tools that may have a good potential to help improve quality of education .

After decades asking the same questions on how to improve the education systems of countries, we, finally, are finding answers that are very promising.  Governments need to be aware of this fact.

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Consultant, Education Sector, World Bank

Senior Adviser, Education

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Welcome to the daily solving of our PROBLEM OF THE DAY with Nitin Kaplas . We will discuss the entire problem step-by-step and work towards developing an optimized solution. This will not only help you brush up on your concepts of Tree but also build up problem-solving skills. In this problem, we are given an integer n, return the fibonacci series till the nth(0-based indexing) term. Since the terms can become very large return the terms modulo 10^9+7. Example :

Input: n = 5 Output: 0 1 1 2 3 5 Explanation: 0 1 1 2 3 5 is the Fibonacci series up to the 5th term. Give the problem a try before going through the video. All the best!!! Problem Link: https://www.geeksforgeeks.org/problems/fibonacci-series-up-to-nth-term/1