Understanding Critical Thinking from the Lens of a Chartered Accountant: Part 1

Critical thinking is not just a skill; it’s a discipline of the mind — a structured approach to analyzing information, identifying gaps, questioning assumptions, and arriving at well-reasoned judgments. For a Chartered Accountant or a CA student, it is the invisible line that separates compliance from insight, routine from revelation. The Institute of Chartered Accountants doesn’t test this skill in isolation, but it is embedded in every clause you interpret, every ledger you audit, every boardroom decision you shape. Also Read: Beyond Numbers – Part 2: How to Be the CA Clients Never Forge

Let’s begin with what critical thinking truly means.

1. Edward Glaser, one of the early thinkers on the subject, described it as “the ability to think critically, which involves three things: an attitude of being disposed to consider in a thoughtful way the problems and subjects that come within the range of one’s experiences; knowledge of the methods of logical inquiry and reasoning; and some skill in applying those methods.”

2. Robert Ennis further refined it as “reasonable reflective thinking focused on deciding what to believe or do.” For a CA, this means refusing to accept any number, clause, or legal opinion at face value — and asking: “What is this trying to tell me?” or better yet, “What might be hidden beneath what is shown?”

Nowhere is this skill more apparent than in the audit profession. Consider an auditor reviewing a company’s revenue recognition policy under Ind AS 115. An average mind would check compliance boxes. But a critical thinker would ask: “Is this method of revenue recognition masking an aggressive earnings strategy? Are there contractual subtleties that shift performance obligations forward?” This is not textbook knowledge. It’s mental pattern recognition, shaped by experience, logic, and curiosity — the heart of critical thinking.

3. Daniel Kahneman, Nobel Laureate and psychologist, whose dual-process theory revolutionized how we understand decision-making, distinguishes between System 1 thinking — fast, intuitive, emotional — and System 2 thinking — slow, effortful, and logical. Most people operate in System 1 mode when making daily judgments, but a great CA knows when to shift to System 2.

Imagine a tax consultant interpreting a CBDT notification — System 1 might say, “It’s the same as last year.” But System 2 prompts, “Wait. The wording has changed subtly. Let’s look deeper at its implication on deferred tax recognition or MAT credit utilization.”

Critical thinking, therefore, is not about being cautious. It’s about being consciously deliberate. It’s choosing the harder path — the slower gear — in a world that rewards speed. It’s about catching the whisper of anomaly in a roar of data. It’s the accountant’s ability to detect financial manipulation in buried footnotes, the auditor’s instinct that a clean bank statement hides an undisclosed related-party transaction, and the tax professional’s insight that a new Section introduced in the Finance Act has cross-implications in three separate areas of law.

This isn’t abstract theory. Let’s recall the infamous Satyam scam — billions were inflated on the balance sheet while “qualified professionals” signed off clean reports. The failure wasn’t technical. It was cognitive. It was the absence of a critical eye that could have questioned: “Why are cash reserves so high, yet capital expenditure so low? Why this odd mismatch in debtor turnover?”

The great thinker Benjamin Bloom, who developed the taxonomy of educational objectives, placed analysis, evaluation, and creation at the top of cognitive abilities.

In your CA journey, passing exams requires comprehension. But becoming a thought leader in finance — a CFO, forensic expert, or strategic advisor — demands the top tier of Bloom’s hierarchy. You must train your mind to synthesize disparate financial signals, evaluate regulatory patterns, and create proactive solutions.

So, the first step is to acknowledge: Critical thinking is not innate; it is cultivated. It begins with small acts — questioning your own audit plan, asking “What if I’m wrong?”, identifying contradictions in case studies, challenging the way you interpret Sections of the IT Act. Over time, these questions create a mental habit — a neurocognitive reflex — that changes how you view every balance sheet and every line of law.

Because at the end of the day, a CA who thinks critically doesn’t just report the past — they shape the future.

→ Reflection Questions for CA Professionals & Students:

1. When was the last time you re-checked an “obvious” conclusion you had drawn? What did you find?

2. Are you relying too much on System 1 (intuition) while preparing reports or analyzing financials? Where can you slow down?

Note:

1. Edward Ludwig Glaser (born May 1, 1967) is an American economist who is currently the Fred and Eleanor Glimp Professor of Economics at Harvard University, where he is also the Chairman of the Department of Economics.

2. Thinking, Fast and Slow is a 2011 popular science book by psychologist Daniel Kahneman. The book’s main thesis differentiates between two modes of thought: “System 1” is fast, instinctive, and emotional; “System 2” is slower, more deliberative, and more logical.

3. Benjamin Samuel Bloom (Feb 21, 1913 – Sept 13, 1999) was an American educational psychologist and didactician who made contributions to the classification of educational objectives and to the theory of mastery learning. He has greatly influenced the practices and philosophies of educators around the world from the latter part of the twentieth century.