How To Screen for Accounting Skills
February 18, 2021
Assessing accounting skills before employment can be hard! First off, there are so many different specializations within the field, making almost every accounting job unique. This makes it virtually impossible to judge how competent a candidate would be in one role even if they have had experience working in accounting. In addition, while most candidates have probably taken a couple of accounting classes, how do we know whether they can actually translate textbook knowledge into applicable skills in the workplace?
With this question, we see that resumes can be misleading. In research conducted by Checkster, it was found that 78% of job applicants lie on their resumes.
Selecting the best applicant from among a pool of candidates holding appropriate degrees can be a tough job. This is a responsibility that will determine the future of the organization. Gone are the days when a similar question set applied for all kinds of candidates. With the demand for more specific job requirements, it is essential to change the way of screening. Analyzing various parameters will escort the recruiters to the best fit candidate for the job position. But how can you ensure that the parameters you are using are appropriate for that job position? Well, before assessing candidates, it is crucial for the recruiters to understand the right practice for judging the applicability of the candidate.
A test that measures the candidate's merit for bagging the job position. It provides the evaluation of the applicant's practical knowledge. The skill tests are designed to analyze the candidate's performance when they face real-life job scenarios. We classify skills into two components - hard skills and soft skills.
Hard skills that the candidates gain through learning are quantifiable. Through these skills, you can assess the job-readiness of the candidate. These are mostly aligned to the day to day activities that the candidate needs to perform daily. For example, the hard skill for an IT professional is the proficiency in computer and data analysis, and that for a designer's position is designing. For an accountant's position, the knowledge of Microsoft Office, SAP, etc., is a must-have. But he should possess the fundamental accounting skills - including preparing the book of accounts, hands-on experience in creating financial statements and balance sheets.
Soft skills are the interpersonal abilities of the applicant and are not quantifiable. People are from diverse backgrounds and possess diverse cultures and varied personality traits. Apart from being proficient in various hard skills, the candidate must be able to collaborate with the team easily. The different soft skills are communication skills, leadership skills, time-management skills, coordinating skills, etc. The recruiters can judge these skills while assessing the candidate's hard skills. You can monitor the time taken by the candidate to complete the task, his body language in addressing challenging questions. Also, you can judge the candidate's communication, including written and verbal skills, analytics, and problem-solving skills.
The skill sets of the employees affect the overall performance of an organization and sustainable employee engagements. According to a report, 82% of industry leaders use skill assessments to judge the suitability of the candidate for the job role. The ability of the organization to lead, manage, and grow depends highly on talented professionals. Ensuring that the candidate has the technical expertise needed for the job role is more accurate through skill tests. However, recruiting the right candidates based on the parameters of skill tests requires the knowledge of the hard skills appropriate for that job position.
Here at Adaface, to solve these problems, we have created screening tests to ensure that candidates’ skills fall in place with job requirements. There are separate tests designed for specific roles to address the high variety in accounting roles. For example, CPAs will have a unique test for their specialization while Financial Accountants will have a different test tailored to their positions’ requirements.
Every accountant should have general knowledge of the fundamental accounting principles. These are the guidelines that must be used to ensure standardization across companies. Here are some of the most important ones:
In this case, we’re not talking about the thoughts we write down before going to bed - a journal entry is a documentation of business transactions. Candidates should be able to properly write a journal entry and understand the different types of entries: adjusting, compound and reversing.
All journal entries are posted into a book called a ledger. Candidates should be able to calculate the account balances of liabilities, equities, assets and expenses. They should also be able to understand the big picture of records to catch any mistakes and categorize transactions.
A trial balance is simply a self-check to make sure that all your ledger accounts balance out. Candidates must identify any errors and transfer final amounts into financial statements.
Income statements have a lot of different components that candidates must holistically analyze. Applicants should be able to prepare income statements, compare statements from different accounting periods, analyze where expenses are occurring and see how all sections of the statement are impacting the bigger picture. Ultimately, understanding an income statement can help accountants understand opportunities for generating profit.
Applicants must understand how to use this document to analyze how a company is doing at a specific point in time and calculate financial ratios. The balance sheet must also be analyzed in conjunction with the other financial statements.
For assets that decline in value over time, candidates should know how to lower their value on financial statements and tax returns. They should also be aware of the types of depreciation to make the correct calculations.
How good is a company at bringing in cash to pay debt and pay for operating expenses? Candidates should be able to answer this question by analyzing cash flow statements.
To understand what a company is worth, here are some of the ratios candidates should understand how to calculate and analyze:
These are the vital accounting principles that define general accounting practices globally. Both public and private firms view GAAP as a crucial requirement for anyone willing to work in accounting.
The accounting candidate must be an expert in Microsoft Office, as this skill is the most basic skill that the candidate must possess. Reading and analyzing data daily forms the basis of this job position. The formulas of excel, sorting, filtering work in the spreadsheet, the knowledge of the pivot table, and VLOOKUP are some essential hard skills that the recruiters must look for in the candidates. This skill becomes more crucial with the growth of the organization. The accountants have to deal with huge data forms with the expansion of the size of the firm.
This skill is mainly required by small or medium-sized businesses. Quickbooks is a software that offers various financial functions like payroll, invoicing and expense tracking. You can guess the popularity of this software with the number of subscribers, i.e., 4.2 million on the online platform.
Planning is the foremost step for the proper organization of people and work. Enterprise resource planning software SAP enables the accountants to plan for the purchase of raw materials, for controlling inventory, and allocating work for laborers. This is specifically required for senior-level accountants. Tableau Software and Zoho analytics facilitate data visualizations that enable efficient decision-making for accounting professionals.
There are complete software solutions dedicated to the taxation part of accounting. Recruiters looking for hiring candidates for this section must look for applicants who are well-aware of the software program for tax preparation. However, basic knowledge of the taxation part is essential for all the accounting candidates, as they would have to handle some of the other tax-related work. The most common software programs that the companies use are Drake, ProConnect, and Lacerte.
The three essential parts of financial statements are the cash flow statement, the income statement, and the balance sheet. The candidates must be able to prepare these three reports as it shows the financial position of any company. The candidates must be able to prepare clear reports that are easily understandable.
Once you know the apt accounting skills, it is then crucial to test for the skills properly to derive an unbiased result and lets you find the most fitting candidate for this job position. For assessing the knowledge on various hard skills, you can follow few points such as -
After the assessments, for detailed evaluation of qualified candidates you can use a few subjective questions as well. This will enable you to judge the candidate's communication skills. Start with easier questions and proceed towards medium and finally tough questions at the end of the test. Do not ask too many questions; go for specific questions only. Allow sufficient time for the candidates to answer the skill test so that you know that the applicant has been given all the opportunities for success.
You should ask both simple and tough questions. Also, the questions will depend on the level of recruitment, whether it is for entry-level accountants or for a senior position. Test the candidate's fundamental knowledge as well as in-depth knowledge about accounting through properly designed questions like -
The skills required for an accounting job vary from workplace to workplace. Though we talked of a number of hard skills that are typically required for an accounting job, every company needs to prudently create the job description. This will help in finding out the perfect candidate who can seamlessly get onboarded to work and will need much less hands-on training. Moreover, nowadays, technologies can play a critical role in assessing the candidates. Various technology platforms help to enable the initial screening processes. Moreover, many psychometric tests are also a critical factor to judge the candidate's fitment in an organization and to check his alignment of thought process with organization goals and objectives. Thus, for the long-term benefit of the organization and sustainable employee engagement, it should create a holistic approach considering all the options discussed above and gain a competitive advantage in the market.
Looking to screen candidates for your accountant role? Check out the Adaface accounting test.
Content Marketer at Adaface