Experience and the Organization of Auditors' Knowledge of Financial Statement Errors
Recent audit research has explored the impact of auditors' knowledge
on various audit judgments [e.g., Choo and Trotman 1991; Frederick
1991; Libby and Frederick 1990; Moeckel 1990; Moeckel and Plumlee
1989]. In order for this knowledge to influence the search for
and interpretation of audit evidence, it must first be retrieved
from the auditor's knowledge base. One factor influencing this
retrieval process is the organization of the knowledge base.
At least two organization schemes have been identified in audit
research -- transaction cycle and audit objective [e.g., Frederick
1991; Libby 1985; Libby and Frederick 1990; Tubbs 1992]. Empirical
results indicate that the development of both of these organization
schemes increases with experience.
The present study extends the work of Frederick, Heiman-Hoffman and Libby [1994] by conducting a direct comparison of transaction cycle and audit objective organization schemes in a different auditing context, as Hayes-Roth and Hayes-Roth [1975] indicate that task demands may alter the organization scheme used to retrieve knowledge. Tests are conducted to determine the impact of task structure on selection of a knowledge organization structure. Also, auditors from each of the Big 6 firms were used to explore the effects of firms' audit methodology structures on the development of the organization scheme. Using multiple tests, the findings indicate that the dominant organization scheme for auditors' knowledge of financial statement errors is dependent on years of audit experience, task being performed, and firm audit methodology structure. The results of the study help develop an understanding of why and how particular knowledge organization schemes evolve and may assist in the development of audit training materials and decision aids that take advantage of the auditor's knowledge organization scheme.
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