The Influence of Audit Structure on Auditors' Performance in High and Low Complexity Task Settings

30 Pages Posted: 12 Aug 2004

See all articles by Iris Stuart

Iris Stuart

California State University, Fullerton; Norwegian School of Economics and Business Administration

Douglas F. Prawitt

Brigham Young University

Date Written: June 24, 2004

Abstract

Audit structure has been studied in a variety of contexts since the 1980's, and continues to be a construct of relevance and importance. The degree of structure employed is a decision variable every time an auditing firm changes its audit approach or introduces a new tool. Thus, decision makers can benefit from an enhanced understanding of the various implications of increasing or decreasing levels of structure. This paper considers the impact of varying degrees of audit structure on the performance of human resources employed in auditing firms. In particular, this study compares the performance of auditors from two firms that differ in the degree of audit structure on four different tasks that can be characterized as being either of high or low complexity. Consistent with the idea that the degree of audit structure affects opportunities for learning to perform relatively complex judgment-oriented tasks, results indicate that performance depends on the interaction between task complexity and the degree of structure in the employing firm's audit approach. For the two less complex analytical tasks, auditors from structured and unstructured audit firms demonstrate comparable performance. In contrast, for the two relatively complex tasks, auditors from the unstructured firm outperform auditors from the structured firm. These results hold after controlling for individual auditor characteristics, including problem-solving ability, effort and months of experience. We argue that the use of unstructured audit methodologies affords increased opportunities for auditors to learn underlying concepts and to exercise judgment at a relatively early stage of their career. These results contribute to the existing body of research indicating that decisions regarding the degree of audit structure in a firm's audit approach can significantly impact the development of an auditing firm's human resources.

Keywords: Audit structure, task complexity, firm effects, analytical procedures, audit efficiency

JEL Classification: M49

Suggested Citation

Stuart, Iris and Prawitt, Douglas F., The Influence of Audit Structure on Auditors' Performance in High and Low Complexity Task Settings (June 24, 2004). Available at SSRN: https://ssrn.com/abstract=569871 or http://dx.doi.org/10.2139/ssrn.569871

Iris Stuart

California State University, Fullerton ( email )

800 N State College St
Fullerton, CA 92834-9480
United States

Norwegian School of Economics and Business Administration ( email )

Helleveien 30
Bergen, 5045
Norway

Douglas F. Prawitt (Contact Author)

Brigham Young University ( email )

Provo, UT 84602
United States
801-422-2351 (Phone)

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