The Influence of Audit Structure on Auditors' Performance in High and Low Complexity Task Settings
30 Pages Posted: 12 Aug 2004
Date Written: June 24, 2004
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: Suggested Citation