JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. This content downloaded from 132.174.254.159 on Wed, Auditing studies to date of rank-related differences in intellectual ability (Marchant [1989]) and consensus on abilities necessary for promotion (Jiambalvo, Watson, and Baumler [1983]) have produced negative results. The homogeneity of the entry-level pool limits the potential effects of these variables. 2 Knowledge differences may relate to technical aspects of accounting systems and audit techniques; the organizational structure, operating characteristics, and external factors affecting firms in a particular industry; the policies which reflect the audit firm's utility function; and other areas. 348 Copyright (C, Institute of Professional Accounting 1990 This content downloaded from 132.174.254.159 on Wed, 27 May 2015 10:32:42 UTC All use subject to JSTOR Terms and Conditions ABILITY TO EXPLAIN AUDIT FINDINGS
which allow more experienced auditors to perform tasks better (see Wright [1988] and Bedard [1989] for a review).Cognitive psychology and artificial intelligence research examining the determinants of skilled decision-making performance has shifted much of its focus from general cognitive abilities to the characteristics and impact of domain-specific knowledge acquired over years of training and experience (Glaser and Chi [1988]). Two related changes have taken place in recent studies of audit experience effects. The first involves using the assignment of tasks to more and less experienced auditors in order to identify tasks which require more or less knowledge and, therefore, should exhibit smaller or larger experience-related performance differences (see Abdolmohammadi and Wright [1987] and Bonner [forthcoming]). The second change goes further in attempting to understand the causes of differential performance by explicitly specifying the nature of the experience-related knowledge differences and the mechanisms through which they affect judgment (Frederick and Libby [1986]). The latter requires assessments of how the knowledge bases of more and less experienced auditors differ and how they influence judgment performance.
While the performance of many actual procedures in an audit program is left to less experienced auditors, explaining and interpreting the implications of the results of those procedures for further testing and possible audit adjustment is usually left to more seasoned auditors. This less structured portion of audit decision making has been described by Mautz and Sharaf [1961], Einhorn [1976], Libby [1985], and Butt [1988] as a diagnostic process. Einhorn [1976] and Elstein, Shulman, andSprafka [1978] propose that the principal organizing element of diagnostic decision making is the diagnostic hypothes...
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