Description
This study examines whether organizing information about internal controls around business processes instead of
control objectives produces stronger category knowledge during training and improves decision performance during
internal control evaluation. Novices who were trained to evaluate internal controls using business-process-focused
materials developed stronger category knowledge. After training, novices who evaluated internal controls using
materials organized around a process focus identified more control issues during a control evaluation task. Findings
suggest that the process focus may be a more effective framework for organizing internal control evaluation tasks.
The in?uence of a business-process focus on category
knowledge and internal control evaluation
Lori S. Kopp
a,
*
, Ed O’Donnell
b
a
Faculty of Management, University of the Lethbridge, Lethbridge, AB, Canada T1K 3M4
b
W.P. Carey School of Business, Arizona State University, P.O. Box 873606, Tempe, AZ 85287-3606, USA
Abstract
This study examines whether organizing information about internal controls around business processes instead of
control objectives produces stronger category knowledge during training and improves decision performance during
internal control evaluation. Novices who were trained to evaluate internal controls using business-process-focused
materials developed stronger category knowledge. After training, novices who evaluated internal controls using
materials organized around a process focus identi?ed more control issues during a control evaluation task. Findings
suggest that the process focus may be a more e?ective framework for organizing internal control evaluation tasks.
Ó 2004 Elsevier Ltd. All rights reserved.
Introduction
Assurance services ?rms generally use one of
two alternative task structures to organize the
information that their auditors evaluate during
?nancial statement audits. They employ either a
categories-of-business-processes focus or a cate-
gories-of-control-objectives focus (Lemon, Tatum,
& Turley, 2000). For example, while evaluating the
reliability of internal controls, auditors with ?rms
that use the process focus learn about client
operations with information that has been cate-
gorized by business process, like procurement, in-
bound logistics, and sales. On the other hand,
auditors who work for ?rms that use the objec-
tive focus learn with information categorized by
control objectives, like authorization, accuracy,
and completeness (Curtis & Viator, 2000). For
most tasks, auditors acquire the same information
under either task structure. The di?erence is the
categories used to organize and present that
information (Frederick, 1991).
The category knowledge that auditors develop
through training and experience becomes a sig-
ni?cant element of their expertise (Tubbs, 1992;
Frederick, Heiman-Ho?man, & Libby, 1994).
Auditors with well-developed category knowledge
tend to perform better than auditors with less-well-
developed category knowledge (Bonner, Libby, &
Nelson, 1997). However, when the categories used
to present decision information do not match the
categories that auditors use to store knowledge in
memory, decision performance can su?er (Nelson,
Libby, & Bonner, 1995).
This study examines two research ques-
tions. First, does organizing training materials
around business-process categories rather than
*
Corresponding author.
E-mail addresses: [email protected] (L.S. Kopp), ed.
[email protected] (E. O’Donnell).
0361-3682/$ - see front matter Ó 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2004.03.004
Accounting, Organizations and Society 30 (2005) 423–434
www.elsevier.com/locate/aos
control-objective categories help untrained novices
develop stronger category knowledge? Category
knowledge becomes stronger when the mental
structures that people use to store information
become more clearly de?ned, which enhances their
ability to encode and remember the information
that they acquire (Day, Arthur, & Gettman, 2001).
Second, does structuring internal control evalua-
tion tasks around a process focus rather than an
objective focus help trained novices perform better
by creating a more consistent mapping between
the way decision information is presented and the
way they organize knowledge in memory? We
provide evidence that the answer to both questions
is yes.
The debate about whether the process focus
provides a more e?ective task structure for evalu-
ating client-speci?c information than the objective
focus is currently being waged in audit practice
(Lemon et al., 2000). In response to changing
economic conditions, several of the largest assur-
ance services ?rms have adopted a process-focused
audit methodology while other ?rms continue to
use the objective-focused approach (Eilifsen,
Knechel, & Wallage, 2001). Not surprisingly, ?rms
that use a process focus in the ?eld also use a
process focus in their training programs (Ballou &
Heitger, 2003). If assurance services ?rms are not
careful to match the structure of their audit pro-
cedures with the category knowledge that their
auditors develop through ?rm training and ?eld
experience, audit performance could su?er.
We examined the in?uence of these alternative
task structures in the context of internal control
evaluation. Internal controls are oversight prac-
tices and processing constraints an organization
uses to help ensure that its assets are protected
from misappropriation and its systems provide
reliable information about business transactions.
During an assurance engagement, professional
standards require that auditors evaluate the reli-
ability of this system of internal controls before
they design their auditing tests (American Institute
of Certi?ed Public Accountants, 1995). Establish-
ing an e?ective system of internal controls has
become a central issue in corporate governance
because of the Sarbanes–Oxley Act that was re-
cently enacted by the United States government.
This legislation establishes accountability for the
system of internal controls at the level of the cor-
porate board of directors and imposes penalties
for non-compliance.
Frederick (1991) demonstrated that auditing
students who learn about controls from docu-
mentation that has been organized around trans-
action ?ows remembered that information more
e?ectively than novices who used documentation
organized around categories of control objectives.
Our study extends Frederick’s work on knowledge
organization by evaluating how task structure
in?uences decision performance during a diag-
nostic auditing procedure. We examine whether
novices who perform control evaluations using
documentation that has been structured around
business process ?ows can recognize control issues
more e?ectively than auditors who use documen-
tation structured around categories of control
objectives.
The ?ndings from this study have implications
for both audit practice and decision-making re-
search. With respect to training, strengthening
category knowledge through exercises struc-
tured around process-focused categories could
help assurance services ?rms and academics teach
aspiring auditors more e?ectively. Evidence that
category type in?uences learning extends the lit-
erature on knowledge development by contribut-
ing to our understanding of the association
between training structure and knowledge acqui-
sition. Regarding decision performance, if the
process focus provides a more e?ective structure
for internal control evaluation then assurance
services ?rms may want to re-evaluate how their
decision support systems present information to
auditors in the ?eld. Evidence that a process-
focused task structure improves decision perfor-
mance extends the literature on decision-making
by contributing to our understanding of the asso-
ciation between information presentation and hu-
man ability to integrate and evaluate decision cues.
Theoretical framework
This study examines how alternative category
structures a?ect (a) the development of category
424 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
knowledge and (b) decision performance during an
information processing task. Prior auditing re-
search has demonstrated that training can in?u-
ence the development of category knowledge
(Bonner et al., 1997) and that stronger category
knowledge can improve judgment in a variety of
auditing decision contexts (see Nelson, 1994 for a
review). This study examines whether using busi-
ness-process categories rather than control-objec-
tive categories for training novices to evaluate
internal controls fosters the development of
stronger category knowledge.
Prior research has also demonstrated that pro-
cess-focused task structures in?uence recall di?er-
ently from objective-focused task structures
(Frederick, 1991) and that a mismatch between the
categories used to structure an audit task and the
categories auditors use to store knowledge in
memory can impair decision performance (Nelson
et al., 1995). This study examines whether using
business-process categories rather than control-
objective categories to structure an internal control
evaluation task fosters superior decision perfor-
mance.
Audit judgment researchers who have com-
pared a process focus with an objective focus have
hypothesized that di?erences between these alter-
native category structures result from the di?er-
ences in the way that categories are linked to each
other. For example, Frederick (1991) explains that
the information components in process-focused-
categories are linked by temporal and/or spatial
relationships while the information components of
objective-focused categories are linked by classi?-
cations of features. He suggests that process-
focused categories can enhance the accessibility of
knowledge stored in memory because temporal
a?liations provide more or better-ordered re-
trieval cues.
Schank (1999, pp. 1–20) describes how human
information processing relies on memory processes
and the categorical structures used to organize the
information stored in memory––the knowledge
that people bring to a decision task. Memory
processes involve instantaneous, automatic cogni-
tion that can be characterized as indexing. People
need a memory index to store new information,
retrieve existing knowledge, and create new indices
for novel information. The human mind searches
this indexing system without conscious e?ort
whenever a new input enters the realm of sensory
perception. In essence, when people process
information, the mind consults a mental index,
which provides a link to memory structures that
store the knowledge needed to understand and
interpret the information.
Schank’s (1999, pp. 107–122) theory of dynamic
memory suggests that human memory is organized
by categories––hierarchical mental structures that
group knowledge by common characteristics. The
memory index provides a map for navigating be-
tween higher-level categories that contain more
general knowledge and lower-level categories that
contain the details. Memory processes are con-
structive in nature. The mind relies on the memory
index to establish links among related categories
and assemble relevant knowledge each time a new
item of information is processed. During decision-
making tasks, sub-conscious cognitive processes
construct the necessary context, procedures, and
criteria on demand, when new information is
integrated with knowledge stored in memory (also
see Libby & Luft, 1993).
Schank (1999, pp. 21–40) believes that the cat-
egories used to store information in memory have
a signi?cant in?uence on the outcome of a decision
task. When categories are well-de?ned, a quality
that results from learning, the indexing process has
a greater chance of properly classifying a decision
cue. When the mind tries to index a cue using
poorly de?ned categories, classi?cation errors be-
come more likely and decision performance can
su?er because classifying a decision cue improperly
(by associating it with the wrong category) results
in misinterpreting the cue.
Schank (1999, pp. 89–106) describes how people
naturally tend to categorize their knowledge in
terms of temporally organized series of events and
related constructs. The high-level mental struc-
tures that the human mind uses to access catego-
ries of detailed information tend to be organized
around temporal sequences of events or ‘‘story
lines’’. At the highest level, memory indexing
processes begin by accessing or constructing a
story line that provides context for the information
being acquired. A story line provides the basis for
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 425
interpreting new decision cues by activating cate-
gories of more detailed information related to the
active story line. In other words, using a story line
to organize the memory indexing process helps
prevent cues from being interpreted out of context
(by being associated with the wrong knowledge
category).
Frederick (1991) examined how the structure of
information about internal controls in?uenced
ability to remember speci?c controls for both
experienced auditors and undergraduate account-
ing students (novices). He found that experienced
auditors who received documentation organized
around transaction ?ow story lines (schematic
organization) recalled more speci?c controls than
auditors who received documentation organized
around categories of control objectives (taxonomic
organization). However, the type of categories
used to organize control documentation had no
in?uence on novices’ ability to recall speci?c con-
trols, which suggests that at least some of the
bene?ts of using a process-focused task structure
may develop as a result of training and experience.
Frederick (1991) also found that both experi-
enced auditors and novices tended to cluster the
controls better when they used transaction-?ows-
story-line documentation than when they used
control-objectives documentation. In other words,
controls recalled under a process-focused task
structure more closely followed the sequence in
which the controls were presented than did con-
trols recalled under the objectives-focused task
structure. These ?ndings support the notion that
people tend to rely on mental representations that
organize knowledge around memory structures
organized like story lines rather than by categories
of attributes.
Research has demonstrated that structuring
information around story lines can improve deci-
sion performance. Pennington and Hastie (1986)
found that jurors, who were presented with evi-
dence grouped by descriptive classi?cations tended
to re-arrange that evidence into a mental repre-
sentation that provided a story line about what
happened. The story lines that they constructed
provided a context for evaluating their choice of
verdicts. In another series of experiments Pen-
nington and Hastie (1988) found (a) that vari-
ability in the story lines people create corresponds
to variability in their decisions and (b) that people
construct and use story lines to provide a context
for decision making. In a study where experienced
auditors evaluated the likelihood that their client
could stay in business, case materials structured
around a story line had a stronger in?uence on
going-concern judgments than case materials
structured by categories of ?nancial attributes
(Ricchiute, 1992).
In summary, Shank’s theory suggests that (a)
people who develop stronger categorical knowl-
edge structures are likely to make better decisions
because they can process information more e?ec-
tively and (b) because people naturally tend to
think in story lines, they can process information
more e?ectively when that information is orga-
nized around series of temporally related events (a
story). Research has provided evidence supporting
both of these propositions.
Training categories
Category knowledge becomes stronger as the
mental structures used to group and store knowl-
edge become more well de?ned (Glaser, 1990). As
category knowledge becomes stronger, decision
performance generally improves (Day et al., 2001).
In auditing contexts, for example, stronger cate-
gory knowledge leads to a better understanding of
frequency distributions for ?nancial statement er-
rors (Nelson, 1993). Auditors with stronger cate-
gory knowledge can process information about
client activities more e?ectively and develop more
accurate expectations about the probability that a
speci?c event has occurred (Nelson et al., 1995).
Novices with stronger category knowledge can
also learn from subsequent experience better than
novices with less well-developed category knowl-
edge (Bonner et al., 1997).
Category knowledge develops through training
and experience. During internal control evalua-
tion, performance improves as the category
knowledge that novices develop through training
becomes stronger (Curtis & Viator, 2000). Train-
ing materials organized around categories of
attributes that link together to form a causal chain
of correlated events produce stronger category
426 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
knowledge than training materials organized
around categories where the causal path is less
obvious (Kersten & Billman, 1997). Schank (1999)
believes that, because the human mind naturally
tends to organize environmental cues around a
story line, learning becomes more di?cult when
information is organized around categories of
attributes that do not form a story. He suggests
that, without a story line to follow, it is more
di?cult to (a) construct categories for storing new
information and (b) link those categories to the
memory index.
If individuals increase the strength of their
knowledge structures when they think in stories,
then novices should be able to learn more e?ec-
tively when training programs are organized
around story lines. Using a process focus for
internal control evaluation provides a distinct
story line not provided when using the control-
objective focus. These associations between ability
to learn and the types of categories used to struc-
ture the learning environment give rise to our ?rst
research hypothesis:
H1: Novices who learn how to perform inter-
nal control evaluation using materials orga-
nized around a business-process focus will
develop stronger category knowledge than
novices who learn about this task using mate-
rials organized around a control-objective
focus.
Task structure
Category structures a?ect judgment by in?u-
encing the knowledge representations that people
construct from memory (Boland et al., 2001).
Altering the way that task-speci?c information is
presented changes the structure of the task, which
interacts with the structure of knowledge stored in
memory and in?uences decision performance
(Devine & Kozlowski, 1995).
Schank (1999, pp. 89–106) suggests that people
tend to make more e?ective decisions when they
can simply retrieve a story line from memory ra-
ther than having to construct a story line from
decision information. People naturally tend to
think in terms of stories. When decision tasks are
structured around a story line, memory indexing
processes involve retrieving a comparable story
line and using links provided by that mental
structure to activate related categories of infor-
mation. However, when decision tasks are struc-
tured around categories of attributes other than
story lines, the mind must construct an appropri-
ate story line before the indexing process can
begin.
The bene?ts of organizing information around
story lines have been examined in various decision
contexts. Klein (1998) describes how people rely
on stories they construct from experience-based
memories to evaluate the plausibility of decision
alternatives. He explains that, in naturalistic deci-
sion-making contexts, people construct a story
about how a potential decision will play out when
they evaluate a novel decision alternative. Kinney
(1997) believes that auditors who learn the story of
value creation will be in a better position to rec-
ognize potential audit problems (because they
have more completely activated their category
knowledge of business processes). O’Donnell and
Schultz (2003) found that auditors who used case
materials organized around business process cate-
gories were able to identify more risk factors
during analytical procedures than auditors who
used materials organized around ?nancial state-
ment categories.
If task structures that organize information
around a story line are less likely to result in
construction errors, and if process-focused task
structures provide a story line, then process-
focused task structures should be less likely to
foster interpretation errors than objective-focused
task structures. In other words, decision perfor-
mance should be better for tasks where decision
information is organized around business-process
categories rather than tasks organized around
control-objective categories. These associations
between task structure and decision performance
give rise to our second research hypothesis:
H2: Novices who perform an internal control
evaluation task using information organized
around business-process categories will be
able to identify more control issues than
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 427
novices who evaluate information organized
around control-objective categories.
Method
We tested our hypotheses in a laboratory
experiment where participants with no audit train-
ing or experience learned about internal control
evaluation then evaluated case materials and iden-
ti?ed control issues. Our study was organized in a
two-by-two, crossed-factors design. One factor was
the type of categories used for training. Participants
learned about internal control evaluation either
with materials that organized information about
control procedures around business-process-cate-
gories or control-objective categories. The other
factor was the type of categories used to structure
the internal control evaluation case. Participants
received case materials that were organized around
either the same process-focused or objective-
focused categories used for training. Participants
were assigned to one of four groups so that the two
experimental factors would be crossed. For exam-
ple, about half of the participants who were trained
with the process-focused materials received the
business-process-focused internal control evalua-
tion case materials. The other half received the
control-objective-focused case materials.
Participants
One objective of this study was to examine
whether the type of categories used for training
would in?uence the development of category
knowledge. Therefore, it was essential to use par-
ticipants with no category knowledge. A total of
82 students enrolled in their ?rst undergraduate
accounting course participated in this experiment.
We chose students with no accounting training or
work experience because we wanted to test the
in?uence of the training that we provided without
the confounding in?uence of knowledge developed
from other courses or work experience. Prior re-
search has shown that students develop a domi-
nant internal control knowledge structure after
completing junior-level ?nancial and managerial
accounting courses (Curtis & Borthick, 2002). We
could not use experienced auditors as subjects
because task-speci?c experience provides proce-
dural knowledge that alters memory structures
(Anderson, 1982) and can in?uence the develop-
ment of category knowledge (Bonner & Walker,
1994). We could not use newly hired auditors be-
cause (a) their audit training, which provides
opportunities to develop category knowledge,
might not be uniform, (b) we would have no
control over the type of categories used during
their training, and (c) instruction provided to them
during their college education leads to develop-
ment of category knowledge.
The students who participated were novices
with regard to internal control evaluations. Dur-
ing their accounting course, they had received
instruction about what internal controls were and
why it was important for an organization to assess
internal control e?ectiveness. However, they had
received no instruction in either accounting infor-
mation systems or auditing and none of the par-
ticipants reported any experience in evaluating
internal controls.
Participation in the study was voluntary but
students who chose to participate received bonus
points in the class. To motivate performance, all
participants were eligible for a cash prize lottery
where the number of times their names were en-
tered into the drawing depended on their level of
task performance.
Of the 44 participants assigned to the process-
focused learning condition, 24 completed the
process-focused internal control evaluation case
and 20 completed the objective-focused internal
control evaluation case. Of the 38 participants
assigned to the objective-focused learning condi-
tion, 20 completed the process-focused internal
control evaluation case and 18 completed the
objective-focused internal control evaluation case.
Materials
All of the narrative cases used in this study were
adapted from accounting information systems or
auditing textbooks. Each narrative contained a
description of (a) the origin of every document and
record in the system, (b) all processing that takes
place, (c) the disposition of every document and
428 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
record in the system, and (d) an discussion of the
control issues of the purchasing cycle for a hypo-
thetical company.
Each case contained information about 20
speci?c internal control procedures, which were
taken from the list developed by Frederick (1991).
In process-focused cases, these procedures were
described in connection with activities related to
(1) purchasing, (2) receiving, (3) accounts payable,
and (4) cash disbursements. In objective-focused
cases, the same 20 procedures were discussed
under control objectives that included (1) autho-
rization, (2) accuracy, (3) completeness, and (4)
validity. Both the process-focused and objective-
focused versions of a case contained identical
sentences except for transition words and phrases.
Procedures
This study involved three phases. During the
?rst phase, the novice participants received
instruction about how to evaluate internal controls
using either process-focused or objective-focused
training materials. They were given the opportu-
nity to ask questions about the training materials,
then they evaluated a training case. The case given
to the participants was compatible with the
knowledge structure in which they received
instruction. The instructor (one of the authors)
used the case to explain internal control concepts
and discuss each of the 20 speci?c internal control
procedures. During this discussion, the instruc-
tor described conditions that would represent
strengths or weaknesses in the system of internal
controls. Paragraph by paragraph, the instructor
demonstrated how the wording in the narrative
could be used to identify whether an internal
control procedure was being followed. At the end
of the ?rst phase, participants were provided with
a written copy of the solution to the case, and they
were instructed to review these materials before the
next training session.
Five days after phase one participants returned
for phase two. Participants began phase two by
completing a demographic questionnaire. Then
they evaluated a new case and identi?ed internal
control strengths and weaknesses. As in phase one,
the version of the case they evaluated during phase
two was compatible with the knowledge structure
in which they received instruction. First, partici-
pants were asked to evaluate internal control
without the use of any of the instructional mate-
rials provided to them during the ?rst session.
Then, they were allowed to review their evaluation
using instructional materials from the ?rst session.
Using a discussion format, the instructor identi?ed
the internal control strengths and weaknesses
verbally on a paragraph-by-paragraph basis. At
the end of the second phase, participants were
provided with a written solution and asked to re-
view all instructional materials in preparation for
the internal control evaluation they would perform
in the next session.
Two days after phase two participants returned
for the third phase. During the third phase, par-
ticipants were instructed to evaluate a di?erent
case and document all control issues (i.e., internal
control strengths and weaknesses). They were not
allowed to use any of the instructional materials
used in the prior sessions. All participants com-
pleted the task within the 30 min allowed (a period
of time that a pilot study indicated would be suf-
?cient). After giving the instructor their docu-
mentation, participants completed a debrie?ng
questionnaire and were then asked to sort the 20
internal controls discussed during the training
phase into four unlabeled categories. Consistent
with Nelson et al. (1995), sorting internal controls
into a predetermined number of categories was
used to hold constant the level of detail in the
participants’ sorts.
Results
During the internal control evaluation phase of
the experiment, participants spent an average of 16
min evaluating case materials and documenting
their ?ndings. On average, they listed ?ve control
issues, including four of the 13 internal control
strengths seeded to the case materials and one of
the seven internal control weakness. While this
level of performance would be considered deplor-
able for auditors, it may not be unreasonable for
novices who have had only a few hours of
instruction and practice, no formal auditing
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 429
training, and no ?eld experience. This exercise
would be considered a relatively simple auditing
task. However, after completing the task, partici-
pants rated the di?culty level at almost seven on
an 11-point scale where zero represented ‘‘not at
all di?cult’’ and 10 represented ‘‘extremely di?-
cult’’. Rating the di?culty level above the mid-
point could be expected of novices with very little
training who tried hard but were not able to per-
form as well as experienced auditors.
Quantifying variables
Our ?rst hypothesis states that participants
who were trained with process-focused materials
will develop stronger category knowledge than
participants who used objective-focused training
materials. We calculated cophenetic correlations
(Sneath & Sokal, 1973) between the categories of
internal controls that participants used during
the training phase and groups of internal controls
that they created during the free-sort task, a
technique that was employed in similar studies by
Nelson et al. (1995) and Bonner et al. (1997).
For participants who received process-focused
training materials, strength of category knowledge
was measured using the correlation coe?cients for
categories from the process-focused training
materials. Strength of category knowledge for
participants assigned to the objective-focused
training condition was calculated using the coe?-
cients for objective-focused training categories.
This metric provides an indication of the extent to
which participants used the categories they learned
during the training phase as an organizing frame-
work for their category knowledge of internal
control procedures. In other words, it measures the
extent to which category knowledge has become
well de?ned. Before testing our ?rst hypothesis, we
evaluated the validity of our measure for the
strength of category knowledge.
Validity checks
If cophenetic correlations provide a reliable
surrogate for strength of category knowledge, then
each participant’s coe?cients for process-focused
categories should be negatively correlated with
their coe?cients for objective-focused categories (a
?nding reported by Bonner et al., 1997). Because
participants had no opportunity to develop cate-
gory knowledge before this experiment (they were
taking their ?rst accounting course and they re-
ported having no accounting experience), the
correlation coe?cients measure the extent to
which the categories they developed during the
sorting task match the categories learned during
the training phase. There is a negative Pearson
correlation of 0.34 between the process-focused
and the objective-focused measures (one-tailed p-
value ¼0.0008), which suggests that these two
measures di?erentiate types of category knowl-
edge.
As category knowledge becomes stronger, the
cognitive demands of an evaluative judgment task
decrease, and the level of di?culty diminishes
(Schank, 1999). Accordingly, if cophenetic corre-
lations provide a reliable surrogate for strength of
category knowledge, then that metric should be
negatively correlated with the perceived di?culty
of the task. During the debrie?ng questionnaire,
participants rated the average di?culty of the task
at 6.75 on a an 11-point scale (0 ¼‘‘not at all dif-
?cult’’, 10 ¼‘‘extremely di?cult’’). There is a
negative Pearson correlation of 0.22 (one-tailed p-
value ¼0.0211) between participants’ di?culty
ratings and the strength of their category knowl-
edge (measured using cophenetic correlation
coe?cients). Because there was no di?erence in the
average ACT scores or GPA across the four
experimental conditions, it unlikely that this result
was driven by between-subjects di?erences in
learning ability. Therefore, this negative correla-
tion suggests that participants with more well-
de?ned knowledge categories for internal control
procedures found the task to be less di?cult
and provides further support for the validity of
our surrogate measure for strength of category
knowledge.
Hypothesis tests
Our ?rst research hypothesis predicts that
novices trained with materials organized around
process-focused categories will develop stronger
category knowledge than novices trained with
430 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
objective-focused materials. We evaluated our ?rst
hypothesis by using analysis of variance to test
whether category knowledge was as strong for
participants in the objective-focused training con-
ditions as it was for participants in the process-
focused training condition. Because the data used
to quantify strength of category knowledge was
gathered after the evaluation task, we included a
task structure variable in the model to control for
the main and interactive in?uence that alternative
structures might have had on the development
of category knowledge. Results are presented in
Table 1.
Category knowledge was stronger for partici-
pants assigned to the process-focused training
condition. Adjusted cell means for strength of
category knowledge (measured using cophenetic
correlation coe?cients) were 0.34 for the process-
focused training group, which was signi?cantly
ðp < 0:05Þ greater than the average of 0.22 for
participants assigned to the objective-focused
training condition. While these cophenetic corre-
lations appear low, they are comparable to audi-
tors’ cophenetic correlations (range 0.01 to 0.31) in
a previous study examining internal control (Davis
& Davis, 1998). These ?ndings suggest that using a
process focus to organize training materials
around a story line can help novices develop
stronger category knowledge, which provides evi-
dence supporting our ?rst research hypothesis.
Our second research hypothesis predicts that,
during a internal control evaluation task, novices
who use a process-focused task structure will
identify more control issues than participants who
use an objective-focused task structure. We eval-
uated this hypothesis by using analysis of variance
to test whether novices assigned to the process-
focused condition identi?ed more control issues
than novices assigned to the objective-focused
condition, while controlling for the in?uence of
di?erences in training. Results are presented in
Table 2.
Participants who used a process-focused task
structure identi?ed an average of 6.00 control is-
sues, which is signi?cantly ðp < 0:01Þ higher than
the average of 4.05 control issues identi?ed by
participants assigned to the objective-focused task
structure. The types of categories used for training
had no main or interactive in?uence on the num-
ber of control issues that participants identi?ed.
These ?ndings suggest that using a process focus
to structure internal control evaluation tasks can
help novices identify more control issues, which
provides evidence supporting our second research
hypothesis.
Additional analysis
As discussed above, prior research has shown
that decision performance improves as category
Table 1
Category knowledge developed during training
DF Sum of squares F -statistic
Panel A: Analysis of variance
Dependent variable ¼strength of category knowledge (cophenetic correlations)
Model 3 0.30 1.69
Error 78 4.74
Process-focused training ðTÞ 1 0.28 4.69
Process-focused task structure ðSÞ 1 0.01 0.10
Interaction ðT Â SÞ 1 0.02 0.44
Process-focused training Objective-focused training Condition mean
Panel B: Cell means
Process-focused task structure 0.31 ðn ¼ 24Þ 0.23 ðn ¼ 20Þ 0.28 t ¼ 1:10
Objective-focused task structure 0.36 ðn ¼ 20Þ 0.21 ðn ¼ 18Þ 0.27 t ¼ 1:93
Condition mean 0.34 0.22 t ¼ 2:17
t ¼ 0:72 t ¼ 0:23 t ¼ 0:32
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 431
knowledge increases. Results presented in Table 1
suggest that process-focused training produced
stronger category knowledge than objective-
focused training. However, results presented in
Table 2 suggest that type of training had no
in?uence on task performance. To examine these
associations further, we conducted a direct test of
the joint in?uence of category knowledge and task
structure by regressing the number of control is-
sues documented on (1) a dummy variable indic-
ative of task structure, (2) strength of category
knowledge measured by cophenetic correlations,
and (3) the interaction between those two vari-
ables. Results are presented in Table 3.
Both process-focused task structure and
strength of category knowledge have a signi?cant,
positive in?uence on the number of control issues
documented, but the interaction term is not sig-
ni?cant. These ?ndings suggest that using busi-
ness-process categories to organize control
evaluation tasks improves performance. Further-
more, the bene?ts of a process-focused task
structure accrue over and above the bene?ts of
developing strong category knowledge.
Discussion
Results from this study suggest (a) that using
process-focused categories when training novices
to perform internal control evaluation can enhance
category learning and (b) that organizing decision
support information around a process focus can
help novice auditors make better decisions. Fur-
thermore, these ?ndings suggest that using a pro-
cess-focused task structure in?uences novices’
judgment above and beyond the in?uence of the
category knowledge that they bring to the task. At
Table 2
Performance during internal control evaluation
DF Sum of squares F -statistic
Panel A: Analysis of variance
Dependent variable ¼number of control strengths and weaknesses documented
Model 4 77.44 2.00
Error 77 1005.77
Process-focused training ðTÞ 1 0.06 0.00
Process-focused task structure ðSÞ 1 76.68 5.95
Interaction ðT Â SÞ 1 0.06 0.00
Process-focused
training
Objective-focused
training
Condition mean
Panel B: Cell means
Process-focused task structure 6.00 ðn ¼ 24Þ 6.00 ðn ¼ 20Þ 6.00 t ¼ 0:00
Objective-focused task structure 4.00 ðn ¼ 20Þ 4.11 ðn ¼ 18Þ 4.05 t ¼ 0:09
Condition mean 5.00 5.05 t ¼ 0:07
t ¼ 1:83 t ¼ 1:61 t ¼ 2:44
Table 3
The in?uence of category knowledge and task structure on performance during internal control evaluation
Parameter estimate T-statistic One-tailed P-value
Intercept 1.87 2.54 0.0066
Process-focused task structure (PTS) 2.02 1.98 0.0208
Strength of category knowledge (SCN) 7.41 3.98 0.0001
Interaction (PTS· SCN) 0.19 0.07 0.9428
OLS regression model: perform¼ b
0
+b
1
PFE+b
3
(PFT· SCN) +e; r-square ¼0.33; f -statistic ¼13.05; p-value ¼0.0001.
Perform¼number of control strengths and weaknesses documented.
432 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
least for novices, a process-focused task structure
appears to help them identify control issues better
than an objective-focused task structure.
Research has shown that, when people encoun-
ter a task structure that does not match their
knowledge structures, they tend to re-structure task
speci?c information to conform to category
knowledge and, as a result, decision performance
can su?er (Nelson et al., 1995; Bonner et al., 1997).
Future research could examine whether the need to
re-structure task information when auditors with
process-focused knowledge structures use an
objective-focused task structure to evaluate con-
trols accounts for di?erences in performance.
This study extends our understanding of how
the process focus can in?uence evaluative judg-
ment. However, while students taking their ?rst
accounting course were appropriate subjects for
this study, their performance is not necessarily
indicative of the performance of experienced
auditors in the ?eld and the generalizability of these
results will be limited. Future research should
examine whether the proceduralized knowledge
that develops through task-speci?c experience
changes associations between category knowledge,
task structure, and decision performance.
Another limitation of this study must be con-
sidered when evaluating our results. Because we
did not establish a baseline measure for strength
of category knowledge before we began the
training phase, we do not know how strong an
e?ect that our training manipulation had on the
development of categorical structures in memory.
Evidence from our test of hypothesis one dem-
onstrates that training altered category knowl-
edge. However, we only measured the strength of
category knowledge structures after the training
had been delivered. It could be that the students
who participated in this experiment were more
familiar with business-process categories like
purchasing and receiving than they were with
control-objective categories like authorization and
completeness. If so, the familiarity they brought
to the training sessions may have in?uenced their
learning experience and could be confounding the
?nding that process-focused categories resulted
in stronger category knowledge than objective-
focused categories.
Research on how the business-risk audit meth-
odology in?uences judgment has just begun to
examine the e?ect of using alternative task struc-
tures for providing decision information to audi-
tors (Ballou & Heitger, 2003). In a study where
novices evaluated information about tests of con-
trols, a process-focused task structure produced
di?erent reliability judgments than an objective-
focused task structure (O’Donnell, 2003). In a
study where experienced auditors evaluated a
strategic auditing case, those who used a business-
process-focused task structure recognized more
seeded risk factors than auditors who used the
?nancial-statement-category task structure pro-
vided by their ?rm’s audit support software
(O’Donnell & Schultz, 2003). Taken together, the
?ndings of this study and the research described
above suggest that delivering decision information
in a way that makes it easier for auditors to con-
struct a story line can enhance decision perfor-
mance. The challenge for future research is to
determine (a) why the process focus in?uences
auditor cognition, (b) when alternative task
structures can help and hinder auditor judgment,
and (c) how to optimize the bene?ts of decision
support systems that are organized around a ?ow
of events rather than a listing of attributes.
Acknowledgements
We are grateful for the helpful suggestions we
received from Steve Kaplan, Fred Phillips and
from participants at the 2002 ABO Section Re-
search Conference and the 2003 Auditing Section
Mid-Year Meeting of the American Accounting
Association.
References
American Institute of Certi?ed Public Accountants, Statement
on Auditing Standards No. 78: Consideration of Internal
Control in a Financial Statement Audit: An Amendment to
SAS No. 55. New York: American Institute of Certi?ed
Public Accountants, Inc. 1995.
Anderson, J. (1982). Acquisition of cognitive skill. Psycholog-
ical Review, 89(4), 396–406.
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 433
Ballou, B., & Heitger, D., (2003). Judgment and Decision
Making Research in a Dynamic Auditing Environment.
Working paper, University of Miami, Ohio.
Boland, R., Singh, J., Salipante, P., Aram, J., Fay, S., &
Kanawattanachai, P. (2001). Knowledge representations
and knowledge transfers. Academy of Management Journal,
44(2), 393–417.
Bonner, S., Libby, R., & Nelson, M. (1997). Audit category
knowledge as a precondition to learning from experience.
Accounting, Organizations and Society, 22(5), 387–410.
Bonner, S., & Walker, P. (1994). The e?ects of instruction and
experience on the acquisition of auditing knowledge. The
Accounting Review, 69(1), 157–178.
Curtis, M., & Borthick, F., (2002). Accelerating the acquisition of
knowledge structure to improve performance in internal control
evaluation. Working paper, University of North Texas.
Curtis, M., & Viator, R. (2000). An investigation of multidi-
mensional knowledge structure and computer auditor per-
formance. Auditing: A Journal of Practice and Theory, 19(2),
83–103.
Davis, C., & Davis, E. (1998). Audit task and audit method-
ology as determinants of auditors’ elicitation of alternative
knowledge organization structures. Advances in Accounting
Behavioral Research, 1, 101–121.
Day, E., Arthur, W., & Gettman, D. (2001). Knowledge
structures and the acquisition of a complex skill. Journal of
Applied Psychology, 86(5), 1022–1033.
Devine, D., & Kozlowski, S. (1995). Domain-speci?c knowledge
and task characteristics in decision making. Organizational
Behavior and Human Decision Processes, 64(3), 294–306.
Eilifsen, A., Knechel, W., & Wallage, P. (2001). Application of
the business risk audit model: a ?eld study. Accounting
Horizons, 15(3), 193–208.
Frederick, D. (1991). Auditors’ representation and retrieval of
internal control knowledge. The Accounting Review, 66(2),
240–258.
Frederick, D., Heiman-Ho?man, V., & Libby, R. (1994). The
structure of auditors’ knowledge of ?nancial statement
errors. Auditing: A Journal of Practice and Theory, 13(1), 1–
21.
Glaser, R. (1990). The reemergence of learning theory within
instructional research. American Psychologist, 45(1), 29–39.
Kersten, A., & Billman, D. (1997). Event category learning.
Journal of Experimental: Psychology: Learning, Memory,
and Cognition, 23(6), 638–658.
Kinney, W., (1997). Foreword, auditing organizations through a
strategic-systems lens. KPMG Peat Marwick, LLP.
Klein, G. (1998). Sources of power Cambridge. MA: The MIT
Press.
Lemon, M., Tatum, K., & Turley, W. (2000). Developments in
the audit methodologies of large accounting ?rms. London,
UK: ABG Professional Information.
Libby, R., & Luft, L. (1993). Determinants of judgment
performance in accounting settings: ability, knowledge,
motivation, and environment. Accounting, Organizations
and Society, 18(5), 425–450.
Nelson, M. (1993). The e?ects of error frequency and account-
ing knowledge on error diagnosis in analytical review. The
Accounting Review, 68(4), 803–824.
Nelson, M. (1994). The learning and use of frequency
information in auditing. Journal of Accounting Literature,
13, 185–211.
Nelson, M., Libby, R., & Bonner, S. (1995). Knowledge
structure and the estimation of conditional probabilities in
audit planning. The Accounting Review, 70(1), 27–47.
O’Donnell, E. (2003). The in?uence of process-focused knowl-
edge acquisition on evaluative judgment during a systems
assurance task. International Journal of Accounting Infor-
mation Systems, 4(2), 115–139.
O’Donnell, E., & Schultz, J., (2003). The in?uence of business-
process-focused audit support software on analytical pro-
cedures judgments. Auditing: A Journal of Practice and
Theory, forthcoming.
Pennington, N., & Hastie, R. (1986). Evidence evaluation in
complex decision making. Journal of Personality and Social
Psychology, 51(2), 242–258.
Pennington, N., & Hastie, R. (1988). Explanation-based deci-
sion making E?ects of memory structure on judgement.
Journal of Experimental Psychology: Learning, Memory and
Cognition, 13(3), 521–533.
Ricchiute, D. (1992). Working-paper order e?ects and auditors’
going-concern decisions. The Accounting Review, 67(1), 46–
58.
Schank, R. (1999). Dynamic memory revisited. New York, NY:
Cambridge University Press.
Sneath, P., & Sokal, R. (1973). Numerical taxonomy. San
Francisco: W.H. Freeman.
Tubbs, R. (1992). The e?ect of experience on the auditor’s
organization and amount of knowledge. The Accounting
Review, 67(4), 783–801.
434 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
doc_629010365.pdf
This study examines whether organizing information about internal controls around business processes instead of
control objectives produces stronger category knowledge during training and improves decision performance during
internal control evaluation. Novices who were trained to evaluate internal controls using business-process-focused
materials developed stronger category knowledge. After training, novices who evaluated internal controls using
materials organized around a process focus identified more control issues during a control evaluation task. Findings
suggest that the process focus may be a more effective framework for organizing internal control evaluation tasks.
The in?uence of a business-process focus on category
knowledge and internal control evaluation
Lori S. Kopp
a,
*
, Ed O’Donnell
b
a
Faculty of Management, University of the Lethbridge, Lethbridge, AB, Canada T1K 3M4
b
W.P. Carey School of Business, Arizona State University, P.O. Box 873606, Tempe, AZ 85287-3606, USA
Abstract
This study examines whether organizing information about internal controls around business processes instead of
control objectives produces stronger category knowledge during training and improves decision performance during
internal control evaluation. Novices who were trained to evaluate internal controls using business-process-focused
materials developed stronger category knowledge. After training, novices who evaluated internal controls using
materials organized around a process focus identi?ed more control issues during a control evaluation task. Findings
suggest that the process focus may be a more e?ective framework for organizing internal control evaluation tasks.
Ó 2004 Elsevier Ltd. All rights reserved.
Introduction
Assurance services ?rms generally use one of
two alternative task structures to organize the
information that their auditors evaluate during
?nancial statement audits. They employ either a
categories-of-business-processes focus or a cate-
gories-of-control-objectives focus (Lemon, Tatum,
& Turley, 2000). For example, while evaluating the
reliability of internal controls, auditors with ?rms
that use the process focus learn about client
operations with information that has been cate-
gorized by business process, like procurement, in-
bound logistics, and sales. On the other hand,
auditors who work for ?rms that use the objec-
tive focus learn with information categorized by
control objectives, like authorization, accuracy,
and completeness (Curtis & Viator, 2000). For
most tasks, auditors acquire the same information
under either task structure. The di?erence is the
categories used to organize and present that
information (Frederick, 1991).
The category knowledge that auditors develop
through training and experience becomes a sig-
ni?cant element of their expertise (Tubbs, 1992;
Frederick, Heiman-Ho?man, & Libby, 1994).
Auditors with well-developed category knowledge
tend to perform better than auditors with less-well-
developed category knowledge (Bonner, Libby, &
Nelson, 1997). However, when the categories used
to present decision information do not match the
categories that auditors use to store knowledge in
memory, decision performance can su?er (Nelson,
Libby, & Bonner, 1995).
This study examines two research ques-
tions. First, does organizing training materials
around business-process categories rather than
*
Corresponding author.
E-mail addresses: [email protected] (L.S. Kopp), ed.
[email protected] (E. O’Donnell).
0361-3682/$ - see front matter Ó 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2004.03.004
Accounting, Organizations and Society 30 (2005) 423–434
www.elsevier.com/locate/aos
control-objective categories help untrained novices
develop stronger category knowledge? Category
knowledge becomes stronger when the mental
structures that people use to store information
become more clearly de?ned, which enhances their
ability to encode and remember the information
that they acquire (Day, Arthur, & Gettman, 2001).
Second, does structuring internal control evalua-
tion tasks around a process focus rather than an
objective focus help trained novices perform better
by creating a more consistent mapping between
the way decision information is presented and the
way they organize knowledge in memory? We
provide evidence that the answer to both questions
is yes.
The debate about whether the process focus
provides a more e?ective task structure for evalu-
ating client-speci?c information than the objective
focus is currently being waged in audit practice
(Lemon et al., 2000). In response to changing
economic conditions, several of the largest assur-
ance services ?rms have adopted a process-focused
audit methodology while other ?rms continue to
use the objective-focused approach (Eilifsen,
Knechel, & Wallage, 2001). Not surprisingly, ?rms
that use a process focus in the ?eld also use a
process focus in their training programs (Ballou &
Heitger, 2003). If assurance services ?rms are not
careful to match the structure of their audit pro-
cedures with the category knowledge that their
auditors develop through ?rm training and ?eld
experience, audit performance could su?er.
We examined the in?uence of these alternative
task structures in the context of internal control
evaluation. Internal controls are oversight prac-
tices and processing constraints an organization
uses to help ensure that its assets are protected
from misappropriation and its systems provide
reliable information about business transactions.
During an assurance engagement, professional
standards require that auditors evaluate the reli-
ability of this system of internal controls before
they design their auditing tests (American Institute
of Certi?ed Public Accountants, 1995). Establish-
ing an e?ective system of internal controls has
become a central issue in corporate governance
because of the Sarbanes–Oxley Act that was re-
cently enacted by the United States government.
This legislation establishes accountability for the
system of internal controls at the level of the cor-
porate board of directors and imposes penalties
for non-compliance.
Frederick (1991) demonstrated that auditing
students who learn about controls from docu-
mentation that has been organized around trans-
action ?ows remembered that information more
e?ectively than novices who used documentation
organized around categories of control objectives.
Our study extends Frederick’s work on knowledge
organization by evaluating how task structure
in?uences decision performance during a diag-
nostic auditing procedure. We examine whether
novices who perform control evaluations using
documentation that has been structured around
business process ?ows can recognize control issues
more e?ectively than auditors who use documen-
tation structured around categories of control
objectives.
The ?ndings from this study have implications
for both audit practice and decision-making re-
search. With respect to training, strengthening
category knowledge through exercises struc-
tured around process-focused categories could
help assurance services ?rms and academics teach
aspiring auditors more e?ectively. Evidence that
category type in?uences learning extends the lit-
erature on knowledge development by contribut-
ing to our understanding of the association
between training structure and knowledge acqui-
sition. Regarding decision performance, if the
process focus provides a more e?ective structure
for internal control evaluation then assurance
services ?rms may want to re-evaluate how their
decision support systems present information to
auditors in the ?eld. Evidence that a process-
focused task structure improves decision perfor-
mance extends the literature on decision-making
by contributing to our understanding of the asso-
ciation between information presentation and hu-
man ability to integrate and evaluate decision cues.
Theoretical framework
This study examines how alternative category
structures a?ect (a) the development of category
424 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
knowledge and (b) decision performance during an
information processing task. Prior auditing re-
search has demonstrated that training can in?u-
ence the development of category knowledge
(Bonner et al., 1997) and that stronger category
knowledge can improve judgment in a variety of
auditing decision contexts (see Nelson, 1994 for a
review). This study examines whether using busi-
ness-process categories rather than control-objec-
tive categories for training novices to evaluate
internal controls fosters the development of
stronger category knowledge.
Prior research has also demonstrated that pro-
cess-focused task structures in?uence recall di?er-
ently from objective-focused task structures
(Frederick, 1991) and that a mismatch between the
categories used to structure an audit task and the
categories auditors use to store knowledge in
memory can impair decision performance (Nelson
et al., 1995). This study examines whether using
business-process categories rather than control-
objective categories to structure an internal control
evaluation task fosters superior decision perfor-
mance.
Audit judgment researchers who have com-
pared a process focus with an objective focus have
hypothesized that di?erences between these alter-
native category structures result from the di?er-
ences in the way that categories are linked to each
other. For example, Frederick (1991) explains that
the information components in process-focused-
categories are linked by temporal and/or spatial
relationships while the information components of
objective-focused categories are linked by classi?-
cations of features. He suggests that process-
focused categories can enhance the accessibility of
knowledge stored in memory because temporal
a?liations provide more or better-ordered re-
trieval cues.
Schank (1999, pp. 1–20) describes how human
information processing relies on memory processes
and the categorical structures used to organize the
information stored in memory––the knowledge
that people bring to a decision task. Memory
processes involve instantaneous, automatic cogni-
tion that can be characterized as indexing. People
need a memory index to store new information,
retrieve existing knowledge, and create new indices
for novel information. The human mind searches
this indexing system without conscious e?ort
whenever a new input enters the realm of sensory
perception. In essence, when people process
information, the mind consults a mental index,
which provides a link to memory structures that
store the knowledge needed to understand and
interpret the information.
Schank’s (1999, pp. 107–122) theory of dynamic
memory suggests that human memory is organized
by categories––hierarchical mental structures that
group knowledge by common characteristics. The
memory index provides a map for navigating be-
tween higher-level categories that contain more
general knowledge and lower-level categories that
contain the details. Memory processes are con-
structive in nature. The mind relies on the memory
index to establish links among related categories
and assemble relevant knowledge each time a new
item of information is processed. During decision-
making tasks, sub-conscious cognitive processes
construct the necessary context, procedures, and
criteria on demand, when new information is
integrated with knowledge stored in memory (also
see Libby & Luft, 1993).
Schank (1999, pp. 21–40) believes that the cat-
egories used to store information in memory have
a signi?cant in?uence on the outcome of a decision
task. When categories are well-de?ned, a quality
that results from learning, the indexing process has
a greater chance of properly classifying a decision
cue. When the mind tries to index a cue using
poorly de?ned categories, classi?cation errors be-
come more likely and decision performance can
su?er because classifying a decision cue improperly
(by associating it with the wrong category) results
in misinterpreting the cue.
Schank (1999, pp. 89–106) describes how people
naturally tend to categorize their knowledge in
terms of temporally organized series of events and
related constructs. The high-level mental struc-
tures that the human mind uses to access catego-
ries of detailed information tend to be organized
around temporal sequences of events or ‘‘story
lines’’. At the highest level, memory indexing
processes begin by accessing or constructing a
story line that provides context for the information
being acquired. A story line provides the basis for
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 425
interpreting new decision cues by activating cate-
gories of more detailed information related to the
active story line. In other words, using a story line
to organize the memory indexing process helps
prevent cues from being interpreted out of context
(by being associated with the wrong knowledge
category).
Frederick (1991) examined how the structure of
information about internal controls in?uenced
ability to remember speci?c controls for both
experienced auditors and undergraduate account-
ing students (novices). He found that experienced
auditors who received documentation organized
around transaction ?ow story lines (schematic
organization) recalled more speci?c controls than
auditors who received documentation organized
around categories of control objectives (taxonomic
organization). However, the type of categories
used to organize control documentation had no
in?uence on novices’ ability to recall speci?c con-
trols, which suggests that at least some of the
bene?ts of using a process-focused task structure
may develop as a result of training and experience.
Frederick (1991) also found that both experi-
enced auditors and novices tended to cluster the
controls better when they used transaction-?ows-
story-line documentation than when they used
control-objectives documentation. In other words,
controls recalled under a process-focused task
structure more closely followed the sequence in
which the controls were presented than did con-
trols recalled under the objectives-focused task
structure. These ?ndings support the notion that
people tend to rely on mental representations that
organize knowledge around memory structures
organized like story lines rather than by categories
of attributes.
Research has demonstrated that structuring
information around story lines can improve deci-
sion performance. Pennington and Hastie (1986)
found that jurors, who were presented with evi-
dence grouped by descriptive classi?cations tended
to re-arrange that evidence into a mental repre-
sentation that provided a story line about what
happened. The story lines that they constructed
provided a context for evaluating their choice of
verdicts. In another series of experiments Pen-
nington and Hastie (1988) found (a) that vari-
ability in the story lines people create corresponds
to variability in their decisions and (b) that people
construct and use story lines to provide a context
for decision making. In a study where experienced
auditors evaluated the likelihood that their client
could stay in business, case materials structured
around a story line had a stronger in?uence on
going-concern judgments than case materials
structured by categories of ?nancial attributes
(Ricchiute, 1992).
In summary, Shank’s theory suggests that (a)
people who develop stronger categorical knowl-
edge structures are likely to make better decisions
because they can process information more e?ec-
tively and (b) because people naturally tend to
think in story lines, they can process information
more e?ectively when that information is orga-
nized around series of temporally related events (a
story). Research has provided evidence supporting
both of these propositions.
Training categories
Category knowledge becomes stronger as the
mental structures used to group and store knowl-
edge become more well de?ned (Glaser, 1990). As
category knowledge becomes stronger, decision
performance generally improves (Day et al., 2001).
In auditing contexts, for example, stronger cate-
gory knowledge leads to a better understanding of
frequency distributions for ?nancial statement er-
rors (Nelson, 1993). Auditors with stronger cate-
gory knowledge can process information about
client activities more e?ectively and develop more
accurate expectations about the probability that a
speci?c event has occurred (Nelson et al., 1995).
Novices with stronger category knowledge can
also learn from subsequent experience better than
novices with less well-developed category knowl-
edge (Bonner et al., 1997).
Category knowledge develops through training
and experience. During internal control evalua-
tion, performance improves as the category
knowledge that novices develop through training
becomes stronger (Curtis & Viator, 2000). Train-
ing materials organized around categories of
attributes that link together to form a causal chain
of correlated events produce stronger category
426 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
knowledge than training materials organized
around categories where the causal path is less
obvious (Kersten & Billman, 1997). Schank (1999)
believes that, because the human mind naturally
tends to organize environmental cues around a
story line, learning becomes more di?cult when
information is organized around categories of
attributes that do not form a story. He suggests
that, without a story line to follow, it is more
di?cult to (a) construct categories for storing new
information and (b) link those categories to the
memory index.
If individuals increase the strength of their
knowledge structures when they think in stories,
then novices should be able to learn more e?ec-
tively when training programs are organized
around story lines. Using a process focus for
internal control evaluation provides a distinct
story line not provided when using the control-
objective focus. These associations between ability
to learn and the types of categories used to struc-
ture the learning environment give rise to our ?rst
research hypothesis:
H1: Novices who learn how to perform inter-
nal control evaluation using materials orga-
nized around a business-process focus will
develop stronger category knowledge than
novices who learn about this task using mate-
rials organized around a control-objective
focus.
Task structure
Category structures a?ect judgment by in?u-
encing the knowledge representations that people
construct from memory (Boland et al., 2001).
Altering the way that task-speci?c information is
presented changes the structure of the task, which
interacts with the structure of knowledge stored in
memory and in?uences decision performance
(Devine & Kozlowski, 1995).
Schank (1999, pp. 89–106) suggests that people
tend to make more e?ective decisions when they
can simply retrieve a story line from memory ra-
ther than having to construct a story line from
decision information. People naturally tend to
think in terms of stories. When decision tasks are
structured around a story line, memory indexing
processes involve retrieving a comparable story
line and using links provided by that mental
structure to activate related categories of infor-
mation. However, when decision tasks are struc-
tured around categories of attributes other than
story lines, the mind must construct an appropri-
ate story line before the indexing process can
begin.
The bene?ts of organizing information around
story lines have been examined in various decision
contexts. Klein (1998) describes how people rely
on stories they construct from experience-based
memories to evaluate the plausibility of decision
alternatives. He explains that, in naturalistic deci-
sion-making contexts, people construct a story
about how a potential decision will play out when
they evaluate a novel decision alternative. Kinney
(1997) believes that auditors who learn the story of
value creation will be in a better position to rec-
ognize potential audit problems (because they
have more completely activated their category
knowledge of business processes). O’Donnell and
Schultz (2003) found that auditors who used case
materials organized around business process cate-
gories were able to identify more risk factors
during analytical procedures than auditors who
used materials organized around ?nancial state-
ment categories.
If task structures that organize information
around a story line are less likely to result in
construction errors, and if process-focused task
structures provide a story line, then process-
focused task structures should be less likely to
foster interpretation errors than objective-focused
task structures. In other words, decision perfor-
mance should be better for tasks where decision
information is organized around business-process
categories rather than tasks organized around
control-objective categories. These associations
between task structure and decision performance
give rise to our second research hypothesis:
H2: Novices who perform an internal control
evaluation task using information organized
around business-process categories will be
able to identify more control issues than
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 427
novices who evaluate information organized
around control-objective categories.
Method
We tested our hypotheses in a laboratory
experiment where participants with no audit train-
ing or experience learned about internal control
evaluation then evaluated case materials and iden-
ti?ed control issues. Our study was organized in a
two-by-two, crossed-factors design. One factor was
the type of categories used for training. Participants
learned about internal control evaluation either
with materials that organized information about
control procedures around business-process-cate-
gories or control-objective categories. The other
factor was the type of categories used to structure
the internal control evaluation case. Participants
received case materials that were organized around
either the same process-focused or objective-
focused categories used for training. Participants
were assigned to one of four groups so that the two
experimental factors would be crossed. For exam-
ple, about half of the participants who were trained
with the process-focused materials received the
business-process-focused internal control evalua-
tion case materials. The other half received the
control-objective-focused case materials.
Participants
One objective of this study was to examine
whether the type of categories used for training
would in?uence the development of category
knowledge. Therefore, it was essential to use par-
ticipants with no category knowledge. A total of
82 students enrolled in their ?rst undergraduate
accounting course participated in this experiment.
We chose students with no accounting training or
work experience because we wanted to test the
in?uence of the training that we provided without
the confounding in?uence of knowledge developed
from other courses or work experience. Prior re-
search has shown that students develop a domi-
nant internal control knowledge structure after
completing junior-level ?nancial and managerial
accounting courses (Curtis & Borthick, 2002). We
could not use experienced auditors as subjects
because task-speci?c experience provides proce-
dural knowledge that alters memory structures
(Anderson, 1982) and can in?uence the develop-
ment of category knowledge (Bonner & Walker,
1994). We could not use newly hired auditors be-
cause (a) their audit training, which provides
opportunities to develop category knowledge,
might not be uniform, (b) we would have no
control over the type of categories used during
their training, and (c) instruction provided to them
during their college education leads to develop-
ment of category knowledge.
The students who participated were novices
with regard to internal control evaluations. Dur-
ing their accounting course, they had received
instruction about what internal controls were and
why it was important for an organization to assess
internal control e?ectiveness. However, they had
received no instruction in either accounting infor-
mation systems or auditing and none of the par-
ticipants reported any experience in evaluating
internal controls.
Participation in the study was voluntary but
students who chose to participate received bonus
points in the class. To motivate performance, all
participants were eligible for a cash prize lottery
where the number of times their names were en-
tered into the drawing depended on their level of
task performance.
Of the 44 participants assigned to the process-
focused learning condition, 24 completed the
process-focused internal control evaluation case
and 20 completed the objective-focused internal
control evaluation case. Of the 38 participants
assigned to the objective-focused learning condi-
tion, 20 completed the process-focused internal
control evaluation case and 18 completed the
objective-focused internal control evaluation case.
Materials
All of the narrative cases used in this study were
adapted from accounting information systems or
auditing textbooks. Each narrative contained a
description of (a) the origin of every document and
record in the system, (b) all processing that takes
place, (c) the disposition of every document and
428 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
record in the system, and (d) an discussion of the
control issues of the purchasing cycle for a hypo-
thetical company.
Each case contained information about 20
speci?c internal control procedures, which were
taken from the list developed by Frederick (1991).
In process-focused cases, these procedures were
described in connection with activities related to
(1) purchasing, (2) receiving, (3) accounts payable,
and (4) cash disbursements. In objective-focused
cases, the same 20 procedures were discussed
under control objectives that included (1) autho-
rization, (2) accuracy, (3) completeness, and (4)
validity. Both the process-focused and objective-
focused versions of a case contained identical
sentences except for transition words and phrases.
Procedures
This study involved three phases. During the
?rst phase, the novice participants received
instruction about how to evaluate internal controls
using either process-focused or objective-focused
training materials. They were given the opportu-
nity to ask questions about the training materials,
then they evaluated a training case. The case given
to the participants was compatible with the
knowledge structure in which they received
instruction. The instructor (one of the authors)
used the case to explain internal control concepts
and discuss each of the 20 speci?c internal control
procedures. During this discussion, the instruc-
tor described conditions that would represent
strengths or weaknesses in the system of internal
controls. Paragraph by paragraph, the instructor
demonstrated how the wording in the narrative
could be used to identify whether an internal
control procedure was being followed. At the end
of the ?rst phase, participants were provided with
a written copy of the solution to the case, and they
were instructed to review these materials before the
next training session.
Five days after phase one participants returned
for phase two. Participants began phase two by
completing a demographic questionnaire. Then
they evaluated a new case and identi?ed internal
control strengths and weaknesses. As in phase one,
the version of the case they evaluated during phase
two was compatible with the knowledge structure
in which they received instruction. First, partici-
pants were asked to evaluate internal control
without the use of any of the instructional mate-
rials provided to them during the ?rst session.
Then, they were allowed to review their evaluation
using instructional materials from the ?rst session.
Using a discussion format, the instructor identi?ed
the internal control strengths and weaknesses
verbally on a paragraph-by-paragraph basis. At
the end of the second phase, participants were
provided with a written solution and asked to re-
view all instructional materials in preparation for
the internal control evaluation they would perform
in the next session.
Two days after phase two participants returned
for the third phase. During the third phase, par-
ticipants were instructed to evaluate a di?erent
case and document all control issues (i.e., internal
control strengths and weaknesses). They were not
allowed to use any of the instructional materials
used in the prior sessions. All participants com-
pleted the task within the 30 min allowed (a period
of time that a pilot study indicated would be suf-
?cient). After giving the instructor their docu-
mentation, participants completed a debrie?ng
questionnaire and were then asked to sort the 20
internal controls discussed during the training
phase into four unlabeled categories. Consistent
with Nelson et al. (1995), sorting internal controls
into a predetermined number of categories was
used to hold constant the level of detail in the
participants’ sorts.
Results
During the internal control evaluation phase of
the experiment, participants spent an average of 16
min evaluating case materials and documenting
their ?ndings. On average, they listed ?ve control
issues, including four of the 13 internal control
strengths seeded to the case materials and one of
the seven internal control weakness. While this
level of performance would be considered deplor-
able for auditors, it may not be unreasonable for
novices who have had only a few hours of
instruction and practice, no formal auditing
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 429
training, and no ?eld experience. This exercise
would be considered a relatively simple auditing
task. However, after completing the task, partici-
pants rated the di?culty level at almost seven on
an 11-point scale where zero represented ‘‘not at
all di?cult’’ and 10 represented ‘‘extremely di?-
cult’’. Rating the di?culty level above the mid-
point could be expected of novices with very little
training who tried hard but were not able to per-
form as well as experienced auditors.
Quantifying variables
Our ?rst hypothesis states that participants
who were trained with process-focused materials
will develop stronger category knowledge than
participants who used objective-focused training
materials. We calculated cophenetic correlations
(Sneath & Sokal, 1973) between the categories of
internal controls that participants used during
the training phase and groups of internal controls
that they created during the free-sort task, a
technique that was employed in similar studies by
Nelson et al. (1995) and Bonner et al. (1997).
For participants who received process-focused
training materials, strength of category knowledge
was measured using the correlation coe?cients for
categories from the process-focused training
materials. Strength of category knowledge for
participants assigned to the objective-focused
training condition was calculated using the coe?-
cients for objective-focused training categories.
This metric provides an indication of the extent to
which participants used the categories they learned
during the training phase as an organizing frame-
work for their category knowledge of internal
control procedures. In other words, it measures the
extent to which category knowledge has become
well de?ned. Before testing our ?rst hypothesis, we
evaluated the validity of our measure for the
strength of category knowledge.
Validity checks
If cophenetic correlations provide a reliable
surrogate for strength of category knowledge, then
each participant’s coe?cients for process-focused
categories should be negatively correlated with
their coe?cients for objective-focused categories (a
?nding reported by Bonner et al., 1997). Because
participants had no opportunity to develop cate-
gory knowledge before this experiment (they were
taking their ?rst accounting course and they re-
ported having no accounting experience), the
correlation coe?cients measure the extent to
which the categories they developed during the
sorting task match the categories learned during
the training phase. There is a negative Pearson
correlation of 0.34 between the process-focused
and the objective-focused measures (one-tailed p-
value ¼0.0008), which suggests that these two
measures di?erentiate types of category knowl-
edge.
As category knowledge becomes stronger, the
cognitive demands of an evaluative judgment task
decrease, and the level of di?culty diminishes
(Schank, 1999). Accordingly, if cophenetic corre-
lations provide a reliable surrogate for strength of
category knowledge, then that metric should be
negatively correlated with the perceived di?culty
of the task. During the debrie?ng questionnaire,
participants rated the average di?culty of the task
at 6.75 on a an 11-point scale (0 ¼‘‘not at all dif-
?cult’’, 10 ¼‘‘extremely di?cult’’). There is a
negative Pearson correlation of 0.22 (one-tailed p-
value ¼0.0211) between participants’ di?culty
ratings and the strength of their category knowl-
edge (measured using cophenetic correlation
coe?cients). Because there was no di?erence in the
average ACT scores or GPA across the four
experimental conditions, it unlikely that this result
was driven by between-subjects di?erences in
learning ability. Therefore, this negative correla-
tion suggests that participants with more well-
de?ned knowledge categories for internal control
procedures found the task to be less di?cult
and provides further support for the validity of
our surrogate measure for strength of category
knowledge.
Hypothesis tests
Our ?rst research hypothesis predicts that
novices trained with materials organized around
process-focused categories will develop stronger
category knowledge than novices trained with
430 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
objective-focused materials. We evaluated our ?rst
hypothesis by using analysis of variance to test
whether category knowledge was as strong for
participants in the objective-focused training con-
ditions as it was for participants in the process-
focused training condition. Because the data used
to quantify strength of category knowledge was
gathered after the evaluation task, we included a
task structure variable in the model to control for
the main and interactive in?uence that alternative
structures might have had on the development
of category knowledge. Results are presented in
Table 1.
Category knowledge was stronger for partici-
pants assigned to the process-focused training
condition. Adjusted cell means for strength of
category knowledge (measured using cophenetic
correlation coe?cients) were 0.34 for the process-
focused training group, which was signi?cantly
ðp < 0:05Þ greater than the average of 0.22 for
participants assigned to the objective-focused
training condition. While these cophenetic corre-
lations appear low, they are comparable to audi-
tors’ cophenetic correlations (range 0.01 to 0.31) in
a previous study examining internal control (Davis
& Davis, 1998). These ?ndings suggest that using a
process focus to organize training materials
around a story line can help novices develop
stronger category knowledge, which provides evi-
dence supporting our ?rst research hypothesis.
Our second research hypothesis predicts that,
during a internal control evaluation task, novices
who use a process-focused task structure will
identify more control issues than participants who
use an objective-focused task structure. We eval-
uated this hypothesis by using analysis of variance
to test whether novices assigned to the process-
focused condition identi?ed more control issues
than novices assigned to the objective-focused
condition, while controlling for the in?uence of
di?erences in training. Results are presented in
Table 2.
Participants who used a process-focused task
structure identi?ed an average of 6.00 control is-
sues, which is signi?cantly ðp < 0:01Þ higher than
the average of 4.05 control issues identi?ed by
participants assigned to the objective-focused task
structure. The types of categories used for training
had no main or interactive in?uence on the num-
ber of control issues that participants identi?ed.
These ?ndings suggest that using a process focus
to structure internal control evaluation tasks can
help novices identify more control issues, which
provides evidence supporting our second research
hypothesis.
Additional analysis
As discussed above, prior research has shown
that decision performance improves as category
Table 1
Category knowledge developed during training
DF Sum of squares F -statistic
Panel A: Analysis of variance
Dependent variable ¼strength of category knowledge (cophenetic correlations)
Model 3 0.30 1.69
Error 78 4.74
Process-focused training ðTÞ 1 0.28 4.69
Process-focused task structure ðSÞ 1 0.01 0.10
Interaction ðT Â SÞ 1 0.02 0.44
Process-focused training Objective-focused training Condition mean
Panel B: Cell means
Process-focused task structure 0.31 ðn ¼ 24Þ 0.23 ðn ¼ 20Þ 0.28 t ¼ 1:10
Objective-focused task structure 0.36 ðn ¼ 20Þ 0.21 ðn ¼ 18Þ 0.27 t ¼ 1:93
Condition mean 0.34 0.22 t ¼ 2:17
t ¼ 0:72 t ¼ 0:23 t ¼ 0:32
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 431
knowledge increases. Results presented in Table 1
suggest that process-focused training produced
stronger category knowledge than objective-
focused training. However, results presented in
Table 2 suggest that type of training had no
in?uence on task performance. To examine these
associations further, we conducted a direct test of
the joint in?uence of category knowledge and task
structure by regressing the number of control is-
sues documented on (1) a dummy variable indic-
ative of task structure, (2) strength of category
knowledge measured by cophenetic correlations,
and (3) the interaction between those two vari-
ables. Results are presented in Table 3.
Both process-focused task structure and
strength of category knowledge have a signi?cant,
positive in?uence on the number of control issues
documented, but the interaction term is not sig-
ni?cant. These ?ndings suggest that using busi-
ness-process categories to organize control
evaluation tasks improves performance. Further-
more, the bene?ts of a process-focused task
structure accrue over and above the bene?ts of
developing strong category knowledge.
Discussion
Results from this study suggest (a) that using
process-focused categories when training novices
to perform internal control evaluation can enhance
category learning and (b) that organizing decision
support information around a process focus can
help novice auditors make better decisions. Fur-
thermore, these ?ndings suggest that using a pro-
cess-focused task structure in?uences novices’
judgment above and beyond the in?uence of the
category knowledge that they bring to the task. At
Table 2
Performance during internal control evaluation
DF Sum of squares F -statistic
Panel A: Analysis of variance
Dependent variable ¼number of control strengths and weaknesses documented
Model 4 77.44 2.00
Error 77 1005.77
Process-focused training ðTÞ 1 0.06 0.00
Process-focused task structure ðSÞ 1 76.68 5.95
Interaction ðT Â SÞ 1 0.06 0.00
Process-focused
training
Objective-focused
training
Condition mean
Panel B: Cell means
Process-focused task structure 6.00 ðn ¼ 24Þ 6.00 ðn ¼ 20Þ 6.00 t ¼ 0:00
Objective-focused task structure 4.00 ðn ¼ 20Þ 4.11 ðn ¼ 18Þ 4.05 t ¼ 0:09
Condition mean 5.00 5.05 t ¼ 0:07
t ¼ 1:83 t ¼ 1:61 t ¼ 2:44
Table 3
The in?uence of category knowledge and task structure on performance during internal control evaluation
Parameter estimate T-statistic One-tailed P-value
Intercept 1.87 2.54 0.0066
Process-focused task structure (PTS) 2.02 1.98 0.0208
Strength of category knowledge (SCN) 7.41 3.98 0.0001
Interaction (PTS· SCN) 0.19 0.07 0.9428
OLS regression model: perform¼ b
0
+b
1
PFE+b
3
(PFT· SCN) +e; r-square ¼0.33; f -statistic ¼13.05; p-value ¼0.0001.
Perform¼number of control strengths and weaknesses documented.
432 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
least for novices, a process-focused task structure
appears to help them identify control issues better
than an objective-focused task structure.
Research has shown that, when people encoun-
ter a task structure that does not match their
knowledge structures, they tend to re-structure task
speci?c information to conform to category
knowledge and, as a result, decision performance
can su?er (Nelson et al., 1995; Bonner et al., 1997).
Future research could examine whether the need to
re-structure task information when auditors with
process-focused knowledge structures use an
objective-focused task structure to evaluate con-
trols accounts for di?erences in performance.
This study extends our understanding of how
the process focus can in?uence evaluative judg-
ment. However, while students taking their ?rst
accounting course were appropriate subjects for
this study, their performance is not necessarily
indicative of the performance of experienced
auditors in the ?eld and the generalizability of these
results will be limited. Future research should
examine whether the proceduralized knowledge
that develops through task-speci?c experience
changes associations between category knowledge,
task structure, and decision performance.
Another limitation of this study must be con-
sidered when evaluating our results. Because we
did not establish a baseline measure for strength
of category knowledge before we began the
training phase, we do not know how strong an
e?ect that our training manipulation had on the
development of categorical structures in memory.
Evidence from our test of hypothesis one dem-
onstrates that training altered category knowl-
edge. However, we only measured the strength of
category knowledge structures after the training
had been delivered. It could be that the students
who participated in this experiment were more
familiar with business-process categories like
purchasing and receiving than they were with
control-objective categories like authorization and
completeness. If so, the familiarity they brought
to the training sessions may have in?uenced their
learning experience and could be confounding the
?nding that process-focused categories resulted
in stronger category knowledge than objective-
focused categories.
Research on how the business-risk audit meth-
odology in?uences judgment has just begun to
examine the e?ect of using alternative task struc-
tures for providing decision information to audi-
tors (Ballou & Heitger, 2003). In a study where
novices evaluated information about tests of con-
trols, a process-focused task structure produced
di?erent reliability judgments than an objective-
focused task structure (O’Donnell, 2003). In a
study where experienced auditors evaluated a
strategic auditing case, those who used a business-
process-focused task structure recognized more
seeded risk factors than auditors who used the
?nancial-statement-category task structure pro-
vided by their ?rm’s audit support software
(O’Donnell & Schultz, 2003). Taken together, the
?ndings of this study and the research described
above suggest that delivering decision information
in a way that makes it easier for auditors to con-
struct a story line can enhance decision perfor-
mance. The challenge for future research is to
determine (a) why the process focus in?uences
auditor cognition, (b) when alternative task
structures can help and hinder auditor judgment,
and (c) how to optimize the bene?ts of decision
support systems that are organized around a ?ow
of events rather than a listing of attributes.
Acknowledgements
We are grateful for the helpful suggestions we
received from Steve Kaplan, Fred Phillips and
from participants at the 2002 ABO Section Re-
search Conference and the 2003 Auditing Section
Mid-Year Meeting of the American Accounting
Association.
References
American Institute of Certi?ed Public Accountants, Statement
on Auditing Standards No. 78: Consideration of Internal
Control in a Financial Statement Audit: An Amendment to
SAS No. 55. New York: American Institute of Certi?ed
Public Accountants, Inc. 1995.
Anderson, J. (1982). Acquisition of cognitive skill. Psycholog-
ical Review, 89(4), 396–406.
L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434 433
Ballou, B., & Heitger, D., (2003). Judgment and Decision
Making Research in a Dynamic Auditing Environment.
Working paper, University of Miami, Ohio.
Boland, R., Singh, J., Salipante, P., Aram, J., Fay, S., &
Kanawattanachai, P. (2001). Knowledge representations
and knowledge transfers. Academy of Management Journal,
44(2), 393–417.
Bonner, S., Libby, R., & Nelson, M. (1997). Audit category
knowledge as a precondition to learning from experience.
Accounting, Organizations and Society, 22(5), 387–410.
Bonner, S., & Walker, P. (1994). The e?ects of instruction and
experience on the acquisition of auditing knowledge. The
Accounting Review, 69(1), 157–178.
Curtis, M., & Borthick, F., (2002). Accelerating the acquisition of
knowledge structure to improve performance in internal control
evaluation. Working paper, University of North Texas.
Curtis, M., & Viator, R. (2000). An investigation of multidi-
mensional knowledge structure and computer auditor per-
formance. Auditing: A Journal of Practice and Theory, 19(2),
83–103.
Davis, C., & Davis, E. (1998). Audit task and audit method-
ology as determinants of auditors’ elicitation of alternative
knowledge organization structures. Advances in Accounting
Behavioral Research, 1, 101–121.
Day, E., Arthur, W., & Gettman, D. (2001). Knowledge
structures and the acquisition of a complex skill. Journal of
Applied Psychology, 86(5), 1022–1033.
Devine, D., & Kozlowski, S. (1995). Domain-speci?c knowledge
and task characteristics in decision making. Organizational
Behavior and Human Decision Processes, 64(3), 294–306.
Eilifsen, A., Knechel, W., & Wallage, P. (2001). Application of
the business risk audit model: a ?eld study. Accounting
Horizons, 15(3), 193–208.
Frederick, D. (1991). Auditors’ representation and retrieval of
internal control knowledge. The Accounting Review, 66(2),
240–258.
Frederick, D., Heiman-Ho?man, V., & Libby, R. (1994). The
structure of auditors’ knowledge of ?nancial statement
errors. Auditing: A Journal of Practice and Theory, 13(1), 1–
21.
Glaser, R. (1990). The reemergence of learning theory within
instructional research. American Psychologist, 45(1), 29–39.
Kersten, A., & Billman, D. (1997). Event category learning.
Journal of Experimental: Psychology: Learning, Memory,
and Cognition, 23(6), 638–658.
Kinney, W., (1997). Foreword, auditing organizations through a
strategic-systems lens. KPMG Peat Marwick, LLP.
Klein, G. (1998). Sources of power Cambridge. MA: The MIT
Press.
Lemon, M., Tatum, K., & Turley, W. (2000). Developments in
the audit methodologies of large accounting ?rms. London,
UK: ABG Professional Information.
Libby, R., & Luft, L. (1993). Determinants of judgment
performance in accounting settings: ability, knowledge,
motivation, and environment. Accounting, Organizations
and Society, 18(5), 425–450.
Nelson, M. (1993). The e?ects of error frequency and account-
ing knowledge on error diagnosis in analytical review. The
Accounting Review, 68(4), 803–824.
Nelson, M. (1994). The learning and use of frequency
information in auditing. Journal of Accounting Literature,
13, 185–211.
Nelson, M., Libby, R., & Bonner, S. (1995). Knowledge
structure and the estimation of conditional probabilities in
audit planning. The Accounting Review, 70(1), 27–47.
O’Donnell, E. (2003). The in?uence of process-focused knowl-
edge acquisition on evaluative judgment during a systems
assurance task. International Journal of Accounting Infor-
mation Systems, 4(2), 115–139.
O’Donnell, E., & Schultz, J., (2003). The in?uence of business-
process-focused audit support software on analytical pro-
cedures judgments. Auditing: A Journal of Practice and
Theory, forthcoming.
Pennington, N., & Hastie, R. (1986). Evidence evaluation in
complex decision making. Journal of Personality and Social
Psychology, 51(2), 242–258.
Pennington, N., & Hastie, R. (1988). Explanation-based deci-
sion making E?ects of memory structure on judgement.
Journal of Experimental Psychology: Learning, Memory and
Cognition, 13(3), 521–533.
Ricchiute, D. (1992). Working-paper order e?ects and auditors’
going-concern decisions. The Accounting Review, 67(1), 46–
58.
Schank, R. (1999). Dynamic memory revisited. New York, NY:
Cambridge University Press.
Sneath, P., & Sokal, R. (1973). Numerical taxonomy. San
Francisco: W.H. Freeman.
Tubbs, R. (1992). The e?ect of experience on the auditor’s
organization and amount of knowledge. The Accounting
Review, 67(4), 783–801.
434 L.S. Kopp, E. O’Donnell / Accounting, Organizations and Society 30 (2005) 423–434
doc_629010365.pdf