The effect of experience on the development of knowledge structures that transfer across audit domains

Date of Completion

January 1996


Business Administration, Accounting|Psychology, Industrial




The purpose of this study is to investigate whether expert knowledge developed for one audit task can be transferred to a different audit task. Knowledge transfer refers to the situation in which knowledge developed for one task will aid decision making performance in another task (Singley & Anderson 1989). Transfer of knowledge occurs to the extent that common elements exist in the tasks (Singley & Anderson 1985). This dissertation provides an analysis of the going concern judgment and the loan credit review judgment. An auditor is required to assess the financial viability of an individual firm in both tasks. The existence of this common element suggests that certain loan credit review knowledge may transfer to the going concern judgment.^ The results of an experimental task administered to 60 in-charge accountants indicate that financial service auditors with loan credit review experience are more accurate than manufacturing auditors without loan credit review experience in their evaluations of "substantial doubt" made for the two firms in the novel industry context. For the two firms in the manufacturing industry context, there was no statistical difference between the accuracy of financial service auditors and manufacturing auditors. Moreover, the four evaluations of "substantial doubt" were completed by financial service auditors in significantly less time. Overall, these results suggest that certain loan credit review knowledge transfers to aid going concern decision making performance.^ The results have both theoretical and practical implications. From a theoretical perspective, the results show that certain types of knowledge can be transferred across tasks within auditing. In so doing, this study is the first to identify such transfer within auditing (Davis & Solomon 1989; Bedard & Chi 1993). From a practical perspective, the results reveal one way that an audit firm can improve the utilization of its existing firm knowledge. There may be other situations where knowledge developed for one audit task will transfer and aid judgment performance in another audit task. Thus, these results may provide the impetus for future knowledge transfer investigations. ^