Tacit Managerial versus Technical Knowledge As Determinants of Audit Expertise in the Field

Abstract

In this paper, we test whether results of prior studies of the determinants of audit expertise generalize to measures of actual performance. In doing so, we expand the concept of expertise to include managerial dimensions in addition to those related to the technical requirements of audit tasks and we investigate how the managerial components of knowledge, together with technical knowledge and problem-solving abilities, distinguish auditors with superior performance at different levels of the organizational hierarchy. Past studies of the determinants of audit expertise have used auditors' experience or rank (e.g., Ashton and Brown [1980], Hamilton and Wright [1982], Bonner [1990], and Libby and Frederick [1990]) or their performance on experimental versions of technical auditing tasks (e.g., Bonner and Lewis [1990]) as proxies for actual performance. Establishing whether experience, knowledge, and ability measures are related to performance on the job is necessary to determine the economic significance of prior findings (Marchant [1990]). We identify experts based on actual performance evaluations produced as part of a CPA firm's compensation and promotion system. The