Characteristics of Relatively High-Performance Auditors 1

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Auditing: A Journal of Practice & Theory American Accounting AssociationVol. 30, No. 1 DOI: 10.2308/aud.2011.30.1.191February 2011pCharacteristics of RelativelyHigh-PerformanceAuditors

Constance A. McKnight and William F. Wright

SUMMARY: In this study, we use directly reported CPA firm performance evaluationsand hypothesize that higher-performing auditors will perceive that technical knowledgeand ability, client interaction skills, and professional attitudes/behaviors are more rel-evant H1, will be more inclined to extend standard audit procedures H2, and willhave a more proactive, involved internal locus of control H3. Fifty-six auditors partici-pated, including the ranks of staff auditor, senior, and manager. Consistent with ourhypothesis, higher-performing auditors emphasized the importance of the three dimen-sions of the work of an auditor; lower-performing auditors did not. Higher-performingauditors were more inclined to extend standardized audit procedures. Finally, auditorswho are more proactive regarding the performance of audit judgment tasks and deci-sions, i.e., they have more of an internal versus external locus of control, were associ-ated with higher levels of job performance.Keywords: job performance; tacit knowledge; task structure; locus of control;

expertise.

Data Availability: Contact the authors.

INTRODUCTIONThe quality of financial statement audits is dependent on the job performance of auditors. Our

nderstanding of the determinants of auditor job performance has evolved from concentration onhe quality of judgments made based on technical knowledge and ability e.g., Bonner and Lewis990; Libby 1995 to overall job performance, including tacit knowledge of a broad set of per-ormance attributes e.g., Abdolmohammadi et al. 2004; Nelson and Tan 2005; Tan and Libby997, including the ability to objectively evaluate subordinates Messier et al. 2008; Tan andamal 2001, 2006. However, relatively little is known about what distinguishes auditors whoseverall job performance is relatively superior.

onstance A. McKnight is an Assistant Professor at the University of Central Arkansas, and William F.right is a Lecturer at the University of Illinois.

e appreciate helpful comments received from the Associate Editor and two anonymous reviewers, as well as Paul Beck,eslie Berger, Efrim Boritz, Rajib Doogar, Natalia Kotchetova, Morley Lemon, Alister Mason, Susan McCracken, Brad

p. 191206omeroy, and Ira Solomon.

ditors note: Accepted by Hun-Tong Tan, previous Associate Editor.

Submitted: April 2008Accepted: July 2010

Published Online: February 2011

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192 McKnight andWright

AAMore awareness of the characteristics of relatively high-performance auditors would provideeveral benefits. While technical accounting knowledge and problem-solving ability are essential,n auditors behavioral skills may, at the margin, differentiate levels of job performance Tan andibby 1997. Such skills may include the effectiveness of client interaction in addition to anuditors professional attitudes and behaviors, including contributions made as a member of anudit team. If the pertinent behavioral skills can be learned, auditors would benefit from trainingo enhance their performance, e.g., role playing in simulated client situations and reinforcement ofroductive interaction behaviors during brainstorming sessions. Further, if a personality trait con-ributes to achievement of higher job performance, such as an internal versus external locus ofontrol Hyatt and Prawitt 2001, CPA firms could focus on such traits as one aspect of hiringersonnel.

Using directly reported CPA firm performance evaluations, our research reveals a very differ-nt profile of characteristic of auditors who achieve relatively high levels of auditor job perfor-ance. First, in addition to their technical knowledge, higher-performing auditors indicated higher

erceived importance of both client interaction skills and professional attitudes/behaviors for theirob performance cf. Abdolmohammadi et al. 2004; Tan and Libby 1997. Second, auditors whoely less on standard audit procedures are associated with higher levels of relative job performanceBamber et al. 1989. Third, we test for the relevance of a personality trait, an auditors locus ofontrol LOC, that influences how auditors react to the demands and expectations of the audit tasknvironment Hyatt and Prawitt 2001. Specifically, auditors who are more proactive and expect tonfluence control their audit situations an internal LOC are associated with higher levels ofverall job performance compared with auditors who perceive that outcomes are determinedrincipally by factors other than their personal efforts, e.g., the behaviors of others an externalOC.

This is the first study that relates both actual CPA firm-reported and self-reported job perfor-ance evaluations to multiple characteristics of auditor job performance. We extend existing

esearch on the attributes of the work of an auditor cf. Abdolmohammadi et al. 2004; Tan andibby 1997 by revealing an underlying three-factor structure of job attributes. In addition to the

elevance of the three attribute-based factors, by adding a task-oriented aspect, a willingness toxtend standardized task procedures, and a personality aspect, an inclination to be proactive andake responsibility during an audit, our results indicate the importance of a more comprehensiveiew of the job performance of auditors.

BACKGROUND AND HYPOTHESIS DEVELOPMENTuperior Job Performance and Attributes of the Work of an Auditor (H1)

Auditors have incentives and opportunities to refine their performance of their job attributesnd improve their overall job performance. As auditors accumulate technical knowledge Libbynd Luft 1993, CPA firms provide feedback on both the interaction skills and the professionalttitudes and behaviors of an auditor. Reviewers of audit documentation also provide performance-riented feedback Rich et al. 1997.

Auditing research to determine the salient attributes of auditor job performance continues tovolve Abdolmohammadi et al. 2004; Tan 1999. Early research focused on cognitive Abdol-ohammadi and Shanteau 1992 and work flow-oriented Jiambalvo 1979, 1982; Kida 1984

ttributes. More recent work has included client interaction skills and professional attitudes/ehaviors Abdolmohammadi et al. 2004; Tan 1999; Tan and Libby 1997. Similarly, early per-ormance attribute research in psychology emphasized cognitive aspects, e.g., use of declarativend procedural knowledge, and motivational aspects McCloy et al. 1994, while more recentesearch includes more behavioral aspects Arvey and Murphy 1998.uditing: A Journal of Practice & Theory February 2011merican Accounting Association

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Characteristics of Relatively High-Performance Auditors 193

AWe partitioned the attributes of the work of an auditor into three categories also see Abdol-ohammadi et al. 2004; Tan 1999: 1 technical knowledge and abilities e.g., Bonner and Lewis

990; Libby and Luft 1993; 2 client interaction skills e.g., Tan 1999; and 3 professionalttitudes/behaviors e.g., Abdolmohammadi et al. 2004 including managerial skills Tan andibby 1997. While technical knowledge and abilities remain essential, skills and behaviors are

ncreasingly important for auditor job performance. The AICPAs core competencies for individu-ls entering the accounting profession incorporate a personal competencies category whichncludes client interaction skills and being able to work productively with others AICPA 1999, asell as the ability to communicate effectively in both written and oral presentations. Frecka andichols 2004, 183 report that graduate programs in accounting place a great deal of emphasis on

earning of the competencies of teamwork and group interaction. Recruiters on university cam-uses use interviews to assess personal competencies pertaining to client interaction and commu-ication skills, and the potential to be a productive member of an audit team. For more experi-nced auditors, positive client interaction skills are essential during the different forms ofnegotiation that occur during an audit Brown and Wright 2008; e.g., Figure 1. Productivelient interaction skills are important for tax professionals as well Bertolini et al. 2010. There-ore, we expect that client interaction skills and professional attitudes/behaviors will be perceivedo be relevant across all ranks.1 The three categories of attributes are also consistent with current

Public accounting firms indicate greater formal emphasis on personality aspects at higher ranks. For example, Formalreviews of auditors do assign higher weights to nontechnical skills with increasing rank Tan and Libby 1997.

FIGURE 1Beta Coefficients for the Self-Reported Job Performance and the Three Performance

Dimensions for Relatively High- and Low-PerformanceAuditors (see Table 3)

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Technical Knowledgeand Ability

Client Interaction Skills Professional Attitudesand Behaviors

HigherPerforming LowerPerforming

elatively high- (low-) performing auditors: standardized firm-reported evaluation > = 0 (< 0). The three per-ormance factors are described in the Appendix. The details of the models, including the significance of theoefficients, are presented in Table 3.uditing: A Journal of Practice & Theory February 2011American Accounting Association

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AAob performance research in psychology that includes more contextual job attributes in addition toechnical measures of task proficiency Arvey and Murphy 1998.

We use self-assessments of attribute-level performance to develop three performance dimen-ions for modeling of firm-reported and self-reported job performance evaluations see theMethod section. Three attributes in the technical knowledge and ability category are veryimilar to attributes used by Abdolmohammadi et al. 2004 and Tan 1999, i.e., the attributesabeled problem-solving ability, accounting knowledge and technical analysis see the Appen-ix. These attributes measure the core technical capability of performing auditing tasks Bonnernd Lewis 1990. We also included two attributes to address the procedural aspects of performingn audit, i.e., maintaining a high percentage of billable hours for the firm, high billable, andperating within an engagement budget, within budget.

Three attributes focus on aspects of client service. They include comprehension of and interestn a clients business, client business awareness, and two client interaction aspects: understandlient concerns measures the extent to which an auditor identifies and understands client con-erns, while convince client captures the perception that client problems and concerns arenderstood.

The third and final category of attributes includes aspects of an auditors professional attitudesnd behaviors. Two attributes address an auditors communication effectiveness, written commu-ication and oral communication. Both of these attributes are emphasized by Abdolmoham-adi et al. 2004 and Tan 1999. We also measured an auditors self-confidence, self-

onfidence, and perceived earned respect, respect. The final two attributes address managerialspects, i.e., the perceived ability to handle responsibility, responsibility, and to exercise effec-ive judgment on an audit engagement, sound judgment. Tan and Libby 1997 emphasize themportance of the managerial aspects of the work of an auditor.

Our first hypothesis is that auditors who achieve relatively high-performance evaluations willerceive that greater technical knowledge and ability, client interaction skills, and professionalttitudes/behaviors are more highly associated with better relative job performance. Prior researcheports that auditors who manifest superior relative performance have better tacit managerialnowledge including knowledge of how to manage ones career Tan and Libby 1997. Wextend this idea by testing whether high-performing auditors perceive more importance of a broadet of behavioral attributes. Stated in alternative form:

H1: Technical knowledge and abilities, client interaction skills, and professional attitudes/behaviors will be perceived to be more important determinants of overall job perfor-mance by higher-performing auditors versus lower-performing auditors.

he Impact of How Auditors Approach Their Work (H2)The essence of the work of an auditor is the selection and processing of evidence, and

eaching conclusions Libby and Luft 1993. An auditor who approaches client situations as beingess routine, and is inclined to extend standard audit procedures, will have different evidencevailable at the input and processing phases of an audit judgment Bonner 1994; Tan et al. 2002.xamples of judgment situations where the evidence obtained by extending standard evidencerocedures could lead to superior insights are evaluating accounting estimates, business risk analy-is and assessments Knechel 2007; Peecher et al. 2007, and fraud risk analysis Allen et al. 2006;

ilks and Zimbelman 2004.An inclination to extend evidence gathering could be especially beneficial for the quality of

emi-structured judgments Bonner 1994. Bonner 1994 describes task structure as being thelarity of the input, processing, and output requirements for the quality of an eventual conclusionBonner 1994, 2008. CPA firms provide only general guidance for semi-structured audit tasksuditing: A Journal of Practice & Theory February 2011merican Accounting Association

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AAbdolmohammadi 1999; Abdolmohammadi and Wright 1987. Therefore, auditors must applyheir strategic knowledge, i.e., knowing when and how to adapt ones knowledge or skill toifferent situations Aguinis and Kraiger 2009. Kozlowski et al. 2001, 2 note that trainednowledge and skills need to be flexible, not rote, so they can be adapted to new, more difficult,nd more complex situations Schmidt and Bjork 1992. Adaptation by auditors could includeess reliance on standard audit procedures and consideration of alternative interpretations of theesulting evidence Bonner 2008; Wood 1986.

Being more inclined to extend standard audit procedures enables a higher level of professionalkepticism PS, which is especially relevant when the client behaves as a strategic opponent Bellt al. 2005; Wilks and Zimbelman 2004. More risky client situations, e.g., when governancessues or SAS 99 red flags AICPA 2002 exist, arouse state skepticism, i.e., a temporaryondition aroused by situational client variables Hurtt 2010, 149150; Nelson 2009.2 Auditorsho are more inclined to extend standard procedures are more likely to be skeptical. Auditors who

re more skeptical will search for more persuasive evidence, suspending judgment until sufficientvidence is available for a judgment or decision Hurtt 2010. Nelson 2009 notes that high PSevealed by skeptical behavior is an aspect of auditor job performance. Therefore, we propose thatuditors who approach client situations as being less routine and rely less on standard auditrocedures will achieve better job performance:

H2: Auditors who approach their work as being less routine and are less inclined to rely onstandard audit procedures will be associated with higher relative job performance.

n Auditors Locus of Control and Relative Job Performance (H3)A personality trait which may affect an auditors work-related behavior is a persons LOC,

.e., the extent to which a person chooses to be involved with, and influence control, a processeading to an eventual outcome. The LOC trait influences how individuals conceive of themselves,esulting in attitudes and behaviors e.g., Hiller and Hambrick 2005; Judge and Bono 2001. Whileontinuous measurement scales are used, individuals are usually partitioned into two categories:internals and externals. Internals are proactive and goal-oriented, believing that they canirectly influence the outcome of a judgment or decision process; alternatively, externals are moreassive and they prefer structured situations, believing that other people or aspects of the situationill essentially determine the outcome Boone and Hendriks 2009; Ng et al. 2006. Internals will

earch for the information and alternatives that they believe will lead to a more favorable outcomeOzer 2008. Internals will also allocate more cognitive effort to accomplish their personallyxpected high level of task performance Judge and Bono 2001; they also exhibit higher jobotivation Ng et al. 2006, better academic achievement Kalechstein and Nowicki 1997, andore leadership qualities Ng et al. 2006. Alternatively, externals assume a more contextual less

ersonal determination of processes and outcomes. Instead of their personal actions, externalsssume that outcomes are more attributable to the decisions and behaviors of their superiors oreers, or the occurrence of chance; instead of being in control, they are being controlledBoone and Hendriks 2009.

While the LOC personality trait has been used to explain behaviors in several work domainse.g., Judge and Bono 2001; Ng et al. 2006; Spector 1988, there has been very limited investi-ation of the impact of an auditors LOC on auditor job performance. We focus on whether anuditors LOC is associated with levels of actual firm-reported performance versus effects of auditrm structure Hyatt and Prawitt 2001 or the willingness of auditors to accept sub-standard

Hurtt 2010 distinguishes between trait PS as a personality characteristic and state PS.uditing: A Journal of Practice & Theory February 2011American Accounting Association

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AAuditing work Donnelly et al. 2003. Auditors having more of an internal LOC would be expectedo be more proactively involved and exercise more initiative; externals prefer to implement pro-edures and judgments selected by others, i.e., they prefer a more structured audit approach Hyattnd Prawitt 2001. Both Chen and Silverthorne 2008 and Hyatt and Prawitt 2001 found anssociation between more internal levels of LOC and higher levels of self-reported auditor joberformance. Chen and Silverthorne 2008 use self-reports of job performance in an Asianulture and Hyatt and Prawitt 2001 use self-reports of supervisor-assessed job performance;s our results indicate, self-reports of job performance differ from firm-reported evaluations. Also,oth Hyatt and Prawitt 2001 and Chen and Silverthorne 2008 use a less applicable LOCnstrument Rotter 1966 that measures LOC in several nonwork settings instead of the moreocused work-oriented instrument provided by Spector 1988 see Donnelly et al. 2003, 9596.he association that exists using the more applicable work-oriented LOC scale and auditorsrm-reported job performance evaluations is the focus of this research. We predict that auditorsho have more of an internal versus external LOC will be associated with higher overall joberformance Donnelly et al. 2003; Hyatt and Prawitt 2001.

H3: Auditors whose personality results in more of an internal versus an external locus ofcontrol will be associated with higher overall job performance.

METHOData Availability, Participants, and Materials

A central aspect of this research is direct availability of actual CPA firm personnel evalua-ions. Eleven public accounting firms were contacted initially; eight firms agreed to participate. Anuditors two most recent supervisor-assessed performance evaluations and annual compensationere reported to the researchers. To ensure anonymity, a numbering identification scheme wassed on the instruments so that we could match data received directly from the auditors seeelow with the performance information provided by each human resource manager. Only theuman resource managers had knowledge of the names associated with each identifying number.

In addition to the actual performance evaluations obtained from the human resource manag-rs, we requested judgments directly from the evaluated auditors. The auditors provided a self-ssessment of their overall job performance based on the same two most recent engagements,elf-assessments of their performance on 14 job performance attributes, responses to items thatomprised reliance on standard audit procedures and the LOC construct see below, judgments ofhe extent to which their firm implemented a structured auditing methodology, and other demo-raphic information. The instrument was pilot-tested with senior managers not included in theample and was revised accordingly. The instruments were mailed to the human resource managert each of the eight participating firms, who distributed them to the participants. We requestedarticipation from all field auditors within the office of each of the firms. If a firm was unable torovide participation from all employees, the human resource manager randomly solicited possibleolunteers. Each participant was given a return envelope and mailed the instrument directly to theesearchers. We relied on the human resource managers and the auditors to perform these tasks.

The response data were received and matched to the firm-reported data for 87 of 118 con-acted auditors, including five auditors who responded to a second request, for a response rate of4 percent. Given the criterion of availability of an auditors two most recent engagement perfor-ance evaluations and allowing for missing values, we have complete data for 75 auditors. Five

f the eight firms used a 15 evaluation scale, one used a 100-point scale, and two firms used a3 scale cf. Tan and Jamal 2001. Representative verbal anchors for the 15 scales are: unsat-sfactory, requires improvement, satisfactory, above average, and outstanding. For one of the tworms that used a 13 scale, the human resource manager reported the same meets expectationsuditing: A Journal of Practice & Theory February 2011merican Accounting Association

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Avaluation for 93 percent of the auditor engagement evaluations and 7 percent as needs improve-ent, without any of the third exceeds expectations evaluations. This pattern of virtually

nvariant job performance is very different from the more dispersed patterns reported by the othereven human resource managers. The extremely limited variability of the personnel evaluationseported by the firm would cause the statistical analysis to be less representative and more un-table. Therefore, we exclude the data from this firm. The result is complete data for 56 auditors:7 staff auditors, 15 seniors, and 14 managers including four senior managers from seven firms.he auditors were employed at five local and two international firms in Northwest Arkansas oneffice was in Memphis, Tennessee. The staff, seniors, and managers indicated, respectively, meanstandard deviation years of experience of 1.75 1.16, 4.68 3.73, and 7.58 2.00; 11 percent ofhe staff, 73 percent of the seniors, and all of the managers had completed their CPA requirements.

irm-Reported and Self-Reported Relative Performance MeasurementsWe computed the firm-reported relative job performance measure using the average of each

uditors two most recent engagement performance evaluations. First, all of the evaluations werecaled such that a more positive evaluation corresponded to a higher evaluation. Second, givenhat different evaluation scales are used at the firms, we used a procedure employed by Hyatt andrawitt 2001, i.e., we standardized the evaluations on a within-firm basis, yielding a range ofrom 1.47 to 2.04 standard deviations for the 56 auditors. We partitioned the auditors into thosehat performed relatively well standardized firm-reported performance greater than, or equal to,ero and those who performed relatively less well standardized firm-reported performance lesshan zero, yielding, respectively, 27 and 29 auditors.

Each auditor provided an evaluation of his or her relative overall job performance on theuditors same two most recent client engagements on a 17 scale, with 7 being the highestelative performance. These two responses were averaged to yield a self-reported measure ofelative job performance. The average self-reported job performance evaluations do not differignificantly for the three different ranks, F2, 53 1, or for the seven different CPA firms, F6,9 1. We also standardized the self-reported evaluations on a within-firm basis, yielding aange of from 2.35 to 1.74 standard deviations for the 56 auditors.

erformance Attributes and Task PerceptionsEach auditor provided a self-assessment of his or her relative performance on each of the 14

erformance attributes in the three categories see the Appendix.3 We estimate the underlyingactor-analytic dimensionality of the 14 attribute assessments. We then test for associations of theactor-analytic dimensions with both the firm-reported Table 2 and the self-reported Table 3verall job performance evaluations. Self-assessments of the attributes were obtained because weequired performance assessments for the same set of attributes and dimensions across all ranksnd firms. Also, the firms did not have details available on all of the 14 attributes. Therefore, wese the attribute self-assessments as proxies for the underlying performance attributes.

Each auditor was told that An auditors performance is measured by many criteriaontrolling costs, maintaining client relationships, communicating effectively, etc. and then wassked to indicate your level of success relative to other auditors at the same level at your firm.he scale ranged from 1, being Much less successful than others, to 7, being Much moreuccessful than others.

We used an instrument developed by Bamber et al. 1989 to measure the extent to which the

We thank Professors Troy Hyatt and Doug Prawitt for permitting us to use their set of job performance attributes seeHyatt and Prawitt 2001 for the context of their development of the attributes.uditing: A Journal of Practice & Theory February 2011American Accounting Association

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AAarticipants rely on standard audit procedures. The scale includes five measures of an auditorserceived reliance on standard audit procedures and one measure of the extent to which an auditorerceives his or her work to be routine.6 A five-point Likert scale was used for each of the sixtems, with the anchor labels 1 to a very little extent and 5 to a very great extent. Usinghe mean of the six items, a lower value indicates less reliance on use of standard audit procedures.he prediction is a negative relationship, i.e., decreasing reliance on standard audit procedures wille associated with increasing levels of job performance H2.

The internal reliability levels for the reliance on standard procedures instrument is 0.756 usingronbachs . This result compares favorably with the corresponding reported by Bamber et al.

1989, 292 of 0.72. Also, we included an eight-item scale that measured the extent to which anuditor perceived that his or her firms audit methodology was structured Bamber et al. 1989.he anchor labels for the eight items are 1 strongly disagree and 5 strongly agree.ronbachs for the firm structure scale is 0.890.

Following Donnelly et al. 2003, as is usually done in work settings Ng et al. 2006, we usedpectors 1988 more applicable work-oriented LOC scale WLCS instead of the original Rotter1966 scale to measure the auditors LOC. The WLCS scale comprises 16 questions pertaining toelationships between causes and rewards/outcomes, with responses on a Likert scale having aaximum of 6. With reverse scaling for eight of the 16 items, low scores represent more of an

nternal LOC while high scores represent more of an external LOC. The WLCS scale values rangerom 17 to 64, with a mean of 39.59. Using the same scale, the auditors in the Donnelly et al.2003 study indicated a range of 2068, with a mean of 42.88. Reliability for the WLCS scale iscceptable given a Cronbachs of 0.82 that is similar to results from previous studies Spector988; e.g., Donnelly et al. 2003 report a Cronbachs of 0.83. Given the expected positivempact of a more internal LOC, we predict a negative relationship for the WLCS scale measure-ents and firm-reported job performance H3.

RESULTSnderlying Dimensionality of Attributes of Auditor Job Performance

Using the full set of 75 auditors to maximize the number of observations, we employed factornalysis to test our hypothesized perceived three dimensions of the 14 attributes see Table 1.7he Kaiser-Meyer-Olkin measure of sampling variability is 0.878, indicating that the data areuitable to yield distinct and reliable factors. The results of the Bartlett sphericity test reject theull hypothesis that the 14 attributes are uncorrelated in the population, approximate Chi-square 31.10, p .001, suggesting potential for worthwhile data reduction.

Three principal components with eigenvalues greater than one were extracted and subjected toarimax rotation, explaining a total of 64.4 percent of the variance in the 14 attributes. Consistentith our predictions, the pattern of factor loadings indicates three primary dimensions of perceived

uditor performance see Table 1. The first factor, Technical Knowledge and Ability, explains3.99 percent of the total variance in the attributes. The attribute loadings using greater than |.60|s the criterion on the first factor suggest that the problem-solving ability, accounting knowl-dge, technical analysis, within budget, and high billable attributes comprise this dimen-

We thank Professor Bamber for permitting our use of the instrument.Our use of this instrument to measure the extent to which the participants rely on standard audit procedures is consistentwith Bamber et al.s 1989, 288 view that this instrument measures the degree to which objective computationalprocedures are available as compared to having to think about what to do including searching for solutions.The instrument can also be interpreted to measure aspects of an auditors willingness to search for and fully examinesufficient evidence before making a decision Hurtt 2010, 152154.One staff auditor did not complete the attribute judgments. We inserted the mean attribute judgments for the staffauditors for this individual.uditing: A Journal of Practice & Theory February 2011merican Accounting Association

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Aion. The second factor, Client Interaction Skills, which explains 21.92 percent of the variance,aptures the nature and quality of client interaction. Attributes that load on this factor include theclient business awareness, understand client concerns, and convince client attributes, as wells the written expression attribute. The written expression attribute was expected to loadore heavily on the third factor. The third factor, Professional Attitudes and Behaviors, which

xplains 18.50 percent of the variance, includes the oral expression, respect, and self-onfidence attributes, as well as the managerial attribute, responsibility. We excluded theanagerial sound judgment attribute. It was predicted to load on the Professional Attitudes andehaviors factor, but the loading is higher on the Client Interaction Skills factor, 0.535 versus.414, both being below our |.60| criterion. Reinforcing the nature of this third factor, the re-pect attribute indicates competence achieved with auditors with whom the auditor interacts, andhe self-confidence attribute indicates a personal sense of perceived competence.

he Job Performance Model: Testing of the Three HypothesesThe five constructs in the job performance model using the standardized firm-reported per-

ormance evaluations are: 1 the three dimensions of the work of an auditor based on the self-ssessed values of the 14 attributes, 2 the extent to which the auditors rely on standard auditrocedures, and 3 an auditors disposition toward being proactive regarding audit tasks the LOConstruct. The model is significant, F5, 50 4.294, p .003 with an Adjusted R2 of 0.230Table 2. Four of the five construct measures are significant p .074. The Client Interactionkills and Professional Attitudes/Behaviors work dimensions are correlated significantly with

TABLE 1Dimensions of Relative Auditor Job Performance

Factor Loadings for the 14 Performance Attributes (see the Appendix)

erformance Attributes

Dimensions (Factors)Technical

Knowledge andAbility

ClientInteraction

Skills

ProfessionalAttitudes and

Behaviorsroblem-Solving Ability 0.770ccounting Knowledge 0.623echnical Analysis 0.761lient Business Awareness 0.658nderstand Client Concerns 0.725onvince Client 0.855ritten Expression 0.660ral Expression 0.628espect 0.696elf Confidence 0.800esponsibility 0.657ound Judgment 0.535ithin Budget 0.630igh Billable 0.716

xtraction method: Principal Component Analysis. Rotation method: Varimax with Kaiser Normalization.otation converged in seven iterations. Three eigenvalues are greater than 1.0 and they explain 64.4% of the total variance.actor labels: 1 Technical Knowledge and Ability; 2 Client Interaction Skills; 3 Professional Attitudes and Behaviors.nsignificant factor loadings equal to or less than |.60| were eliminated Field 2009, 644645.uditing: A Journal of Practice & Theory February 2011American Accounting Association

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AAevels of firm-reported relative performance, i.e., Client Interaction Skills, t 1.689, p .048,nd Professional Attitudes and Behaviors, t 2.172, p .017. Levels of the third Technicalnowledge and Ability dimension do not distinguish among the relative performance levels

t 0.898, p .187however, see below.

igh- versus Low-Performing Auditors and the Three Performance Dimensions (H1)H1 predicts that the higher-performing auditors will indicate higher associations of the self-

ssessed Technical Knowledge and Ability, Client Interaction Skills, and Professional Attitudes/ehaviors work dimensions. For the relatively high- and relatively low-performance auditors, we

egressed the standardized self-reported performance evaluations on the three self-assessed per-ormance dimensions see Table 3. Very different profiles are revealed. Only for the highererformers does the Technical Knowledge and Ability dimension distinguish marginally amongevels of relative performance at the 10 percent level of significance. The higher performers alsomphasize the Client Interaction Skills p .055 and Professional Attitudes and Behaviors p 005 performance dimensions while the low performers do not see Figure 1. The model for theelatively high performers is significant, F3, 23 4.42, p 0.014, with an adjusted R2 of 0.283.n contrast, the results for the relatively low performers are insignificant statistically and substan-ively regarding the three dimensions of performance see Table 3. The results are not signifi-antly different across the ranks see the Discussion section. These results are consistent with1.

ffects of Being Inclined to Extend Standard Audit Procedures (H2)H2 predicts that auditors who rely less on standard audit procedures will be associated with

igher levels of job performance. Consistent with this prediction, the beta coefficient of 0.451 inhe job performance model Table 2 is significant, t 3.658, p .001, and this is the largest

TABLE 2Tests of the Three Hypotheses

UnstandardizedCoefficients

StandardizedCoefficients

t Sig.B Std. Error BetaConstant 3.199 0.982 3.260 0.002echnical Knowledge and

Ability H10.100 0.112 0.107 0.898 0.187

lient Interaction Skills H1 0.179 0.106 0.201 1.689 0.048rof. Attitudes and BehaviorsH1

0.261 0.120 0.261 2.172 0.017

eliance on Std. ProceduresH2

0.684 0.187 0.451 3.658 0.001

ocus of Control H3 0.023 0.015 0.182 1.476 0.073

he dependent variable is the standardized firm-reported relative evaluations of auditor job performance. The five variablesre implied by the three hypotheses: The model is significant.5,50 4.294, p 0.003; Adjusted R2 = 0.230; one-tailed tests of coefficient significance.he three dimensions of the duties of an auditor are Technical Knowledge and Ability, Client Interaction Skills, androfessional Attitudes and Behaviors see Table 1 and the Appendix. Reliance on standard audit procedures is measuredy using the mean of six items. The locus of control measure was obtained by using the 16-item work locus of controlWLCS scale generated by Spector 1988.uditing: A Journal of Practice & Theory February 2011merican Accounting Association

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Aoefficient among the five explanatory variables.8 The correlation between the auditors extent ofeliance on standard audit procedures and their assessments of firm-level structure is 0.398, 0.002, i.e., the auditors who were more inclined to rely on standard audit procedures assessed

heir firms audit approach to be more structured cf. Hyatt and Prawitt 2001. Regarding joberformance, and consistent with H2, the correlation with reliance on standard audit procedures is0.375, p 0.002, one-tailed, and this association remains significant after adjustment for the

uditors assessments of their firm-level structure, i.e., the partial correlation is 0.363, p .003.he staff auditors at the large firms were less inclined to rely on standard audit procedures, i.e.,.125 versus 3.767 for the staff auditors at the small firms, t 3.367, p .001; no significantifferences are indicated for the seniors and managers.

ffects of Perceived Locus of Control (H3)H3 predicts that the auditors who have more of an internal LOC a lower WLCS score will

e associated with better job performance. Consistent with H3, the locus of control measure is aarginally significant determinant of job performance t 1.476, p 0.073 with a predicted

egative beta coefficient of 0.182 Table 2. The means of the LOC measurements are notignificantly different for the three different ranks or the large versus small CPA firms.9

dditional Analysesuditors Understanding of Their Relative Overall Job Performance

To what extent are auditors aware of their relative job performance? Tan and Jamal 2006eport that superiors understood the task performance of their subordinates. However, the benefit

Bamber et al. 1989 also measure subjective task-related uncertainty variety. The participants provided measure-ments of task uncertainty. The measurements are not significant p 0.222 when they are included in the jobperformance model reported in Table 2.We also measured an auditors commitment to his or her current organization. We used the commitment questionemployed by Donnelly et al. 2003, which provides a four-category possible response. For example, the most commit-ted response is I plan to remain with my current organization until I retire. No significant differences were indicatedfor the firm- or self- reported overall job evaluations. A notable aside is that the high commitment auditors, i.e., thosewho intended to remain for five-plus years or until retirement with their current audit firm, have significantly moreinternal and better work locus of control, i.e., a mean of 37.0 versus 42.3, F1,54 6.756, p .012.

TABLE 3Relatively High- and Low-Performance Auditors and Associations with the Three Job

Performance DimensionsSelf-Reported Overall Job Performance Evaluations

uditors

StandardizedCoefficient:Technical

Knowledge andAbility

StandardizedCoefficient:

ClientInteraction

Skills

StandardizedCoefficient:Professional

Attitudes andBehaviors Adjusted R2

ModelSignificance

igh-Performance 27 0.226 0.296 0.509 0.283 F 3,23 4.42p 0.101 p 0.055 p 0.005 p 0.014

ow-Performance 29 0.071 0.100 0.180 0.066 F 3,25 0.424p 0.362 p 0.315 p 0.186 p 0.737

igh- Low- performance auditors: standardized firm-reported evaluation 0 0. The three performance factors areescribed in the Appendix. The magnitudes of the coefficients are compared in Figure 1.uditing: A Journal of Practice & Theory February 2011American Accounting Association

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AAf CPA firm performance feedback may not be fully assimilated by auditors. Kennedy and Peecher1997 found that auditors were overconfident regarding the extent of their technical knowledge.

hile Kennedy and Peecher 1997 focus on one performance attribute versus multiple dimen-ions, auditors who are overconfident about their performance of an important attribute mayncorrectly evaluate their relative overall job performance. Overconfidence could also complicatefforts to calibrate ones performance relative to that of ones peers and superiors Tan and Jamal006. Moreover, Jourden and Heath 1996 found that even when people are given veridical taskeedback, their perceived level of competence drives their motivation and productivity.10

The relatively high-performance auditors indicate significant awareness of their superior per-ormance. We ran a 2 3 ANOVA with the self-reported performance evaluations as the depen-ent variable, relatively high versus low firm-reported performance as one factor, and the threeanks as the second factor. The self-reported job performance evaluations are significantly higheror the higher performance auditors, 0.464 versus 0.459, t 3.52, p .001, one-tailed.11 Theain effect of the ranks is not significant, F2,50 1 and the ranks factor does not interact with

he high- versus low-performance factor, F2,50 1. The relatively high-performance auditorslso have significantly higher mean attribute ratings, 71.70 versus 66.28, t 2.135, p .02,ne-tailed.12

he Value of ExpertiseIn addition to the performance evaluations, we obtained from the human resource managers

evels of annual auditor compensation and whether overtime compensation was paid. Only one ofhe small firms paid overtime compensation. Therefore, we can measure the value in compen-ation of levels of firm-reported performance. Using the square root transformation of the annualalary data to achieve a distribution consistent with the normal distribution assumption, theegression model includes two control variables. As would be expected, levels of compensationiffer according to rank, F2, 49 53.10, p 0.001, and compensation is higher at the largerrms, F1, 49 21.02, p 0.001. The firm-reported job performance measure is significant, t .647, p 0.01, one-tailed: An increase of one standard deviation in firm-reported performancemplies a $2,307 difference in annual compensation.

DISCUSSIONThis study provides new insights regarding the characteristics of relatively high-performance

uditors: they manifest a very different perception of their work. Auditors are increasingly ex-ected to develop client interaction skills in addition to professional attitudes and behaviors Ab-olmohammadi et al. 2004; Tan and Libby 1997and the higher-performing auditors recognizedhe relevance of these behaviors Tables 2 and 3 also see Arvey and Murphy 1998. Auditorsho rely less on standard audit procedures cf. Tan et al. 2002 and auditors who are more internalersus external in their locus of control Chen and Silverthorne 2008; Donnelly et al. 2003; Hyattnd Prawitt 2001 are associated with higher levels of job performance.

0 Evaluating the performance of subordinates is also a demanding task. For example, seniors may be able to use self-promotion to manage the performance beliefs of their managers Emby and Gibbins 1988; Rich et al. 1997. Moreknowledgeable superiors may overestimate the knowledge of subordinates Kennedy and Peecher 1997. Tan and Jamal2001 report that when they evaluated the quality of justification memoranda, managers having received an averageperformance evaluation were biased by awareness of the prior performance of a senior with whom they work; out-standing managers avoided this bias, thereby more objectively evaluating job performance.

1 A larger percentage of staff auditors are in the firm-reported relatively low-performance group, i.e., relative percentagesof 69 percent versus 26 percent. The average firm-reported evaluation is lower for the staff auditors, i.e., a meanevaluation of 3.29 versus 3.79 for the seniors and managers, t 3.34, p .05, all on a 15 scale.

2 The correlation of the standardized firm-reported and self-assessed job performance evaluations is 0.501, p .001,one-tailed. The correlations for the staff auditors, seniors, and managers are, respectively, 0.433, 0.564, and 0.764 all p .02.uditing: A Journal of Practice & Theory February 2011merican Accounting Association

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AA complementary explanation for the association of being inclined to extend standard auditrocedures and job performance is that higher-performance auditors may be assigned to moreemanding judgment tasks, i.e., tasks with less structure Bonner 1994, 230. This selectionrocess and the greater opportunity provided for superior job performance may have contributedo the significant association. We also note that the reliance on standard audit procedures is loweror the staff auditors at the large firms, 3.12 versus 3.77, t 3.767, p .001. The explanation maye that staff auditors at the large firms audit clients that have more complex business operations.he reliance on standard audit procedures for the seniors and managers at the large and small firms

s not significantly different.Two limitations of our study should be noted. First, future research is needed to refine our

nderstanding of the most representative portfolio of job attributes and work dimensions foristinguishing levels of auditor job performance see the Appendix. Significant progress has beenchieved Abdolmohammadi and Shanteau 1992; Abdolmohammadi et al. 2004; Tan 1999; Tannd Libby 1997 but clarification and refinement remain necessary. Second, we have a relativelymall sample of auditors across the three ranks; more statistical power would have permittedstimating of the three work dimension coefficients for rank-specific models.13 While the difficul-ies of obtaining actual CPA firm evaluations of performance are significant, their use is importantor understanding the characteristics of higher-performing auditorsand we indicate that self-eports of job performance are correlated with, but are not identical to, firm-reported evaluations.

APPENDIXJOB PERFORMANCE ATTRIBUTES

The participants indicated their perceived level of success relative to other auditors at theame level at his or her firm using a 17 scale, with 1 being Much less successful than others,nd 7 being Much more successful than others.

. Technical Knowledge and Ability

Developing practical solutions to problems encountered on an engagement. Problem-SolvingAbilityDeveloping an adequate understanding of relevant firm accounting releases, SEC regulations,federal and state income tax laws, etc. Accounting KnowledgePossessing technical ability in preparing financial statements and reports. Technical AnalysisOperating within an engagement budget. Within BudgetMaintaining a high percentage of billable hours for the firm. High Billable

. Client Interaction Skills

Comprehension of and interest in my clients businesses. Client Business AwarenessListening attentively to identify and understand the real concerns of my clients. UnderstandClient ConcernsConvincing clients that I understand their unique problems and concerns. Convince Client

3 For example, while the cell sizes are very small, the coefficients are in the predicted directions, i.e., for the higher-lower- performing staff auditors, 0.747 0.414 for the Client Interaction dimension and 0.710 0.316 for the Profes-sional Attitudes and Behaviors dimension. For the higher- lower- performing seniors and managers, the coefficients are0.114 0.081 for the Client Interaction dimension and 0.608 0.176 for the Professional Attitudes and Behaviordimension.uditing: A Journal of Practice & Theory February 2011American Accounting Association

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AA. Professional Attitudes and Behaviors

Effectiveness of written expression. Written ExpressionEffectiveness of oral expression. Oral ExpressionGaining the respect of associates. RespectProjecting an image of self-confidence. Self ConfidenceAbility to handle responsibility. ResponsibilityExercising sound judgment on an engagement. Sound Judgment

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Characteristics of Relatively High-Performance Auditors 1