The study has implications for audit planning and practice that are not specifically discussed in the paper.  First, the study provides some support for a seemingly obvious position that seniors/managers are more efficient in identifying financial statement errors than audit staff.  Second, the study shows that when auditors are given time to freely sort errors (e.g., when the errors have already been identified in the audit), they prefer to classify the errors by audit objective.  This finding is somewhat counterintuitive, given that auditors’ knowledge is primarily structured around transaction cycles.  The authors suggest that this finding may be attributed to auditors thinking about the causes of errors when sorting through errors, which would correspond more directly to audit objectives than to transaction cycles.    

Coyne, M. P., S. F. Biggs, and J. S. Rich. 2010. Priming/Reaction-Time Evidence of the Structure of Auditors’ Knowledge of Financial Statement Errors. Auditing: A Journal of Practice and Theory 29(1):99-123.

Research into how knowledge of financial statement errors is organized in auditors’ memory has an important practical goal to improve decision making in auditing contexts.  Prior research has concluded that auditors structure their knowledge of financial statement errors primarily around audit objectives.  This stream of research has typically used cue sorting method, and it has been believed that other research methods would reach the same conclusions regarding how auditors structure their knowledge of financial statement errors.  

However, the cue sorting method has one important limitation for studying memory structure. The act of sorting cues requires a participant to develop sorting strategies and make conscious choices about sorting cues into categories. These sorting strategies and choices may or may not be representative of the structure or organization of the knowledge in participants’ memory.  For example, an auditor may decide to sort financial statement errors alphabetically, which is an unlikely organization of the auditor’s knowledge.  The purpose of this study is to determine if the finding that auditor knowledge of financial statement errors is organized primarily around audit objectives can be replicated with the priming/reaction time method.  This method is often preferred in psychological research for studying the structure of knowledge in memory.

Coyne et al. collect their evidence via an experiment with audit staff, seniors, and managers as participants.  In this experiment auditors complete a task designed to assess how financial statement errors are organized in auditors’ memory.  The task is completed by each auditor initially using the method used in prior research (the free sort method), and then using the method preferred in psychological research for studying the structure of knowledge in memory (the priming/reaction time method).  The free sort method requires the auditors to sort 35 financial statement errors into groups of “audit differences that go together.”  In the priming/reaction time method, Coyne et al. measure participants’ speed of recognition of several financial statement error descriptions as audit objectives or transaction cycle primes. The experiments were conducted in the early 2000’s time period.

• Coyne et al. find that when auditors use the free sort method, the results of prior research are generally replicated.  That is, auditors sort errors in a way that indicates that they structure their knowledge of financial statement errors primarily around audit objectives.
• Coyne et al. find that seniors’/managers’ average financial error recognition speed in the priming/reaction time method are significantly faster than the audit staff’s average recognition speed. 
• Coyne et al. find that all auditors’ speed of financial statement error recognition is faster when they are primed to think of transaction cycles, than when they are primed to think of audit objectives.  This effect is especially pronounced for seniors/managers.  Thus, Coyne et al. find that seniors’/managers’ speed of financial error recognition is significantly faster when they are primed to think of transaction cycles than audit objectives.    
• In a supplemental analysis, Coyne et al. find that seniors/managers are marginally more accurate than staff, and are significantly more accurate than staff with transaction cycle primes.  This finding further supports the study’s conclusion that seniors/managers organize their knowledge about financial statement errors around transaction cycles. 
• In a supplemental analysis, Coyne et al. find that staff are more accurate with transaction cycle primes than audit objective primes.  This finding provides some evidence that staff may organize errors around transaction cycles, and no evidence that staff organize errors around audit objectives.