A Research Note concerning Practical Problem-Solving Ability as a Predictor of Performance in Auditing Tasks

Abstract

The ability to recognize when there is a variety of solutions to a particular situation has been shown to be important to success in the accounting profession (Baril et al. 1998). Recently, a measure of ability has been developed in psychology that focuses on “practical” problemsolving ability (PPSA) (Devolder 1993). From a theoretical standpoint, relatively little is known about the association between ability and performance in accounting tasks. Thus, the purpose of this study is to investigate if PPSA predicts performance on two important auditing tasks, internal-control-evaluation and analytical procedures. Participants in this study (66 auditors and 78 accounting students) assessed vignettes of real-world financial problems and provided solutions to these problems. Participants also solved an analytical procedures and internal-control-evaluation task. The results suggest that PPSA was useful in predicting the performance of both accounting students and experienced auditors on both analytical procedures and internal-control evaluation. This is the first accounting study to examine PPSA. Practically, results suggest it may be important to attract students with high PPSA into the accounting profession.

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