Shifting Human/Technology Agency and Auditor Legal Liability
Posted: 9 May 2020
Date Written: April 15, 2020
Abstract
Recent advances in decentralized, autonomous technology enables replacement of human agents with technology agents that perform recurring transactions with little human intervention. Theory suggests that this shift from human to technology agency will change perceptions of causality which could affect surrounding legal institutions. Of course, since humans both develop and audit the autonomous system, legal liability for a failure should not change because of the system that generated the failure. However, based on the human/computer interaction literature, we predict that jurors will shift liability assessments from the auditor to the system. In a between-participants experiment with eligible jurors, we manipulate human intervention in the transaction processing system (human agency versus technology agency) and the auditor’s collection of substantive test evidence (less versus more), and we measure participants’ association of technology with success (technology optimism). For human agency, we find the auditor’s conduct of substantive tests is associated with jurors’ assessments of auditor causal influence, while the conduct of substantive tests is not associated with jurors’ assessments for technology agency. Instead, for technology agency, we find jurors’ technology optimism is associated with jurors’ assessments of auditor causal influence, consistent with jurors focusing on the system rather than the auditor’s evidence collection. Together our results suggest that shifts in human/technology agency could lead to unintended shifts in judgments of auditor liability that depend on the client’s transaction processing system rather than the auditor’s extent of evidence.
Keywords: Transaction Processing Systems, Audit Evidence; Technology Optimism, Auditor Legal Liability, Juror Judgments
JEL Classification: M40, M41
Suggested Citation: Suggested Citation