Client Autonomous Technology and Auditor Legal Liability

Technological advancements have enabled client organizations to replace human labor with autonomous technology that processes transactions independent of direct human intervention. Theory suggests that autonomous technology introduces an unconscious bias that reduces the perception of human control over negative events when systems use more autonomous technology. In a between-participants experiment, we test whether jurors reduce their assessments of auditor control over an undetected misstatement in the presence of a more, compared to a less, autonomous client system. Although jurors should focus on audit evidence quality and not on the nature of the client’s system, we find they do so only in the presence of a less autonomous client system and only when their implicit belief that “more technology is good” is lower. Overall, technology-based perceptions can change perceptions of auditor accountability for audit failures. Data Availability: Data are available upon request to the first author. JEL Classifications: M41; M42.