12130950 a responsibility for audit expert system

8/6/2019 12130950 a Responsibility for Audit Expert System

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ABSTRACT. To effectively pursue ethical action, the

business community must recognize that the funda-

mental form of human association is not the social

contract into which persons enter as atomic indi-

viduals, making partial commitments to each other

for the purpose of gaining limited common ends or

of satisfying certain laws. The fundamental form ofhuman association is rather the face to face commu-

nity in which ongoing commitments are the rule and

in which aspects of every individuals experience are

conditioned by the continuing membership. The

following discussion initiates a preliminary phase in

the consideration of what constitutes ethical issues

associated with the business applications of expert

systems. The focus is on knowledge based expert

system applications in public accounting, specifically

in the audit domain. Prior research on the develop-

ment and use of expert systems in auditing has

focused on a limited set of ethical issues. Niebuhrstheory of the the responsible self is used here to

broaden the scope of what constitutes an ethical issue

and provides a framework for identifying responsible

action. Within this framework, an action is respon-

sible if it takes into consideration ongoing relation-

ships among the stakeholder groups affected. Actions

prior to the development of the system along with

the potential consequences for the system must be

considered. The discursive requirements that provide

the context and conditions necessary for imple-

menting the proposed theoretical framework are

presented and an illustration of how the responsibility

ethic can be implemented in the audit expert system

domain is developed.

KEY WORDS: expert systems, information tech-

nology, responsibility ethics, stakeholder committee,

systems development

Expert systems (ES) are computer systems

designed to make expert level decisions withincomplex domains. The business applications of

this advanced information technology has beenvaried and broad reaching, directed toward

making operational, management and strategicdecisions. Audit expert systems (AES) are such

systems applied in the auditing environmentwithin the public accounting domain. Major

public accounting firms have been quite active in

developing such systems (Baldwin-Morgan, 1993;Tomas, 1998; Yang and Vasarhelyi, 1998), and

some argue that these tools and technologies willbe increasingly important for survival as the firms

strive to enhance their competitive position andto reduce their legal and business risk (Baldwin-

Morgan, 1998). The implementation and use ofthese powerful systems raise a variety of signifi-

cant ethical questions. As public accounting firmscontinue to devote substantial resources to the

development of AES, dealing with the ethical

risks and potential consequences to stakeholderstakes on increasing significance. Although the

ethical implications of AES are beginning to berecognized, much remains to be done. As an

A Responsibility Ethic Jesse F. Dillardfor Audit Expert Systems Kristi Yuthas

Journal of Business Ethics 30: 337359, 2001. 2001 Kluwer Academic Publishers. Printed in the Netherlands.

Jesse F. Dillard is cur rently the KPMG Peat MarwickProfessor of Accounting and Accounting DepartmentChair in the Robert O. Anderson School of

Management, University of New Mexico. ProfessorDillard received his Ph.D. from the University of SouthCarolina, has published widely in the accounting andbusiness literature, and is currently working in the areaof information technology and its ethical implications inthe workplace.

Kristi Yuthas is an associate professor at Portland StateUniversity (Portland State University). Her researchfocuses on the social and organizational impacts of infor-mation technology and management control systems.


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initial step, this paper proposes an ethical frame-

work for recognizing, discussing and evaluatingAES implications for public accounting and its

stakeholders. The paper is an attempt to developand expand the ethical implications associated

with the application of expert systems in businessdomains. The focus is on audit expert systemsbecause the domain is relatively well developed

and can be fairly easily delineated (e.g., seeVasarhelyi and Kogan, 1998). However, the

implications of the discussion are germane forother large public service organizations as well

as business applications in general.1

Previous research on ES ethics has been sparse

and narrowly focused. Khalil (1993) considers theethics of expert system applications in terms of

the systems capacity for and legitimacy in moraldecision making. He suggests that the legal or

ethical responsibility for decision-making cannot

be abdicated by humans (or organizations)through the implementation of expert systems,

and he concludes that ethics cannot be trans-ferred to systems; thus, the concept of artificial

ethics is still science fiction (p. 319). Discussionwithin the audit domain has centered around the

expert/firm relationship and tends to focus onlegal implications (Specht et al., 1991) or own-

ership rights (Sutton et al., 1995) associated withaudit expert system use.

Following Dillard and Yuthas (1997), thispaper expands the scope of these discussions by

applying Niebuhrs (1963) theory of responsi-

bility ethics. The normative arguments of theresponsibility ethic allow for explicit considera-

tion of multiple stakeholders within the auditdomain. Application of Niebuhrs framework also

provides a means through which ethical issues canbe formulated with greater breadth and speci-

ficity. The purpose of this paper is therefore to

show how a responsibility-oriented perspectivecan be used by audit firms and other publicaccounting constituents to identify a broad range

of potential ethical issues and to address them ina systematic manner that considers stakeholder

interests. As such, the responsibility ethicprovides a broader basis for addressing ES appli-

cations within the audit domain.

The remainder of the paper is divided intothree sections. The first section describes extant

literature on AES ethics and Niebuhrs responsi-

bility ethic (1963) including the conditions thatmust obtain for it to be most successfully applied.

The second section discusses how Niebuhrsframework differs from current perspectives on

ethical decision making in auditing and describesthe process through which decisions are madeunder the responsibility approach. The third

section provides an example of issues that mightarise when the responsibility framework is used

to analyze the ethical implications of an AESimplementation.

Theoretical background

This section lays the theoretical groundwork forthe responsibility approach to ethical dilemmas

proposed in this paper. The section begins by

defining expert systems and exploring pastresearch on ethical issues associated with the use

of ES in auditing. Previous research relies on anarrow interpretation of the theory of distribu-

tive justice, an ethical perspective that deals withquestions surrounding the ethical distribution of

rights and resources, such as audit expertise andits associated rewards. We argue that this per-

spective is limited and propose the use of analternative approach for addressing AES dilemmas

Niebuhrs responsibility-based ethics. This

perspective is appropriate for AES decisions,because it is designed to address communal

problems such as those associated with sharedresponsibility for system outcomes. Although

Niebuhr provides a framework for analyzing thedecision context to determine appropriate action,

he does not discuss how an understanding of thiscontext is to be gained by the decision maker.

The final portion of this section describes the

necessary conditions for a dialogue that allowsstakeholders a voice in AES decisions.

Expert systems

Expert systems and decision support systems canbe seen as extremes on a continuum representing

the extent to which a system possesses reasoningcapabilities (Dillard and Bricker, 1992). A

338 Jesse F. Dillard and Kristi Yuthas


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decision support system contains no reasoning or

logic capabilities but assists the decision maker byselecting information and sequencing decision

processes. Expert domain knowledge is requiredon the part of the decision maker to arrive at

the decision or judgment. In contrast, expertsystems are designed to be used by decisionmakers who do not possess expertise in the

problem domain. The human experts represen-tation of the task domain provides the template

for expert system design.2 The knowledge baseand heuristic rules which are used to systemati-

cally search a problem space reflect the decisionprocesses of the expert. A viable expert system

is expected to perform this search as effectivelyand efficiently as a human expert. An expert

system incorporates the reasoning capabilities ofa domain expert and applies them in arriving at

a decision. The system user needs little domain

specific knowledge in order for a decision orjudgment to be made. The users main decision

is whether to accept the systems result.Decisions or judgments made by an expert

system can be an intermediate component in alarger decision context. For example, an AES

may provide a judgment as to the adequacy ofloan loss reserves that an auditor would use as

input for making an audit opinion decision. Thefact that the output supports or provides input

for another decision does not make the systemany less an expert system. The distinguishing

feature of an expert system lies in its ability to

arrive at a nonalgorithmic solution using processesconsistent with those of a domain expert.

The audit domain

Baldwin-Morgan (1993), citing Brown (1991),

states that currently, over 30 auditing expertsystems are being developed and used by Big 6firms at a cost of millions of dollars each year

(p. 17). Using telephone interviews with Big 6

representatives, Brown and Murphy (1990) foundthat although there was a great deal of diversity

among them, all of the firms were either usingexpert systems in their audit practice or had such

systems under development. The respondentsreported that expert systems were useful for

solving auditing and accounting problems. The

functional areas in which expert systems werebeing used included audit work program devel-

opment, internal control evaluation and risk

analysis, and technical assistance.

Audit-related systems or prototypes that havebeen developed include Expertest, ExperTAX,and RISK ADVISOR (Coopers and Lybrand,

e.g., Graham et al., 1991), LOAN PROBE(KPMG Peat Marwick, Willingham and Ribar,

1988), CONTROL PLAN (Deloitte andTouche), RIC Checklist (Price Waterhouse),

EDP-EXPERT (Hansen and Messier 1986),AUDITORS ASSISTANT (Srivastava et al.,

1990), AUDITOR (Dungan, 1983), ICE

(internal control evaluation, Kelly, 1984),

XINFO (going concern opinion decision, Dillardand Mutchler 1988), TICOM-IV (Bailey et al.,1988) and AUDITPLANNER (Steinbart, 1984).

While a critical review of extant AES is beyondthe scope of this discussion, such reviews have

been undertaken by OLeary and Watkins (1989),Brown and Murphy (1990), Meservy et al.

(1992), Baldwin-Morgan (1993), Khani andZarolwin (1995) and Tomas (1998). There is also

a growing body of behavioral systems researchthat focuses on the design and use of expert

systems in accounting (e.g., Steinbart and Accola,

1994; Pei et al., 1994; Eining and Dorr, 1991;Murphy, 1990; Gal and Steinbart, 1992; Pei and

Reneau, 1990; Steinbart, 1987).Despite the increasing level of interest and

investment in expert systems by publicaccounting firms (OLeary and Watkins, 1989;

Baldwin-Morgan, 1993, 1998), little attention ispaid to exploring the impact these systems will

have on a firm and its stakeholders. This is notsurprising, considering the dearth of literature

investigating ethical problems relating to other

types of information systems (Mitroff and Mason,1989). Expert systems research both inside and

outside the audit domain focuses largely ondescribing individual systems, exploring the

benefits to be gained from expert systems andaddressing technical complexities of developing

successful systems. The primary justification forexpert system development and implementation

in general takes a decidedly utilitarian perspec-tive. The primary ethical consideration is

A Responsibility Ethic for Audit Expert Systems 339


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economic efficiency does it pay in terms of

return on investment? The return can beobtained from reduced operating costs, increased

efficiency, increased productivity, increasedrevenues and/or reduced legal liability risk.

Apparently, experts, firms and researchers do notconsider the implementation of expert systems asethically problematic. The question of whether

expert systems should be developed or imple-mented in particular circumstances is generally a

non sequitur relative to the technologicalquestion of whether they couldbe developed.

A limited number of recent studies has con-sidered ethical issues associated with the devel-

opment and application of audit expert systems.This work has taken either a legal perspective or

an ownership perspective, and although it hasadvanced the discussion of systems development

and use, the analysis has tended to be narrowly

focused.Specht et al. (1991) raise the issue of who is

liable when a system fails and conclude thatparticipation in the development and use of an

expert system can expose an auditor/expert toincreased legal risk. The expert may be liable for

audit failures attributable to the expert system ifthe knowledge base is found to contain errors

or if the system is implicated in erroneous auditjudgments.

Several studies focus specifically on ownershiprights. Ownership refers to rights or entitlements

to specialized knowledge or expertise. Mitroff

and Mason (1989) suggest that the developmentof expert systems will cause professionals to

address the question of who owns an expertsknowledge. Before the development of expert

systems, expert knowledge leading to professional judgments resided in the minds of experts/

auditors and moved with them from job to job

and firm to firm. When knowledge is incorpo-rated into an expert system, an individual maylose ownership to, and control over, the exper-

tise.Sutton and Byington (1993) identify the

question of ownership as the primary ethicalissue in expert systems applications. Sutton et al.

(1995) focus on ownership as it relates to the

replication and dissemination of an expertsknowledge using computer software. These

authors frame the ethical issues in terms of

distributive justice and consider the issues in lightof three ethical reasoning categories: teleological,

deontological and contractarian. They rightlyargue that each of these ethical foundations

provides a different perspective on the ethicaldilemma being faced by an individual, a firm

and/or society with respect to the development

and implementation of expert systems in auditfirms. As a result of their analysis, Sutton et al.

(1995) propose the use of a contractarian frame-work to evaluate expert systems development

and application.The arguments in prior AES research can be

framed as problems of distributive justice. Thecentral focus of theories of distributive justice is

the question of how goods and opportunitiesshould be equitably distributed. A broad array

of answers to this question have been proposed.

The perspective of AES researchers tends tocoincide with Nozicks (1974) argument that

rights to what one acquires are der ived from howone acquired it. If the property has been legiti-

mately acquired, its possessor has earned it, hasthe right to continue to possess it, and is entitled

to any returns generated. The question of whois entitled to the use of expert knowledge thus

hinges on whether the expertise was legitimatelyacquired by a person without infringing on the

efforts or rights of others when the expertise did

not previously exist, or whether the expertise wastransferred from an expert who initially and

legitimately acquired the expertise. If the issueis that of who is responsible for creating, or

earning, the expertise, then under Nozicksproposal, the distributions of the rewards from its

exploitation would be fairly easy to settle. Suchis the position generally taken by Sutton et al.

(1995) in all three of the positions they address.3

The problem with this perspective, and animportant shortcoming of prior AES literature,centers on its view of legitimate entitlements.

Any theory of distributive justice hinges on thequestion of who deserves what. As MacIntyre

(1984) points out, Nozicks formulation presumesthat one is deserving because one has earned the

right. Other more liberal formulations (e.g.,

Rawls, 1971) presume that one is deservingbecause one has been deprived. Neither position



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considers the context of the distribution decision

in terms of the ongoing relationships amongindividuals affected by the decision as does the

responsibility ethic discussed in the followingsection.

Responsibility ethic

When considering relations among ethical

agents,4 one does not consider only the teleo-logical ends being consciously pursued or the

deontological self-legislated laws (e.g., social con-tracts) being obeyed. One considers how agents

are responding to each others behavior based oninterpretations of past actions and anticipation

of responses to proposed actions, all groundedwithin a communal history. One interprets the

things that are encountered as parts of wholes,

as related to and as symbolic of larger meanings.(Murdock, 1992). Niebuhr (1963) argues that

ethical systems must be formulated for, and by,members of an ongoing community. This is

consistent with the perspective of normativestakeholder theory, which suggests that the

ongoing rights and interests of communitymembers should be considered before a firm

takes action (Donaldson and Preston, 1995).Niebuhr proposes a responsibility-oriented ethic

containing the following key elements: inter-preted action, response, accountability, and social

solidarity. Moral or ethical behavior requires

awareness of the relatedness of events and can beviewed as a response to previous, interpreted action.When determining the appropriate response, theagent recognizes the condition of being held

accountablefor the consequences of that decision.These actions, responses, and consequences all

take place within an ongoing community.

Responsibility is derived from an agents recog-nition of his/her accountability for behavior andincludes accepting the relational consequences

as well as anticipating the continued reaction of

the community. Accepting the continuingdialogue among agents forming a community is

what Niebuhr refers to as social solidarity. Thus,responsibility based on personal accountability is

dependent upon a relatively stable ongoingcommunity of agents.

Niebuhrs perspective on the central question

in ethics what shall I do? is cast in termsof an ongoing conversation among the agent and

all affected parties. The responsibility ethic

recognizes the involvement and connectedness of

behavior and response. An agent responds tobehaviors based on the interpretation of actionas well as the anticipated interpretation of the

responses of the other actors. The agent is heldaccountable for the response by the community

of agents interpreting his/her act. The agentanticipates and accepts the reaction of the com-

munity of actors to the response.Niebuhr integrates a systematic dynamic into

ethical considerations by recognizing the inter-

connectedness of actions, response and interpre-

tation as well as the ongoing nature of theprocess. An ethical decision is not a one-time,isolated event. An agent is engaged in an ongoing

conversation of behavior and response carried outwithin a sustaining community or society. The

ethic of responsibility does not seek the goodin a utilitarian sense or the right in a deonto-

logical sense, although it incorporates both ofthese ideals. The good and the right are defined

within the process of determining which actionis fitting, based on the history of the community.

Conditions for responsible behavior

Niebuhrs responsibility ethic presents an abstract

process-oriented perspective whereby ethicalbehavior is derived from an agent recognizing

and being held accountable for his/her actionsas part of a society. Niebuhr uses a descriptive

metaphor of an ongoing conversation betweenthe agent and the members of the community.5

The conversation metaphor has a literal compo-

nent as well; implicit in Niebuhrs perspective isa reliance on the ability of community membersto engage in open and trustworthy discourse.

For Niebuhr, ethical behavior is predicated onan agents ability to communicate (i.e., interact

and develop symbolic meaning) while partici-pating as a nontransient member of an ongoing

community. Thus, one of the first steps toward

the implementation of a responsibility ethic isthe stipulation of what constitutes legitimate



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communal dialogue. According to Niebuhr, dis-

course requires an agent to assess the trustwor-thiness of the system of actors within which the

agent is situated. Through ongoing discourse andaction, the agent develops a sense of loyalty

toward the community. Niebuhrs argumentssuggest that if the communal discourse is dis-torted or controlled by powerful agents set on

accomplishing self-interested goals, the ethic ofresponsibility becomes an ethic of manipulation

and exploitation.Although Niebuhr recognizes the importance

of fair discourse, the abstractness of his formula-tion makes it difficult to move from theoretical

discussion to the actual implementation of theresponsibility ethic in a practical domain such as

audit expert systems. However, the responsibilityethic has similarities to contemporary stakeholder

approaches and, like those approaches, can be

useful in developing a broader perspective on thedomain of interest. Normative stakeholder

theory6 suggests that a firms stakeholders thosegroups potentially affecting or affected by a firms

actions should have the opportunity to expresstheir interests. The rights and responsibilities of

these groups are to be considered before takingaction if the action is to be an ethical one. 7

To explore the conditions necessary to achievefair discourse among stakeholders, we draw upon

Habermas theory of communicative action.Habermas (1984, esp. 92104) stipulates that

legitimate communication which forms the basisfor ethical action requires the satisfaction of three

validity claims:

1. propositional validity concerning externalor objective characteristics (truth obliged

to provide grounds);2. normative validity concerning rightness

relative to social norms (rightness obliged

to provide justification); and3. subjective authenticity relative to the per-

ception and actual intention of behavior(truthfulness obliged to prove trustwor-

thiness).

These claims can be used to define the condi-tions under which the responsibility ethic can

be legitimately pursued. In discussing theseclaims, we use as an example the interaction

between an audit firm and its client with respect

to the use of AES. The first validity claimrequires that a behavior is the most effective and

efficient means of obtaining an end. This claim

is teleological in nature. The focus is toward

instrumental, goal-directed behaviors. In usingan expert system on an audit engagement, theaudit firm claims, and the client legitimately

accepts, that the system is technically sound, isappropriately applied, and represents effective and

efficient service. The second validity claim is thata behavior is correct and proper in accordance

with relevant norms. This claim is deontologicalin nature. The focus is toward behavior con-

forming to some covering law or set of prede-termined standards. The audit firm claims, and

the client legitimately accepts, that the systemconforms to extant accounting and auditingstandards and that the implementation of the

system is within the scope of legal and/or pro-fessional guidelines. The third validity claim

refers to the authenticity and sincerity of subjective behavior. The focus is toward behavior

that is legitimate, in that the actual purpose ofthe agent is the stated purpose of the agent. This

represents the critical assumption underlying theresponsibility ethic of Niebuhr. An agent must

be trusted to be genuine in his or her behavior.

This claim moves beyond the teleological anddeontological considerations. If an agent is not

genuine in his or her assertions, strategic inten-tions are presumed. One agent is attempting to

manipulate another agent for the formers gain.The trustworthiness of the dialogue is put in

doubt.If any of these validity claims fails, legitimate,

trustworthy dialogue can break down. Mutualunderstanding grounded on previous experience

cannot be relied upon as the basis for respon-

sible behavior. Intersubjective understanding isillusive and it may become difficult to integrate

actions/responses into a larger context. Loyaltyamong the agents toward communal institutions

may not develop.To pursue the engagement of a responsibility

ethic within an audit context, it is thus neces-sary to approximate the requisite conditions for

legitimate communication in which the validityclaims can be made. To arrive at the desired goal



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of a dynamic, evolving ethic, certain conditions

must be met. Following Habermas, Kettner(1993) identifies five conditions or character istics

required for an ethically rational dialogue: gen-erality, autonomous evaluation, role-taking,

power-neutrality, and transparency.Generality requires that a discussion must be

open to all interested parties (or their represen-

tatives) who are competent to participate. Withinan expert system context, everyone affected by

the implementation and use of the system shouldhave an opportunity to express an opinion.

Groups affected by audit expert systems thatshould be included in the dialogue consist of, but

are not limited to, experts, firm employees/users,firm management, clients, current and potential

investors in clients, regulators, the accountingprofession, and society.

Autonomous evaluation implies that individ-

uals should be allowed to interject their ownindividual interests and needs into a discussion

and should not be restricted to seeking univer-salized ends such as the greatest good or equi-

table distribution. These individual interests arealso open to criticism by other participants when,

for example, they appear to be irrational ordogmatic. This implies that each of the stake-

holder groups mentioned above is to be per-mitted to present its position with respect to

expert systems applications as each would be

affected, without fear of ridicule or reprisal butin anticipation of legitimate criticism.

Role-taking requires that even as participantspresent their individual interests and needs, they

transcend these self-interested positions so thatthey can understand the views of the other

participants. For example, those responsible forthe decision to develop an expert system would

take seriously the interests of those affected by

the system, viewing the circumstances from theperspectives of other stakeholders, such as thefield auditor who will use the system or the client

who must rely on the output.

Power-neutrality suggests that participantsmust hold, or acquiesce to, positions of equal

power with respect to participation and expres-sion. Nondistorted communication can occur

only when participants are not affected byasymmetric power arrangements. In an actual

dialogue between an expert and a firm, each may

withhold certain statements for fear that negative

consequences would result. Thus, to achieveundistorted communication it is necessary to

develop mechanisms that allow parties to partic-

ipate without fear of retribution; for example, thedialogue might take place under conditions ofguaranteed anonymity or between experts of one

firm and managers of another.Transparency reinforces the premise that most

discourse relates to strategic behavior. Agents uselanguage strategically to accomplish their own,

self-interested goals. Therefore, for fair discourseparties must be encouraged to expose their own

individual interests, strategies and goals and to

seek to explore those of other participants. For

example, if it is a firms intention to use an expertsystem to standardize audit practices and therebyreduce the work force, this purpose should be

made known to all participants. Likewise, anexpert seeking to obtain status within a firm

would be required to reveal such objectives. Ifthe goals are misrepresented or hidden from

others, consensus based on full mutual under-standing cannot be attained.

Clearly, these conditions are highly restrictive

and difficult to attain. Nonetheless, they provideideals which can be pursued by firms or stake-

holders seeking to identify moral courses ofaction when faced with ethical dilemmas. To the

extent that the conditions for ethical dialogue arenot met, the ethical consensus obtained from the

communal discourse is brought into question andthe responsibility ethic is incomplete or distorted.

Thus, these conditions represent limiting condi-tions of the responsibility ethic. Firms committed

to understanding and pursuing the ethical useof expert systems can use the constraints as

guidelines for actual conversations. They can

develop mechanisms through which stakeholderscan be identified and invited to express their

views in an ongoing and open discussion.The responsibility ethic formulated above does

not specify universal weighting mechanisms forethical outcomes. Each situation in which the

approach is used would contain unique contex-tual elements. Thus, prioritization and selection

of interests and outcomes could only be deter-mined through legitimate dialogue among



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affected parties; decisions would be made, ideally,

on the basis of the stronger argument. If thisprocess is seriously pursued, different sets of

responsible behaviors may emerge and differentapproaches might arise among the firms with

respect to AES development and implementation.The responsibility framework provides

guidance for developing a context within which

priorities can be set by the affected stakeholdersfacing a particular ethical dilemma within a

specific set of circumstances. The frameworkdoes not prescribe a set of rules to be applied to

all AES decisions under all circumstances. It does,however, seek to emphasize the importance of

context in ethical decision making. It describesa process through which the interests of stake-

holders can be explored and the conditionsnecessary for this process to succeed. With these

limitations in mind, the following section

presents an example of how the responsibilityethic can be applied in determining the ethical

actions associated with AES development andimplementation.

Implementation of a responsibility ethic

The ethical issue in question is whether an auditfirm should undertake the development and

implementation of an expert system designed to

make some set of significant judgments as partof the standard audit program. In this section, we

draw upon a cognitive model of the ethicaldecision making process of auditors which was

developed and validated by Lampe and Finn(1992). We combine this model with the four

elements of the responsibility ethic to show howa responsibility ethic can be used as a framework

for approaching ethical dilemmas. Niebuhrs

work provides a general, abstract framework thatcan be applied in identifying and evaluating thenature of ethical issues surrounding the devel-

opment and use of expert systems. The frame-

work also allows for recognition of thepervasiveness of system-related effects throughout

many levels of analysis.We begin this section by summarizing the

elements of the Lampe and Finn model, whichwas designed to accommodate a single auditor

facing a particular ethical dilemma. We refor-

mulate this model and combine it with Niebuhrs

ideas to develop a decision making frameworkdesigned to help AES proponents become aware

of their stakeholders and to conduct ongoing,

structured discussions with these stakeholders toidentify potential ethical issues. Our analysiscenters around the Lampe and Finn model

because their model directly addresses ethicaldecision making in the audit domain. However,

this model is based upon, and is similar to othergeneral cognitive models, such as the one

developed by Rest (1986).Lampe and Finn (1992) argue that the standard

audit decision model, as set forth in the AICPA

code of ethics, is not sufficiently complex to

describe fully the processes by which auditorsmake ethical decisions. Lampe and Finn developa 5-stage decision model that begins at the point

just after an ethical issue has been identified andends just before an action is taken. The model

includes the following distinct processes (pp.4041):

1) gain understanding develop an under-

standing of all facets of the decision,including related elements of the code of

ethics;

2) recognize impact explore how thedecision will affect others;

3) judge alternatives identify and comparealternative decisions;

4) assess other values explore values beyondthose implied by the code of ethics;

5) make final decision combine code-implied and other values to determine the

appropriate course of action.

As discussed earlier, Niebuhrs responsibility ethic

contains four components:

1) social solidarity ongoing network of rela-

tionships and interaction among commu-nity members;

2) interpreted action the decision makersinterpretation of actions preceding the

decision;

3) accountability the anticipated responsesby community members to the alternative

courses of action;



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4) response the decision regarding the best

alternative response to the ethical dilemmaand the associated action.

The four components of the responsibility ethic

are related to the five decision processes identi-fied by the cognitive decision model, and a

simple transformation can be used to equate thetwo, as shown below:

Niebuhr Lampe and Finn

1) social solidarity 4) assess other values

2) interpreted action 1) gain understanding3) accountability 2) recognize impact

3) judge alternatives4) response 5) make final decision

Before the two perspectives are consolidated,it is important to note the major differencesbetween the two. The most important difference

between the responsibility approach and thecognitive process models is that the latter begins

with the assumption that an ethical dilemma hasalready been identified. As discussed earlier, a

very important shortcoming in the AES litera-ture is its failure to treat ES implementation and

use as an ethical dilemma. From a responsibility

perspective, identification of ethical dilemmasmust be problematized. All decisions that have

the potential to significantly affect the interestsof stakeholder groups have an ethical component.

Thus, the process of identifying stakeholders,their related interests, and exposing potential

problems should be ongoing.The second difference between Niebuhrs

approach and the cognitive approaches lies in therelationship between the decision maker and

other community members. The cognitivemodels assume that the decision maker is both

thinking and acting in isolation from other stake-

holders when making an ethical decision. Thedecision maker, working alone, is faced with the

difficult task of conceptualizing the values, inter-ests, and reactions of others to the alternative

courses of action available. Niebuhrs approachviews each action as only a small part of an

ongoing relationship among members of a com-munity. Through this process, stakeholders con-

tinually reveal, discuss and defend their interests.The decision maker, as a member of an ongoing

community, internalizes the interests of others,

thus blurring the distinction between self andother. The interests addressed when a decision

is formulated are those of both the decisionmaker and the stakeholders. Appropriate

responses to ethical dilemmas are developedthrough consensus among group members ratherthan unilaterally by an individual decision maker

working alone.To address these differences, one important

change is made to the Lampe and Finn model.The fourth step, assess other values, is moved to

the beginning of the process, and would actuallytake place before the identification of a specific

ethical dilemma. This step would then provide acontext for identifying and resolving dilemmas.

In Niebuhrs framework, identification of ethicaldilemmas is an ongoing problem for which theinterests of stakeholders provide the background

for the process. Niebuhr contextualizes alldilemmas by recognizing the ongoing nature of

the relationships and interactions among com-munity members. Thus, social solidarity is listed

first awareness of the interests of other membersof the community is an ongoing process that

both precedes and contextualizes all ethicaldilemmas.

Social solidarity

When implementing a responsibility based

approach to ethical decision making, accom-plishing a sense of social solidarity requires two

activities: identification of stakeholders andestablishment of a communal discussion. First,

the decision maker seeks to identify the relevantstakeholder groups and to understand their rights

and interests. In the Lampe and Finn model, this

process does not occur until a specific dilemmahas been identified and the moral course of

action has been determined by the decisionmaker. When describing this phase, Lampe and

Finn attempt to allow for reasons why a decisionmaker might deviate from some logical course of

action prescribed by the code of ethics or by thedecision processes associated with the auditors

level of moral development. For example, theremay be an obvious technical conclusion with



10/24

respect to a disclosure issue, but client relation-

ships, personal gain, or community pressuresmight result in an action inconsistent with

auditing norms.Under the responsibility approach, the auditor

does not consider the interests of self and otherstakeholders after an initial judgement is made.Instead, the process of understanding and acting

upon community interests is ongoing and affectsevery decision and action made within that

context. The responsibility component related tothis decision phase is solidarity. The expert is

motivated by the ethical framework to considersuch things as the implications for the profession,

client responsibilities, social responsibilities,demands for efficiency, consistency with profes-

sional norms, competitive pressures and socialexpectations with respect to technology.

Interpreted action

This stage is comparable to Lampe and Finns

recognize impact stage. Lampe and Finn con-ceptualize this process as obtaining data about the

situation. When ethical dilemmas arise throughthe course of monitoring the stakeholder envi-

ronment, the decision maker considers thecontext or history of the dilemma before acting,

in an attempt to understand the context or

history of the dilemma. Although the interests ofother stakeholders are ongoing and continually

addressed, the decision maker must think aboutthe interactions related to the current dilemma.

When an ethical dilemma is addressed by thedecision maker, the decision maker must first

consider the historical interactions among com-munity members on matters related to the issue

of importance. The parties to the dilemma must

consider past actions and responses to thoseactions. The actors must also consider their ownand others interpretations of those actions before

forming a solution to the current dilemma.

Accountability

In the responsibility framework, the decisionmaker is held accountable to other community

members for actions taken. Before a response to

the ethical dilemma is formulated, the decision

maker explores the potential consequences of thedecision for all constituents, along with their

responses to the response. The accountability

stage is Lampe and Finns recognize impact andjudge alternatives stages. Combining thesestages highlights the fact that the morality of

alternatives cannot be judged solely usingdeontological grounds, as is implied by the

Kohlberg hierarchy on which cognitive modelsare based. The decision maker, as part of a

community, recognizes that all actions have con-sequences and will propagate sequences of future

actions. Therefore, recognizing the impact of

potential responses to the dilemma is an integral

part of judging alternatives.

Response

Once the decision maker and constituents haveiteratively considered the alternatives and ethical

issues associated with them, a response can beformulated. The response stage actually goes

beyond Lampe and Finns make final decision

phase, because it suggests that an action consis-tent with the decision will be carried out.

Although Lampe and Finn do not discuss whathappens after the decision is made, their work

relies on Rest, who suggests that after a responseto a dilemma is formulated, it will only be

carried out if the decision maker has the inten-tion, along with the perseverance and ego

strength, required to do so. Again, the cognitivemodels assume that the decision maker is acting

alone. Under the responsibility framework, con-stituents who might inhibit the decision makers

ability to carry out the decision will have par-

ticipated in the decision making process andin identification of the desired behavior. The

stakeholders also recognize the ongoing nature oftheir relationships with the decision maker.

Further, the decision maker has already consid-ered, and eliminated, alternatives to enacting the

appropriate response. Therefore, the processes ofmaking and carrying out the decision are

combined in the responsibility framework.



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Example of implementation of theresponsibility framework

In the previous section, we described the stepsrequired for implementation of the responsibility

ethic. In this section, we provide an example ofwhat might transpire when the responsibilityframework is used by an audit firm to explore

the ethical contours of an AES implementation.As discussed above, the first stage of the model

is social solidarity in which the audit firm con-stituents and their interrelationships will be

recognized. This stage is ongoing, and thereforeprecedent to any particular ethical dilemma. The

subsection below discusses the rights and respon-sibilities of major constituent groups likely to be

affected by the AES.Once the stakeholders and their interests have

been recognized, the firm begins the process of

discussing the ethical dilemma (development ofthe AES) with its constituents. As addressed

earlier, a valid discussion relies on conditions offair discourse, in which participants can express

and argue for their particular rights and interestswithout distorting those beliefs and without fear

of retaliation. When engaging in this discussion,the participants would work through the

remaining three steps of the framework inter-preting past actions, exploring the consequences

of alternative solutions, and producing a response

to the ethical dilemma. In the final two parts ofthis section, we present an example of the ethical

issues that might arise as part of these discussions.Although in a real decision making setting, the

firm would seek reactions from all constituents,we provide examples of the interaction between

the firm and the two constituent groups moststrongly affected by the development and use of

the AES. We examine the results of a simulated

discussion between the firm and the expert orexperts who are to lend expertise to the AES tobe developed. We then examine the results of a

simulated discussion between the firm and the

owners/shareholders representative of a clientfirm in which the AES will be used as part of

the audit program.Although the interactions exemplified below

represent only a subset of those to be consideredin a full implementation of the responsibility

approach, they are sufficient to demonstrate the

importance and benefits of the responsibility

framework. The examples show that by workingthrough Niebuhrs stages, ethical issues emerge at

each stage issues that vary across constituencies

as well as stages. The example shows that throughthe responsibility-oriented process an ethicaldilemma and its context can be more completely

defined.

Rights and responsibilities of audit constituents

The first step in the process is social solidarity.

The firm becomes aware of its place in the social

world by recognizing the interests of and inter-

actions among community members. In the caseof audit expert systems, members include: theexpert or experts who lend expertise to the

development of the system; the audit firm,represented by the controlling management

group; the firms employees and users who areaffected by system development and/or imple-

mentation; the audit client(s) for whom thesystem will be used as the basis of judgments;

investors in the client firm;8 the public account-ing profession; governmental and regulatory

agencies; and other affected members of society.Responsible behavior requires that the relevant

issue set be derived from the perspective ofeachcommunity member in relation to each othermember. The interaction set is illustrated inFigure 1. Only through examining the com-

plexity of the context and relationships sur-

rounding an issue can responsible behavior bedetermined.

Niebuhrs responsibility ethic assumes a readystock of knowledge comprised of previous

behaviors and responses that, in effect, construct

the frame of reference used for understanding andinterpretation. An agent draws on this stock ofknowledge in considering a response and in

anticipating the subsequent responses of com-munal agents. In addressing an issue or question,

not only may the agent be granted certain

rights9 by the community, but also the social/

ethical fabric represented in the agents stock of

knowledge suggests certain responsibilities coin-ciding with those rights. The following discus-



12/24


13/24

sion identifies eight areas of rights and responsi-

bilities that may be associated with communalagents for an audit expert system decision.

The expert presumes the right to his/herexpertise, but given that right has responsibili-

ties to all community constituencies. Theprimary responsibility to all constituencies is thatof competence and professional integrity. In

addition, there are responsibilities of solidaritywith other firm employees/users, of loyalty to the

firm, of membership to the profession, and cit-izenship to the community.

Thefirm employee/userpresumes the right to atechnically competent expert system, but given

that right has a primary responsibility, to allconstituencies, of competence and professional

integrity. In addition, there are responsibilitiesof respect toward and solidarity with the expert,

loyalty to the firm, effective and efficient per-

formance to the firm and the client, membershipto the profession, and citizenship to the com-

munity.The firm presumes the right to develop and

implement an audit expert system, but given thatright has responsibilities to all community con-

stituencies. The responsibilities to the expert andthe employee/user are fair compensation, good

work environment, security, training, trust-wor-thiness, and respect. The firms responsibilities to

the client, profession and society are competence,

professional integrity, and effective and efficientservice. The firm is responsible to investors and

regulators in certifying the accuracy of theinformation provided by the client and to society

in abiding by its laws and regulations.The clientpresumes the right to an effective

and efficient audit, but given that right has thefollowing responsibilities: accept the experts

expertise and judgment, provide access and coop-

eration to employee/user, compensate the firmfairly for its services, provide informationreflecting stewardship of resources and results of

actions to investors, acknowledge the services

provided by the profession, provide informationindicating level of conformance to regulations,

and provide goods and services in a sociallyresponsible way within the laws and regulations

of society.The clients investors have a right to an effec-

tive and efficient audit, but given that right have

the following responsibilities: recognize the com-

petence and professional integrity of the expert,employee/users and the firm; provide professional

and competent oversight of client activities and

recognize managements competence and profes-sional expertise; acknowledge the serviceprovided by the profession; provide information

indicating the level of conformity to regulations;and carry out resource allocation decisions effec-

tively and efficiently in a socially responsible waywithin the laws and regulations of society.

The profession presumes the right to expectcompetence and professional integrity from thoseinvolved in expert system development and

implementation, but given that right has a

responsibility to all constituencies to maintainprofessional standards. In addition, there areresponsibilities to recognize the expertise of

member professionals, to provide constructiveinput to the regulatory process, and to carry out

its obligations in a socially responsible mannerwithin the laws and regulations of society.

The regulators presume the right to validinformation, but given that right have the

responsibility to recognize the competence and

professional integrity of the expert, theemployee/user and the firm. The regulators have

a responsibility to the other constituencies toprovide effective and efficient regulatory over-

sight as well as to acknowledge the client man-agements competence and professional expertise.

Society presumes the right to valid informationbut given that right has the responsibility to

recognize the competence and professionalintegrity of the experts, employees/users, and the

firm. Further, society has a responsibility torecognize the competence and professional

expertise of the client and the investors as well

as their position as allocators of capital resources.Society also has the responsibility to acknowl-

edge the service provided by the profession andthe regulatory groups.

The expert/firm relationship

Applying Niebuhrs framework requires that, inaddition to the ongoing social context, past and



14/24

expected future actions be considered when

determining responsible action. The first illus-tration of the frameworks application is based on

a scenario in which an expert and a firm considerthe development and implementation of an audit

expert system. The parties are assumed to haveenjoyed an ongoing positive relationship charac-terized by loyalty and trust. The scenario

developed here is designed to demonstrate thateven within this narrow, cooperative context, a

large number of ethical issues arise that, to thispoint, have not been recognized or explored in

the AES literature.Figure 2 lays out the basic elements of

Niebuhrs framework from the perspectives of theexpert and firm. It identifies some of the many

issues that might arise in a dialogue regardingsystem development and implementation. The

list of issues is not intended to be exhaustive. Its

purpose is to illustrate the breadth and com-plexity of the problem and to make explicit the

general responsibilities described above. The listdemonstrates that a full exploration of the

relevant issues extends far beyond the previouslyaddressed problems of ownership and liability.

The firm/expert figure presents an example ofissues that might emerge from discourse between

these constituent groups. Identifying such issuesin real-life audit settings would necessitate a

discourse in which each partys position and

concerns are presented and debated. In deter-mining an ethical course of action with regard to

the development and use of an ES, the primaryconsideration for the expert and firm is their

accountability to other constituent groupsaffected by the development of the system. The

action and social solidarity portions of Figure 2represent the participants perceptions of previous

actions and relationships between the parties. The

accountability portion of the dialogue is criticalto the determination of an ethical course ofaction, because it represents anticipated effects of

ES development and use. Thus, parties must

thoroughly explore their responsibilities towardeach other when selecting a course of action.

Numerous responsibilities are likely to arisethrough such analysis, and a number of these are

represented in the accountability portion ofFigure 2. Responsibilities relating to this discus-

sion have been organized into six categories:

commitment, quality of work, quality of the

audit, quality of the system, quality of work life,and competitive pressures.

Examples of the issues that arise with respect

to commitment include: does the firm have anobligation to increase its commitment to theexpert? does the expert have an obligation of

increased commitment to the firm? will theexperts status within the firm increase? will

exposure of expertise negatively affect theexperts status? will the firm accept liability for

system failures? will the firm use the system for

the intended purpose? will the firm inform theexpert of the systems use? will each party assist

in the upgrading of the system? will the expert

sell expertise to competitors? will the expertleave the firm prematurely? will the expertsupport the use of the system?

Examples of issues that arise with respect tothe nature of the work include: will the nature ofthe experts work be significantly changed? willthe system affect the work of other firm

employees? will auditors be required to use thesystem? can the expert withdraw from the system

development project? can the expert delegate

tasks as a result of developing the system? can theexpert free time for more demanding tasks? can

the work of nonexperts be upgraded?Examples of issues that arise with respect to

the quality of the audit include: will the systemimprove the quality of the audit through access

to expertise? will the system provide concretiza-tion and standardization of judgment? will the

expert conscientiously participate in systemdevelopment and implementation? will the

expert misrepresent knowledge? will the expertidentify knowledge gaps? will the firm continue

to research potential negative system conse-

quences? will the firm withdraw the system ifaudit quality is degraded? will the firm withdraw

the system if the expert-client relationship isdegraded?

Examples of issues that arise with respect tothe quality of the expert system include: will theparticipants in the system development be com-petent and adequately trained? will the system be

technologically accurate? will the system be ableto be used effectively and efficiently? will the



15/24


system be updated to accommodate changing

circumstances? will the system be used appro-priately and in appropriate contexts? will the

system be adequately tested? will the firm andusers be fully aware of technological limitations?

Examples of issues that arise with respect tothe quality of work lifeinclude: will the expert beable to delegate decisions to nonexperts, freeing

time for more challenging assignments? will non-experts receive additional authority and respon-

sibility as a result of having access to the system?will nonexperts be provided an opportunity to

develop expertise? will the system routinizework, limit creativity and learning? will partici-

pation create a time burden? will participationcreate unnecessary frustration? will continued

participation be at the discretion of the expertand other participants? will the firm withdraw

the system if the quality of work life is degraded?

Examples of issues that arise with respect tocompetitive pressures include: will the developmentof the expert system help relieve competitivepressures? will the system reduce audit costs by

shifting tasks to lower cost, less expert, personnel?will the system reduce the number of high-priced

experts needed to be retained? will the value ofexpertise be downgraded by participation? will

liability be reduced through standardizing someaudit judgments? will liability be reduced through

an increased ability to substantiate decisionprocesses? will the system be used according to

industry norms?

The firm/investor relationship

Figure 3 lays out the basic elements of Niebuhrsframework from the perspectives of the audit

firm and the investors in the client firm for

whose audit the proposed expert system will beused. This scenario identifies some of the manyissues that might arise in a dialogue between the

two regarding the development and implemen-tation of such a system. Again, the list is not

comprehensive, but illustrates the breadth and

complexity of the problem and the need toextend consideration of ethical issues beyond the

expert/firm relationship that has been theprimary focus in previous research.

The responsibilities identified in this scenario

revolve around issues of the effectiveness and effi-ciency of audit services, expertise, competence,

and professional integrity as part of the process

of attesting to the accuracy of the information

supplied to the investors.This figure illustrates all four components of

Niebuhrs responsibility ethic. In contemplating

the response (the development and use of theES), the firm and investors must maintain

accountability they must explore the potentialeffects of the system on other constituent groups.

Two categories of issues are likely to emerge fromsuch an endeavor: issues concerning audit effec-

tiveness and efficiency, and issues concerningexpertise, competence, and professional integrity.

The issues concerning audit effectiveness andefficiency are: Will the system improve the overalleffectiveness of the audit? Will the system increase

the overall efficiency of the audit? Will the systemincrease the productivity of cheaper nonexperts?

Will the system reduce the time required toperform tasks? Will the system reduce the need

for highly compensated experts? Will the systemimprove the consistency of the audit process? Will

the system improve the consistency of audit workpapers? Will the system reduce audit risk? Will the

system reduce the likelihood of litigation? Will

the system contribute to high quality audits? Willthe system contribute to reasonably priced audits?

Will the system facilitate meeting industrial qualitystandards? Will the system affect billing rates?

Will the system enhance the ongoing professionalrelationship between the firm and investors?

The issues concerning expertise, competence, and professional integrity include: Will the number ofexperts working on the audit be reduced? Willsystem development rely on qualified personnel?

Will the system increase the development of

expertise by audit personnel? Will the system beadequately validated? Will the system be used in

place of experts only when appropriate? Can thesystem be appropriately applied to the clients

particular circumstances? Will system judgmentsbe validated by a human expert? Will system

judgments be questioned by users? Will decisionsbe backed by clear logic trails? Is the system tech-

nologically justified? Will the system facilitatemeeting professional standards?


16/24


17/24


18/24

RESPONSIBILITIES OF FIRM AND CLIENTS INVES

From perspective of: FIRM CLIENTS

ACTION

Contractual Investors have been satisfied with previous years audits Firm has p

relationship Investors benefit from ongoing relationship Firm bene

Repeat audits have been profitable in the past Previous re

Investors have expected high quality audits Firm has m

Personnel Investors have allowed the firm control over personnel, Firm has u

procedural, and technological decisions procedu

Investors have accepted level of expertise exhibited Firm has u

Investors have accepted billing levels service

Investors have accepted the use of trainees for some tasks Firm has u

Use of trai

efficienc

Procedures Investors have expected use of up-to-date audit procedures Firm has c

Investors have expected use of procedures comparable Firm has u

to those used by peer firms peer firmInvestors have accepted firms choice of audit procedures Firm has u

Technology Investors have expected continued research into the use of Firm has k

audit-enhancing technologies Firm has u

Investors have expected firm to use technology comparable peers

to that used by peer firms Firm has u

Investors have accepted the use of advanced audit previou

technology


19/24

Competitive pressures Investors understand competitive pressures in the audit Firm faces

profession Firm must

Investors understand the need for the use of productivity- remain

enhancing tools Firm will

Investors understand pressure to use nonexperts when

possible

ACCOUNTABILITY

Efficiency and ES will enhance the overall effectiveness of the audit ES will inc

effectiveness ES will enhance the overall efficiency of the audit ES will inc

ES will enhance the productivity of cheaper nonexperts ES will red

ES will enhance the consistency of the audit process ES will red

ES will enhance the consistency of audit work papers ES will re

ES will reduce the likelihood of litigation ES will co

ES will contribute to high quality audits ES will fac

ES will not affect billing rates ES will im

ES will improve the ongoing professional relationship between

between the expert and firm

Expertise, ES will enhance the development of expertise by audit System dev

competence and personnel Number o

professional ES judgments will be questioned by the user ES will be

integrity Decisions will be backed by clear logic trails ES will be

ES is technologically justified ES will be

ES will facilitate meeting professional standards ES judgme

SOCIAL SOLIDARITY

Firm and investors are mutual participants in the audit

Firm and investors have mutual concern for the quality of the audit

Firm and investors have mutual concern for the efficiency of the auditFirm and investors seek to avoid legal liability

Figure 3. Mutual responsibilities of the firm and the clients


20/24

Concluding remarks

Previous research on the ethical development and

use of expert systems in auditing has focused ona limited set of ethical issues. This paper has

demonstrated how Niebuhrs theory of theresponsible self can be used both to broadenthe concept of what constitutes an ethical issue

and to provide a framework for identifying whatconstitutes responsible or ethical behavior.

Essentially, behavior is responsible if it takes intoconsideration the previous acts and relationships

of all parties affected by the act and anticipatesthe consequences of the act on these parties as

well as their expected reactions. The frameworkcompels those involved in developing expert

systems to consider how their actions fit into thecontext of ongoing relationships not only among

experts and firms, but also all other affected

parties.The preceding discussion has described dis-

course requirements that provide the means andconditions necessary for implementing Niebuhrs

ideas. To achieve consensus regarding the ethicaldevelopment and implementation of an expert

system, the following conditions should besought: all participants should have mutual con-

sensus as a goal; there should be free and equalaccess to the discussion; and all participants

should be appropriately informed, rational, anduncoerced. Although it is unlikely that these

conditions can be fully attained in real-lifesettings, they provide an ideal toward which the

discussion can aspire and through which discus-

sions can be evaluated.The responsibility ethic arises as a result of the

trust and loyalty necessary for the sincere con-sideration of issues (behaviors and responses)

through ongoing communal discussion. As the

analysis progresses, the parties may evolve towarda utilitarian resolution of some issues and acontractarian solution for others, but all will be

considered and carried out with an attitude ofresponsibility motivated by accountability

through anticipated responses with the ongoing

community or society. The resolution of each ofthe issues identified in the presentation above will

be situation-specific and dependent upon theagents perceptions based on past experience, the

level of loyalty and trust among the participants,

and their willingness to engage in legitimate andcomprehensive dialogue.

The framework developed is intended to be

prescriptive as opposed to predictive and can be

applied, with slight modifications, to any of thestakeholder groups associated with the develop-ment and implementation of AES. In addition,

implementation of the framework facilitates thespecification of behavioral propositions. First,

such an analysis would allow prescriptiveprocesses to be identified. Decision makers could

be observed to determine how closely theiractual decision processes adhere to the model.

Second, the responsibility ethic provides anindication of relevant issues that should be eval-

uated at each phase for the decision process inorder for the undertaking to be considered anethical one. The extent to which such issues are

considered by a decision maker might indicatesome level of ethical sensitivity. The extent to

which these dimensions are identified beforehandmight prevent decision makers from excluding

important factors when considering alternatives.Third, the extent to which the requisite dialog-

ical characteristics of generalizability, autonomousevaluation, role taking, power neutrality and

transparency have been obtained at each decision

phase can be employed as a validity metric.Fourth, and more generally, the responsibility

ethic provides a rich context within which toconsider decisions having ethical implications.

Not only does it extend beyond the professionalcode implied model (AICPA, 1988), it also

provides a theory-grounded context withinwhich cognitive decision processes are carried

out. Fifth, at an operational level, by using theproposed framework it may be possible to

identify specific elements relevant to explaining

the degree to which firms incorporate ethicalconsiderations into their decision processes and

the extent to which formal procedures are inplace to do so. As a result, explanations of dif-

ferences in the extent and timing of AES appli-cations across audit firms could be identified.

Though these propositions could be reformu-lated as testable hypotheses, we believe that at this

stage such implied specificity is unwarranted andunduly limits the scope of the discussion. The



21/24

idea that scientists ought to be concerned only

with prediction, explanation and the construc-tion of testable theories is an unacceptable corol-

lary of the value-neutral thesis [of science] (Gaa,1996, p. 15). Ethics research has an agenda to

encourage and facilitate decision makers to actethically. Ultimately, our own (value-laden)purpose is to aid audit firms and their stake-

holders in acting more ethically when AES aredeveloped and used.

The discussion undertaken here has initiateda preliminary phase in the study of ethical issues

surrounding expert system applications. It hasdemonstrated that deliberation can, and must, be

broadened beyond its current focus on economicclaims (in this case rights to intellectual property),

and dialogically considered in light of a respon-sible self. Such discussion must consider not

only the appropriate action within the context

of individual rights and responsibilities, but mustalso give recognition to the continuing human

community a community wherein agents areaccountable for the consequences of their actions

and in which the self and the community arestrongly interlinked and continually redefined. To

pursue ethical actions effectively, the audit com-munity must understand that the fundamental

form of human association is not the socialcontract into which persons enter as atomic

individuals, making partial commitments to each

other for the sake of gaining limited commonends or of satisfying certain laws. The funda-

mental form of human association is, rather, theface-to-face community in which ongoing com-

mitments are the rule and in which aspects ofevery individuals existence are conditioned by

continuing membership.

Notes1 Though they only briefly refer to expert systems,

Mason et al. (1995) and Spinello (1995) present a

discussion of the ethical issues surrounding informa-

tion technology and management in general.2 Although we use the singular form of expert,

systems are often developed and tested using more

than one expert.3 As MacIntyre (1984) notes, all three perspectives

are evaluated within the current modern economic

order which contains the central features of individ-

ualism, acquisitiveness, and the elevation of the market

place to a central position.4 Agent is used in the sociological sense to mean one

who has the ability to act or influence, not in the

more restricted neoclassical economics sense ofprincipal-agent relationships.5 The ideas formulated by Niebuhr are grounded in,

and are evolving out of, the linguistic turn in

modern philosophy. Habermas (1984, 1987), among

many others, has recognized the power of language

and speech acts in human reasoning and under-

standing. The current discussion is an integration of

Niebuhrs ideas about ethics being grounded in an

ongoing community and Habermas more recent ideas

about the centrality of speech acts to communication

and understanding and the universality of validity

claims which provide the basis for human under-

standing and systems integration. Ethical claims must

be grounded to be justifiable. Generally, these grounds

are either the result of some covering law, such as

Holy Scripture, or are, according to our formulation,

the result of communal dialogue and interaction

(Goffman, 1974), thus the centrality of the dialogical

model.6 Several variations on stakeholder theory exist

(Donaldson and Preston, 1995), including descr iptive

stakeholder theory which suggests that firms survive

by responding to their stakeholders, and instrumental

stakeholder theory which suggests that firms can

manage stakeholders to accomplish instrumental goals.We use normative stakeholder theory which suggests

that firms are morally obligated to address the

interests of stakeholders.7 In the stakeholder literature (Carroll, 1996), an

approach called issues management has been

developed whereby a firm continuously scans its

environment to develop an awareness of ongoing

stakeholder interests and reactions to previous actions.

Although this approach is certainly superior to the

standard approach of ethical research, in which the

agent merely thinks about the consequences of action,

it does not go far enough in seeking active partici-pation among affected stakeholders when an ethical

dilemma is addressed.8 We recognize that the clients stakeholder set goes

beyond creditors and stockholders to include

employees, suppliers, customers, society, etc. To limit

the scope of the discussion, we assume that the

interests of these stakeholders are reflected by the

client criterion of continuing operations or by

those of society at large.9 These rights and responsibilities are not the result



22/24

of some natural law or covering law external to the

community. They are the result of ongoing relation-

ships and discursive activities of the community which

have resulted in agreed upon values and behavioral

norms.

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Anderson School of Management,University of New Mexico,Albuquerque, NM 87131,

U.S.A.

E-mail: [email protected]@anderson.unm.edu



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