Prem Sikka

The power of “independence”: defending and extending the jurisdiction of accounting in the United Kingdom

Abstract Accountants are part of what Abbott describes as “the system of professions”. Within this system, each professional group strives to defend and expand its area of jurisdiction in competition with rival professions. However, challenges to the accountancy profession do not necessarily come only from those who seek to occupy its territory. Challenges also come from journalists, academics, politicians and others who have no desire to occupy the territory of accountants but can nevertheless advance some competing discourses that may disrupt and weaken the professions capacity to secure and expand its domain. The paper argues that in the process of defining, defending and extending its jurisdiction, the accountancy profession attaches considerable importance to its image of “independence”. Drawing upon evidence provided from three case studies relating to the events in the 1970s, 1980s and early 1990s, the profession is shown to have taken a number of initiatives to defend and reinforce this “image”. In its efforts to neutralize and discredit challenges to its aura of independence, the profession has developed and deployed a variety of tactics. These include revising its ethical guidelines, refining its disciplinary arrangements, as well as by mobilizing other agencies, including the state, politicians, media, accounting academics, etc., in support of its claims. In a society marked by numerous social divisions, the accountancy profession is not in a position to ward off all challengers. Nevertheless by the use of such tactics, it is argued that it seeks to neutralize threats to self-regulation and to redefine the terrain on which it combats its challengers.

Globalization and the state-profession relationship: the case the Bank of Credit and Commerce International

Abstract Globalization of businesses raises major questions about the regulation of corporations, both in the national and international context. The debate is marked by two competing views. The ‘hyperglobalists’ claim that in a globalized world, nation-states cannot take effective actions to regulate multinational businesses, especially those relating to banking and finance. In response, the ‘skeptics’ accept the view that to regulate corporations, the nation-state has always had to restructure itself. However, they challenge the contention that globalization has reduced the power, functions and authority of the state. The paper contributes to the debate through an examination of some of the processes leading to the forced closure (and the aftermath) of the Bank of Credit and Commerce International (BCCI), a bank that operated from 73 countries. It particularly focuses upon the role of the banking regulators and their reliance upon auditing technologies to regulate major banks. The paper sides with the ‘skeptics’ and argues that the nation states, especially major Western states, remain important players in the regulation of global businesses. It concludes that the nation-state’s capacity to regulate global enterprises is compromised by history, domestic concerns and relationships with class and capitalist interests rather than by globalization per se.

Guardians of Knowledge and Public Interest: Evidence and Issues of Accountability in the UK Accountancy Profession.

In the UK, the accountancy profession plays an important and influential role in the audit and regulation of economic and social affairs. Although an increasing amount of interest is currently being taken in the role of accounting and auditing in society, comparatively little attention has been given to the profession′s obligation, as mentioned in the Royal Charters, to act as guardian of the “public interest” in relation to public policy making. Through an examination of correspondence with the professional bodies, stimulated by a refusal to provide information about matters relating to an auditing guideline, the accountability of these bodies to their members and to the public more generally is discussed. It is suggested by the evidence that the profession′s interpretation of the requirement to serve the “public interest” is not easily reconciled with its declared obligations.

Radicalizing accounting history: the potential of oral history

Much of the historical research in accounting continues to mimic idealized scientific methods in which written and official evidence is privileged. This research advances the narrative that the institutions of accountancy and major personalities are engaged in a heroic process of “progress”. Such a view ignores the impact of accounting on the lives of ordinary people. Thus, there is little understanding of the lived experiences of ordinary people who are affected by accounting and shape its development. This is in contrast to the currently dominant approaches to writing accounting history. Calls for the use of oral histories so that those marginalized and neglected by conventional history can be given a voice and problematize the narratives of “progress” dominating accounting research.

Ethical statements as smokescreens for sectional interests: The case of the UK accountancy profession

The UK accountancy industry has traded upon its professional status as a means of expanding and legitimating its activities. Extensive appeals are made to ethical codes and disciplinary arrangements as part of its claim to professional status. This study examines some recent events relating to audit failures and alleged unprofessional conduct by accountancy firms and their partners in the UK with a view to assessing the validity of the claims to professional status. It concludes that the rhetoric of the claims is belied by the failure/inability of the professional accountancy bodies to take effective action against the offending firms or their partners.

Sweeping it under the carpet: The role of accountancy firms in moneylaundering

Abstract White-collar crime is increasing in the Western world. It has been estimated that some £500 billion of hot money is laundered through the worlds financial markets each year. Such huge amounts of money cannot be successfully laundered without the involvement of accountants (and other professionals) who use their expertise to create the complex webs of transactions whose purpose it is to conceal and obscure illegal activity. Despite this involvement, accountants and auditors are expected to play a leading role in the reporting of fraud and moneylaundering. Through a detailed consideration of a case in which a small accountancy firm was judged by the UK High Court to be involved in moneylaundering, the paper explores the relationship between regulators and errant accountants. The reluctance or inability of the regulators to pursue other accountants and larger accounting firms involved in this case suggests that the current regulatory apparatus operates to shield the activities of accountancy firms from critical scrutiny.

Enterprise culture and accountancy firms: new masters of the universe

Purpose - This paper aims to argue that enterprise culture is producing negative effects. Companies and major accountancy firms are increasingly willing to increase their profits through indulgence in price fixing, tax avoidance/evasion, bribery, corruption, money laundering and practices that show scant regard for social norms and even laws. Design/methodology/approach - The paper locates business behaviour within the broader dynamics of capitalism to argue that hunger for higher profits at almost any cost is not constrained by rules, laws and even periodic regulatory action. Findings - The paper uses publicly available evidence to show that accountancy firms are engaged in anti-social behaviour. Evidence is provided to show that in pursuit of higher profits firms have operated cartels, engaged in tax avoidance/evasion, bribery, corruption and money laundering. Practical implications - The paper seeks to bring the anti-social activities of accountancy firms under scrutiny and thus extend possibilities of research in social responsibility, ethics, accountability, claims of professionalism, social disorder and crime. Originality/value - It is rare for accounting scholars to examine predatory practices of accounting firms. It shows that predatory practices affect a variety of arenas and stakeholders.

The role of accountancy firms in tax avoidance: Some evidence and issues

Abstract As entrepreneurial businesses, accountancy firms have supplemented their traditional trade of selling accounting and auditing services by diversifying into a variety of other products and services. They have developed organisational structures and strategies to sell tax avoidance schemes to corporations and wealthy individuals. The sale of such services shifts tax burdens to less mobile capital and less well-off citizens. It also erodes the tax base and brings the firms into direct conflict with the state. This paper provides some evidence of the strategies and tactics used by accountancy firms to sell schemes that enable their clients to avoid corporate, sales and payroll taxes. Such strategies stimulate reflections upon the possible trajectories in the development of accountancy firms and social consequences of their trade.

The Mountains are Still There: Accounting Academics and the Bearings of Intellectuals

In the UK and elsewhere, accounting vocabularies and practices have come to permeate everyday life through their involvement in the management of hospitals, schools, universities, charities, trade unions, etc. This has been accompanied by an increase in the power of accountancy and the institutions of accountancy which increasingly function as quasi‐legislators. Such developments call for a (re)consideration of the role of accounting academics/intellectuals. Argues that, in a world where major business and professional interests are organized to advance sectional interests, to promote stereotyped images and to limit public debates, accounting academics/intellectuals have a responsibility to give visibility to such issues and thereby mobilize potentialities for gaining a fuller understanding of, and encouraging more democratic participation in, the design and operation of major social institutions. Suggests that, despite the constraints on academics, there are considerable opportunities to create, develop ...

Professionalizing Claims and the State of UK Professional Accounting Education: Some Evidence

Abstract In advancing the ‘professionalizing’ claims, the UK accountancy bodies emphasise that their members have command of practical and theoretical education, engage in ethical conduct, serve the public interest and act in a socially responsible way. However, such claims are routinely problematized by scandals that highlight the highly partisan role of accounting and accountants and failures of accounting education. Rather than undertaking a radical review of accounting education, the professional bodies seek to rebuild confidence in accounting and their jurisdictions by (re)affirming that accounting education is or will be devoted to producing reflective accountants through educational processes focussing on sound education principles, ethics, professional scepticism, lifelong learning opportunities, distinguishing between private and public interest and serving the public interest. These promises presuppose that students on professional accounting courses are exposed to such values. To advance the debate, this paper examines a number of financial accounting, auditing and management accounting books and finds that, beyond a technical and instrumental view of accounting, there is little discussion of theories, principles, ethics, public interest, globalization, scandals or social responsibility to produce socially reflective accountants.