Accountants' Truth: Knowledge and Ethics in the Financial World

Citation

Wild, S. (2010), "Accountants' Truth: Knowledge and Ethics in the Financial World", Pacific Accounting Review, Vol. 22 No. 3, pp. 275-278. https://doi.org/10.1108/01140581011091710

A series of recent major international business scandals and corporate collapses, including US energy giant Enron, WorldCom, Parmalat, the Madoff “Ponzi” scheme, Australian insurance conglomerate HIH, and the failed Lehman Brothers banking empire, among many others, have implicated leading players in accounting and auditing, undermining the profession's status and influence while provoking sharp public focus onto the role of a discipline expected to act as a bastion of the public interest. There has been a considerable resultant growth in the literature attempting to identify the underlying causal factors of what are perceived to be fundamental failures inherent in the commercial system and its regulatory bodies, and questioning the ethical foundations both of accountants as practitioners and the function of accounting itself.

Matthew Gill's Accountants' Truth is a recent addition to this literature, its aims being to provide an epistemological analysis of “the workings of an increasingly rationalized, globalized, and powerful [accounting] discourse” (p. 154), to identify the contributory processes undermining the ethical standards of accounting practitioners, and to consider potential ways in which these ethical issues may be resolved. The book examines how the development of an arcane, inaccessible, highly specialized, technical, and exclusive accounting “knowledge”(or “truth”) has contributed to the construction of a compelling and pervasive worldview in which globalized commercial activity has over time become detached from the ethical norms of the societal environment within which it functions and purports to serve. A major focus of the study is the historical background to the “ascendancy of quantification as an authoritative form of knowledge” (p. 56). This specialist information underpins the present economic and political hegemony which claims its legitimacy from concepts of “fact” and “truth” that are based on the “rationalization”, “scientization” and “technocratization” of accounting processes and reporting.

The majority of current literature on the subject of accounting ethics – particularly that which is aimed at accounting education – focuses on the nature of the drivers and motivations for the moral choices of individual accountants, assuming their status as rational, autonomous agents confronting alternative potential courses of action. Gill, however, adopts a substantively different approach that is informed by sociological rather than agent‐centred theories. His study presents an alternative stance that analyses the systemic functions of the accounting profession itself, and its role in formulating and shaping the ontological perspective and resultant behaviours of young chartered accountants as they undergo the intensive and ritualized processes of initiation into a very hierarchical, enclosed, and self‐referential work environment.

The book is derived from Gill's PhD thesis in sociology undertaken at the London School of Economics, and it retains the salient features of structure and tone of this formal academic project, as well as reflecting the author's own training and background as a chartered accountant in a “big four” firm in London. The study combines an empirical study of the ethical attitudes and experiences of a small group of mid‐level accounting trainees with an epistemological study of the nature of truth‐construction, and illustrates how concepts of informational truth are utilized in a commercial environment as rhetorical devices to influence desired commercial imperatives.

The book's origins as an academic work are evident in its inclusion of an extensive literature review, a detailed outline of its methodology, comprehensive notes and frequent supportive referencing throughout the text, although this is seldom overly‐intrusive on the main discussions it presents. Gill also frequently engages in the text with the argument of a number of ethicists and others in the field who present alternative views, while extensively theorizing his own major arguments, drawing on a range of philosophical work including that of Aristotle, Chomsky, Foucault, Latour, Marcuse, Marx, Nietzsche, and Weber, among others, to support the conclusions he bases on the empirical observations of his study.

While the general subject matter of the book is focused on accounting ethics, it is not directed solely at a specialist accounting readership, but is relevant to the “construction of [specialist] knowledge in many spheres, including science” (p. 55). It would therefore also interest those with a more general concern with ethical issues in commerce, and the construction of professional discourse in a range of other disciplines. Technical accounting terms are clearly explained in common language, and descriptions of the scenarios presented are sufficiently generalistic to allow non‐specialists to identify and understand the ethical issues presented.

The view of accounting practice outlined in the book is one which strongly contradicts the profession's own interpretation that it presents a neutral, unbiased and “objective reality” and identifies a pre‐existing “truth” that can be “impartially represented”. Instead, accounting is perceived as a process of “constructing and shaping economic realities rather than merely describing them”(p. 58), in which “accountants play a variety of roles, including that of technocrats, bureaucrats, experts, strategists, professionals, pragmatists, sportspeople, and more” (p. 22), a performative activity tailored as necessary for a specific “audience” of information users. Gill identifies accounting practice as being a “highly developed art”, while accountants act as “painters rather than photographers” (p. 51).

In this environment, pragmatism and instrumental rationality dominate decision‐making, to the exclusion of other considerations. Accounting becomes a function of “managing the expectations of stakeholders” (p. 29), concerned not with presenting objective truth but with “risk management”. Accountants are required to seek “the most cost‐effective means to achieve a specific goal without reflecting on the worthiness of that goal”. Practitioners' ethical views are formed and shaped within an institutional context in which the infrastructures of accounting practice are subject to a “deforming” combination of commercial imperatives, peer pressure, and “compliance with expectations”. In this environment, unethical practice is viewed not as a behavioural aberration but as an inevitable consequence of standard practice so that “ethics are rendered fragile by collaboration and cooperation”, and considered as merely failure to “manage [stakeholder] perceptions” and to maintain reputation.

Gill utilizes the metaphors of sport, family, war and “technocracy” to describe the nature of an overwhelmingly masculinist environment in which accounting is practiced. The accounting firm can be seen as the stereotype of “family”, with accountants wishing to belong and to be accepted within its strongly hierarchical patriarchal structure. In this context, “accounting […] can seem like a game that can be played without broader moral consequences” (p. 86).

Unlike most of the literature focused on the subject of accounting ethics, Gill, while locating the nature and source of what he considers the profound problematic ethical issues inherent in the accounting profession, does not present a guide for their practical solutions. Despite his view that the major driver of unethical accounting conduct is the ethos of the profession itself, the author is opposed to regulatory attempts to impose ethical behaviour upon accountants, as these remove “the autonomy of the profession and of the individual practitioner”. Any improved ethos must be initiated from fundamental policy and attitudinal change within the profession, and “cannot simply be imposed by regulators from above.” The author's view is that practitioners must “develop their ethos themselves”.

As a broader study of the function of accounting in the construction of social practices, there are a number of significant gaps and methodological weaknesses in the book's considerations. The ethical concerns that Gill takes as his focus are limited to those of traditional commercial issues, such as financial fraud or misrepresentation, and exclude recent attempts to broaden the parameters of accounting and business ethics to encompass issues of corporate social responsibility directed towards the negative impacts of business on the social and natural environments in which it operates.

Gill assumes that the socialization of young accountants into the profession is the major influence on their subsequent ethical views and work behaviours, taking no account of the nature of the social, economic and cultural background from which they originate, and other pre‐existing psychological factors influential upon their moral attitudes. Other research, for example, has indicated that the students who enter accounting education, and are subsequently translated into the profession, are themselves a highly self‐selected cohort largely originating from a narrow socio‐economic band (professional and upper middle classes), and therefore already subject to moral and ethical imprints on which their subsequent induction into the profession forms only one of a number of potential influences.

The sample of interview subjects from which the data is drawn to support the study's major findings is very small and narrowly focused. The author acknowledges that there was no attempt at randomization in the sample of interview subjects that he selected for his study – 20 young, mid‐ranking male accountants employed at the big four accounting firms in London (the author's own background) – so Gill's findings could not be assumed to be more widely generalizable. Also, although only recently published, the book appears somewhat dated, an impression created in the main by its failure to refer at all to the ethical implications for the accounting profession of the recent global financial crises in the property, banking and finance industries, selecting instead examples of corporate malfeasance from a decade or more in the past.

Accountants' Truth is not intended as a textbook suitable for classroom study, and does not aim to provide a general study in business ethics nor a guide for training in ethical practice, but would provide valuable contextual reading for advanced level courses in financial accounting and theory. At less than 180 pages in length, it provides a succinct outline of the history of the development of accounting thought, the nature of the ethical problems inherent in the accounting profession, and the policy changes necessary to encourage a return to what Gill considers to be the profession's moral foundations. It provides an informative and interesting addition to the current literature on accounting ethics, presenting a new perspective and useful insights into the ways in which the development of specialized technical knowledges – that is, purposively constructed versions of “truth” – can manipulate and dominate political and economic structures, social practices and policy‐making.