Accountant ethics: A brief examination of neglected sociology
Fogarty,Timothy J. Journal of Business Ethics. Dordrecht: Feb 1995.Vol.14, Iss. 2;pg. 103,13 pgs
Timothy Fogarty is an assistant professor at the Weatherhead School of Management, Case Western
Reserve University. His research interests include accounting professionalism, public accounting
organizations and accounting education. He has published articles in the accounting, sociology,
management, legal and education literatures.
Abstract (Document Summary)
The current discourse of accountant ethics, both as it pertains to the practice of accounting and accounting
education, provides a highly selective understanding of ethical issues. Traditional treatments of accountant
ethics make implicit assumptions inconsistent with a sociological perspective. The ways in which
accountant ethics have been approached are identified both in literature pertaining to practice and the
classroom. The boundaries of the topic, when its definitions are left tacit, systematically preclude many
important features of ethics. Included in these are sociological treatments of the accounting profession as
a group, extra-personal aspects of decision making, the stratification of accounting practice, and a sense
of ethical action. An illustration of how institutional theory has the potential to create a systematic
sociological interpretation of accountant ethics is presented in conclusion.
Full Text
The current discourse of accountant ethics, both as it pertains to the practice of accounting and accounting
education, provides a highly selective understanding of ethical issues. Although ethics, as a topic, logically
invites interdisciplinary, multi-perspective inquiry, that which exists in the literature has been captured by
a dominant paradigm that tends to preclude other approaches with alternative potentials for enlightening
the subject.
This paper seeks to describe the traditional approach to ethics and to reveal the work within this area tends
to obscure. For these purposes, tension is created along the following axes:
1. Individual versus Group
2. Psychology versus Sociology
3. Equality versus Stratification
4. Words versus Actions
The first idea in each of these polarities provide a collective description of the mainstream interpretations
of accountant ethics. The second set contrasts these analytic categories with the concepts that the
conventional way of seeing makes more difficult to appreciate. The paper concludes with a brief attempt
to use institutional theory to unify some of the elements outside the current paradigm of accounting ethics.
Traditional parameters of accountant ethics
This section argues that the vast majority of scholarship about accountant ethics adopts certain selective
perspectives. Specifically, our understanding of accountant ethics presents the assumptions of
individualism, psychologism, equality and linguistic reification.
Individualism
The many studies and commentaries that explicitly state that the individual accountant is the proper unit
of ethical analysis provide the epigram for the larger body of work that assumes this to be the case.
Individual autonomy, free will or decision making ability is often asserted as the "bottom-line" for accounting
ethics (see Copeland, 1988; Fuglister et al., 1991; Schlacter, 1991). This focus on the person may be
consistent with broader trends in the culture that center the understanding of society on the individual (see
Lasch, 1978).
The intuitive appeal of the individualistic perspective includes the assumption that the aggregation of
individuals into groups, such as firms and professions, is unproblematic. However, when the study of the
accounting profession becomes the study of individual accountants, the cultural social and political
dimensions are systematically neglected.
The study of the ethics of individual accountants has also engendered a broadening inquiry into other
personal attributes. A body of evidence has developed on whether male or female accountants are more
ethical (see Grollman and Van Hise, 1990) and whether more educated accountants are more ethical (see
Shaub, 1991). The "ethics score" as a personal characteristic invites context-free comparisons with other
groups whose membership is similarly reduced to a set of personal attributes (e.g., Armstrong, 1987;
Ponemon, 1990; Welton and Davis, 1991). Some have even suggested that these demographic and
background correlations serve as the basis for "ethical screening" in the hiring process (see Hoff, 1989).
The use of individual accountants as the unit of analysis thereby inclines the ethical inquiry to be limited to
the statistical search for associations among individual attributes.
The individualism of ethical studies in accounting also invites atheoretical inquiries and discussions of
personal values. Without a philosophic basis or convincing definitional attempts, some studies suggest
that the primary object of accounting ethics is the development of these values (see Kelly, 1983; Welton
and Davis, 1991; Sellers, 1991). Offering only a general idea of what constitutes the good or the virtuous,
this literature tends to degenerate into laments that the world would be a better place if only people would
be more noble. A related body of work then posits the centrality of ethical socialization, or "how can be
make people better?" (see Ponemon and Glazer, 1990; Langenderfer and Rockness, 1989). The focus on
the values of individuals inexorably posits desirable values and stigmatizes "bad apples", as if ethics could
be unilaterally improved through better systems, better measurement and more widespread desire for selfactualization. At this level, the primacy of the individual becomes confuted by the more pervasive personal
hedonism and utility maximization that contradict the message that the "right" values are worth having. In
this view, ethics can be no more than a remote mechanism to curb flagrant displays of the "wrong" values.
Psychologism
The tendency to fragment the accounting profession into individual accountants discussed in the previous
section is exacerbated by the stress placed on psychological attributes of those individuals. Psychological
treatment, in addition to providing a more convenient measurement platform than philosophy, also
appropriates the mantle of science for the study of accounting ethics.
The dominant approach for the psychological inquiry into accountant ethics has been the Defining Issues
Test (DIT), developed by Rest (1986) from the stage theory of Kohlberg. The boom in the study of
accounting ethics can be alternatively viewed as the repetitive application of this scale (see Shaub, 1991).
The scale asserts six stages of moral reasoning via the elicitation of priorities for decisions based on a
series of scenarios. Once individual moral development is characterized, it can be associated with other
factors to support hypotheses concerning accounting ethics. Although not without its validity and reliability
questions, the DIT represents some progress over the more primitive stimulus-response ethics studies
(e.g. Fulmer and Cargile, 1987; Hiltebeitel and Jones, 1991) that possess serious demand effect problems.
Even if the DIT is accepted as a stable measure of a unidirectional process of development, it fails to cover
the terrain implied by psychological inquiry. As a cognitive measure the DIT ignores motivation and other
emotion-based characteristics. Furthermore, reward is typically not manipulated and no information is
provided on the behavior of similarly situated others. These shortfalls put accounting ethics well beneath
the margin defined by more purely psychological ethics investigations (e.g., Trevino and Youngblood,
1990). These parameters apparently violate the conception of the DIT as "cognitive" and "developmental".
Even limited to the cognitive side of psychology, the DIT lacks the robustness of variables like locus of
control, ego strength and field dependence as a way to define differences among people. It would appear
that even within the psychological realm, the need to demonstrate isomorphism with the DIT as "the way"
to do an accounting ethics study, prevents this approach from reaching even its constrained potential.
However, the more basic problem relates to the psychological field itself. By definition, psychological
variables highlight individual differences and are incapable of reaching questions that transcend that level.
Although it is true that aggregates of individuals form groups, and that groups form societies, not all their
characteristics are represented by psychological variables. The "whole" is more than the sum of its parts.
Therefore, it is impossible to aggregate ethical limits across individuals when the individual remains the
level of analysis.
Equality
Although the accountant ethics literature concentrates on psychological differences at the individual level
of analysis, it simultaneous fails to make other important distinctions. For the most part, the material
circumstances that surround this professional practice have been ignored. Unless explicit discussion of
practice differences are presented within an ethical argument, the assumption that such differences are
not germane is natural. The typical discourse of accountant ethics suggests to the reader that an
unexamined generalizability to all accountants is warranted.
Although the Code of Ethics applies to all accountants, the nature of subspecialties within the field have
proliferated more specific codes. However, little recognition of the essential differences among these
functional areas exists (c.f., Harris and Reynolds, 1992). Beyond this first distinction, almost nothing has
been written challenging the equality presumption.
Intuitively, the ethical nature of action is very difficult to discern without attention to the degree of personal
risk involved with the action. The most salient dimension of risk may be the career contingencies that
consequential decisions involve. More situational relevance also requires a consideration of the potential
for unethical action to be unobserved. Since accountant involvement in these situations is far from random,
accountants cannot be considered equal for purposes of exercising ethical judgment.
The fact that the modern practice of accounting involves practitioners in organizations that are
bereaucratically structured greatly erodes the equality assertion of the ethics literature. Robison (1990)
provides one of the few recognitions of the unique ethical dilemmas of the professional subordinate. In
general, organizational rank connotes varying degrees of power and different role expectations that vitiate
the equality tendency of the ethics discourse. Only when abstracted to the artificialities of the academic
laboratory can all accountants be equal.
Reification of the text
The periodic revisions to the Code of Ethics usually develops great excitement in the accounting
community. In the latest round of alterations, hope that a more satisfactory document would be produced
centered around the development of a goal-driven structure that utilized more positive wording. The basic
change in this reorganization entailed the development of a two-tiered differentiation of standards and rules
(Anderson and Ellyson, 1986). This revision was supposed to help encourage practitioners toward
excellence, differentiate the enforceable from the idealistic and provide guidance in the dynamic
environment of modern practice (Bishop and Tondkar, 1987; Anderson, 1985). However, the similarity of
hopes for the previous revision of this document (see Higgins and Olson, 1972), and their subsequent
unrealization, necessitates the question of just how important the words contained in the code can be, in
and of themselves.
The continued focus on the words in the code and their arrangement represents the reification of ethics.
The belief among many that the understanding of ethics must start with a learning of the textual code (e.g.,
Armstrong, 1987) infuses the document with a extraordinary power that requires a critical reassessment.
Many assert that the text of the code allows the recognition of ethical issues (e.g. McDonald, 1992). Even
if this is the case, how such translates into competence in ethical resolution is problematic. Since the code
in many specific and important instances essentially endorses a reasonableness standard, clear resolution
guides are infrequently provided (Robison, 1990). The code therefore tends to beg the ethical question,
rather than answering it. For example, the code is mostly mute on the ethical implications of the scope of
accounting practice. By recommending little other than careful consideration of the limits of accounting
competence (see Scribner and Dillaway, 1989), the code's qualification as the exhaustive, or even
essential, source of ethical authority is debatable.
The reification of the code in the minds of practitioners and academics poses a greater potential harm than
exists in its inarticulateness. The very attempt to enumerate ethicality may connote the message that literal
adherence is more important than overall integrity or professional character. When the focus resides on
rules, the idea that minimal compliance will suffice gains credence. Rules also provide those inclined
toward unethical action with safe harbors (Scribner and Dillaway, 1989). Similar to those available in the
Internal Revenue Code, these safe harbors sanction the violation of the spirit of the document.
The literal code also implicitly asserts a objectivistic reality on ethics. The magnification of the importance
of the accountants' code propels the belief that ultimate principles of rightness exist in that document and
that it should cover all situations. This then provides the accountants' code with an artificial or self-fulfilling
importance (Carpenter, 1991). In actuality, this code becomes important because of the attention paid it
by the leadership of the practice community and by the writings of academe. However, neither of these
groups can demonstrate the fundamental nature of the code in an action context. Nonetheless, the
discourse centering around the code itself contributes to the relative neglect of the empirical record of
ethical adherence or shortcomings (c.f., Grollman and Van Hise, 1990).
The reification of the code is reflected in accounting education through the segregation of ethics in the
curriculum. In part, this ghettoization is facilitated by the desire to have students learn the code. The
integration of ethics throughout the curriculum would provide a less reified decisional context for ethical
decisions, since less attention would be given to given to the dead tissue of the text.
Summary
By restricting the consideration of ethics to the individual level of analysis, and by making psychology the
primary approach to the individual, the ethics literature in accounting is devoid of a sense of collective fates
and collective responsibilities. By presuming a false equality among practicing accountants, the nature of
social conflict in ethical domains is disguised. By concentrating upon the linguistic choices in the code of
ethics, only a vague appreciation for human action remains.
Alternative approaches
This section sketches the contours of the obscured dimensions of accounting ethics. The elements
discussed can be thought of as the antithesis of each of the analytic categories developed above as
descriptions of the dominant ethics paradigm in accounting. In other words, this section describes the
opportunity cost of the conventional wisdom of accountant ethics.
The collective profession
The directing of attention toward accounting ethics usually is motivated by the existence of professionwide issues. Matters such as the public's expectation gap for auditing (Shaub, 1988) and the need for
general social confidence in the work of accountants (Chua and Mathews, 1990) traditionally have
generated concern over accounting ethics in practice and in the classroom. The role of ethics in the
legitimation of the profession for these purposes is well recognized (see Preston et al. 1990; Carpenter,
1991; Higgins and Olson, 1972). These conditions mandate a broader realization that accounting ethics
involves a community of shared interest and common fates. If ethics in part define the accounting
profession (see Ruland and Lindblom, 1992), the matter of their content and future cannot be solely, or
primarily, an individual issue. Although individual accountants comprise the accounting profession, the
collective level amounts to something qualitatively different. Otherwise, little meaning exists in the idea of
a profession.
When the professional level is embraced, ethics become part of larger questions. Ethical constraints help
define the boundaries of the profession and facilitate the specification of the relationship with external
parties (Axline, 1990). Ethics also contain ideological and public relations dimensions at the professional
level (see Lehman, 1988) as the collective body struggles with the obligation to give form to the public
welfare and to solve the structural problems created by the legislative grant of monopoly privilege.
The prioritization of the individual, dubious enough in isolation, also exacerbates the difficulty of
appreciating the community of accountants in larger fields of social relations. Abbott (1988) argues for a
perspective capable of theorizing systems of professions in cooperative and competitive relations. As an
important constituent element, accounting ethics must be conceived in their value for accountants as a
occupational group, and in their impact on other effected groups (i.e., clients, those making contiguous
professional claims, government).
When ethics are examined at a more aggregated level, new impacts upon the individual can be
hypothesized. Just how principled and moral an individual practitioner should be, becomes a more complex
matter. Non-resolution of ethical conflicts at the profession-wide level also tends to unfairly push down the
demand for resolution to the individual (Harris and Reynolds, 1992). This threatens to scapegoat
practitioners unlucky enough to be in the wrong place at the wrong time.
Sociological assessment
Just as the biases of individualism and psychologism form a natural pair, the awareness of ethics as a
group phenomena makes a sociological analysis appropriate. A brief overview of what this implies serves
to highlight the relative constraints of psychology inquiry.
Sociological assessment requires a more open system approach. Ethical standards cannot be judged on
their own terms but instead need a consideration of their congruency with the political, cultural and
economic milieu (O'Leary and Boland, 1987). Not only does greater environmental turbulence require a
more systematic ethical approach (Loeb, 1989), but it also mandates an examination of these
contingencies. This decries the objectivist and universal nature of ethics by refocusing attention on how
ethical beliefs come to be shared and the forces that precipitate their change.
A sociological perspective also helps transcend the individual level of analysis through more explicit
recognition that individuals are grouped into organizations in modern accounting practice. The recognition
that the objectives of the business entity and those of the profession are not isomorphic allows the
conclusion that ethical conflicts that are not primarily psychological. Interpersonal influence (see Trevino
and Youngblood, 1990) and the dynamics of multiperson decision making in practice (Solomon, 1987)
elaborate the meaning of ethical action in sociological traditions. This approach also might better enlighten
the inconsistencies between the call for ethical action and other professional events: i.e., the CPA exam,
continuing professional education), and the allocation of concern between work and family life.
The occupational socialization of accountants (see Blank, 1985; Fogarty, 1992) provides the single best
invitation for non-psychological methods. If ethical postures are socially created rather than innate, the
influence of post-entry organizational experiences should be more closely examined as a source of ethical
influence. Welton and Davis (1991) and Ponemon (1992) both show the convergence of ethical ideas
among colleagues over time. These studies, however continue to treat socialization as a black box, and
are yet to provide much information about the specific mechanisms of socialization. Nonetheless, they
reveal the potential for sociological approaches to accounting ethics.
The stratified profession
If the assumption that all accountants reside on a level field for ethical purposes is seriously awed, some
deeper recognition of the intraprofessional stratification of accountants is necessary for the literature.
The most often recognized stratification criteria employed in accounting is the Big 6-non Big 6 firm
distinction. The use of this division for the study of ethics has not progressed beyond the early studies by
Loeb. Loeb (1971, 1972) found the ethical climate to vary significantly by firm type, as did the adherence
to certain ethical provisions. Loeb's work invites the interpretation that ethics can be used by elite
accounting groups (i.e., Big 6) to discipline others (i.e., non-Big 6). Following Carlin's (1966) seminal work
on lawyers, Loeb's work illustrated the need to consider socioeconomic status as a predictor of ethical
behavior. Put bluntly, ethics may be an indulgence that some accountants may be more able to afford than
others. For these purposes, the oligopolistic market structure of the sellers of accounting services (with
non-Big 6 firms lumped together as a price follower) cannot be ignored.
The ethical consequences of the unequalled stratification of the accounting profession finds a good
example in the scope of services issue. Big 6 firms and their predecessor entities have pushed out the
definition of accounting practice in an effort to overcome the maturation of tradition practice markets. This
generated some initial concern about conflicts of interest between consultancy-type engagements and
those pertaining to the public interest. However, the discourse was deflected from structural dilemmas by
the vain search for a specific instance of a "smoking gun". Lacking uncontroverted evidence of a specific
practitioner's blatant unethicality, the elite sectors of the profession have been allowed free rein to develop
new services without ethical concern. In areas where elites cannot afford ethical constraint, there is none.
Within firms, the inequality created by hierarchical rank also deserves explicit treatment in ethics study.
Implicit pressures placed on accounting subordinates for performance results require a more thoughtful
elaboration of ethical issues (see Robison, 1990; Axline, 1990). The residue that remains after the
purposeful promotion process in CPA firms indicates that the desired ethical profile may be curvilinear (see
Ponemon, 1992). To wit, those promoted to partner may be less ethical on average than those promoted
to the higher staff ranks. The necessity of organizational dependence and the continuity of careers within
organizations requires the elaboration of a fuller set of ethical conflicts (see Schlacter, 1991) and potential
structural mitigations (see Loeb, 1989). Since rank differences tend to parallel age differences and income
differences in CPA firms, it may be difficult to disentangle rank effects to the satisfaction of all. However,
since rank produces income and since age is the least specific differentiation, more attention to rank seems
appropriate. Along these lines, Thomas (1991) suggests a role for differing materiality thresholds in these
characteristics that can be used in an additive way for differing role expectations.
Ethical action
In lieu of the elaborate attention currently devoted to the linguistic content and organization of the
accountant's code of ethics, more attention to the actions of accountants would improve our understanding
of ethics. Our current knowledge evinces a heavy reliance on the assumption that attitudes translates
efficiently into behaviors, despite long-standing evidence to the contrary (see Johnston and Schuler, 1972).
Enforcement actions provide more reliable and unproblematic evidence on the actual importance of
accounting ethics. If provisions exist in codes but are not enforced, the fact of their inclusion is
compromised. Enforcement creates a coherent expression of the priorities of the profession, since
resources will never be so plentiful to allow full enforcement. A study of enforcement provides a means of
analyzing cui bono, possibly contrasting the public interest and professional self-interest. Studies of this
sort must be sensitive to the varying sanctioning powers of different bodies whose jurisdiction tends to
overlap. The small amount of available evidence suggests very low levels of ethical enforcement against
accountants that tend to be reserved for the most blatant types of misfeasance (Tidrick, 1992; Graber,
1979). Since enforcement tends to require a third party informant, unsatisfactory levels of enforcement
must be attributed to interpersonal as well as organizational causes.
The artificialities of the laboratory environment must be overcome if meaningful progress in ethical study
is to be made. Real, or nearly real, decisions must be observed under realistic environments of conflicting
objectives, stress and time/benefit considerations. Ceteris paribus, less unethical behavior will occur when
ethical action imposes no costs. While surveys also have their shortcomings, they can be valuable in
creating descriptive typologies of phenomena that some would like to pretend "can't happen here" (e.g.,
Grollman and Van Hise, 1990, Davis and Ketz, 1991). Anonymous admissions of unethical behavior might
be cries, albeit faint, that something ought be done.
The study of ethical action does not require that the content of the ethics code be completely ignored.
Schlacter (1991) suggests that unethical action may increase as the code becomes more general and
abstract. This argument is based on the relative possibility for self-interested interpretation and the lack of
conflict resolution guidance. However, the more complete story also must include the demise of the codes'
spirit as a source for creative ethical resolution. No degree of code specificity can counteract a socialization
that characterizes ethics as an unfortunate limitation on desired behavior. In short, the words in the code
can be meaningful, but only in a context broad enough to embrace the actions and attitudes of practitioners.
Summary
This section has advocated a new perspective on accountant ethics. The analytic classifications use to
describe this as profession-wide, sociological, materially differentiated and action-oriented may have
overemphasized the categorical differences. A unification of these dimensions occurs through the
increased willingness to adopt a critical perspective on accounting practice. This requires research that
incorporates less implicit belief in the lack of self-serving motivations of accountants. A greater recognition
of the role of the structure of modern practice is also necessary.
Accounting ethics as institutionalized reality
This section applies institutional theory to accountant ethics as an exemplar of how a sociological
perspective can assist the study of ethics. Institutional theory, first proposed by Meyer and Rowan (1977),
has been applied to a variety of accounting issues (Mezias, 1990; Covaleski and Dirsmith, 1991; Fogarty
et al., 1991). It allows the explicit separation of functional rationality and political reality for social actors
(see also DiMaggio and Powell, 1983).
Institutional theory explores how organizational structure and action are molded by cultural, political and
social forces that surround these entities. This perspective posits that why things happen reflect the
expectations that accompany the situation, as much as they do the nominal purpose that action suggests.
In other words, action often is more symbolic than purposeful in the conventional sense. The apex of this
symbolism involves demonstration of the necessity of continuing present institutional arrangements (Meyer
and Rowan, 1977).
Institutional theory seems particularly relevant to the professions due to their paramount interest in
maintaining their often exclusive right to act in specified domains. Abbott (1988) illustrates this well by
showing that professions legitimate themselves, not only by providing their expertise, but also by attaching
their expertise to widely held social values. Professions thereby make claims that these values cannot be
pursued and realized without their unique contributions (see Thomas, 1983).
In order the apply the theory to accountant's ethics, this section argues that: (1) accountant ethics; exist in
an institutionalized context, (2) the accounting profession has created structures of symbolic conformity,
(3) these structures are primarily not functionally rational and (4) society has bestowed ceremonial
confidence on the profession in these endeavors.
Existence of an institutionalized environment
Institutional theory operates in interorganizational fields that are characterized by the salient need for social
legitimacy. These environments dictate that organizational survival is predicated upon some form of
conformity to prevailing values or standards for appropriate behavior. Organizations that do not appreciate
how their actions are infused with values in terms of meeting the expectations of important constituents
may lose support, and thus endanger their continued right to act. Governmental units, highly regulated
organizations, and those in the private sector but highly dependent upon public financing provide clear
examples of institutionalized environments (see Kamens, 1977; Ritti and Silver, 1986).
The contents of an institutionalized environment evolve over time, and emanate from law, custom and
widespread belief (Zucker, 1987; Powell, 1987). They vary from generalized norms of rational behavior to
highly context-specific rules about what conduct is acceptable. The important expectations for the entity
must be incorporated by the organization as part of its structure in order to insure the continuity of
confidence among external groups. Institutional environments flourish where there is a lack of a
measurable outcome that summarizes organizational performance. When outputs are highly qualitative,
or not subjectable to an agreed upon calculus for combination, success becomes little more than the
sustained belief of satisfactory operation among critical constituents.
Heightened public scrutiny of the accounting profession has increased to external attention on accountant
ethics (Anderson and Ellyson, 1986). An effective code is believed to be the sine qua non of preserving
the privileges of CPA status (Bishop and Tondkar, 1987). This external orientation has intensified over the
past three decades (Preston et al., 1990). Ethics of the profession have increasing become ethics for the
profession. However, the essence that makes this situation the subject matter of institutional theory is the
lack of any chance of technical satisfaction. The precise contents of the correct ethical code for the
accounting profession is unclear.
The American Institute of Certified Public Accountants (AICPA) and their counterpart associations outside
the U.S. charged with the regulation of professional ethics, must convince society that it is acting for the
public interest with regards to the oversight of its members. This however, must be accomplished in an
environment incapable of explicitly defining accounting competence or elaborating the standard for
fiduciary behavior, except in very general terms. These professional associations, acting together with the
governmental boards that regulate practice, must act to retain their charge and to forestall more direct
forms of ethnical regulation by those outside the profession.
Displays of symbolic conformity
Organizations in institutionalized environments are subjected to a set of isomorphic forces that result in
their eventual similarity (DiMaggio and Powell, 1983). However, they retain some discretion over their
actions as long as such actions display symbolic conformity (see Oliver, 1991). The most generic of these
tendencies involves the acceptance of assessment criteria originally exterior to the organization. This
incorporation is usually reflected in the means an organization adopts for the realization of its socially
sanctioned production. Those that develop structures other than those that demonstrate "social fitness"
risk the loss of support and trust of the external parties in their output (Galashiewicz, 1985).
Structure should not be limited to the relationships specified by organizational charts. Structure embraces
the entire social configuration of an activity's domain and is therefore heavily cognitive in nature (Meyer,
1978). Although usually mapped in means-ends terms, structure involves the dynamic elements of
consent, trust, and the language through which descriptive accounts are given (see Meyer et al., 1987;
Neu, 1991). In the final assessment, organizations must signal that they are doing all that can be done,
and that such is being done in the ways that society believes will work.
The creation of a written code and its periodic revision can be thought of as an institutionalized structure.
Lowe (1987) asserts that the primary purpose of the most recent alteration was to improve the image of
the profession to outsiders. How the current code embraces the public interest is through the recitation of
general goals and the deemphasis of those specific rules that have less apparent public interest
dimensions. The central message of "quality", "tone at the top" and "service ideal" purposefully fail to
express any coherent moral ideas. Instead, they are very harmonious with the themes of recent writing on
managerial capitalism (e.g., Peters and Waterman, 1982). In this way, the code of ethics is a key structure
wherein the accounting profession professes its social fitness and reveals its isomorphism with their
clientele and pro-business government.
Decoupling core processes from symbolic structures
The essence of institutional theory lies in the convincing demonstration that what an organization actually
accomplishes and what its structures suggest it should be accomplishing are often quite distinct. In this
event, the former, often referred to as core processes, are said to be loosely coupled from the latter (Meyer
and Rowan, 1977). Structures, indirectly created by and maintained for external constituents, do not
significantly contribute to organizational output. The work that must be done usually operates according to
an internal technological or bureaucratic logic that, for the most part, remains invisible to outsiders.
Although core processes cannot broadly contravene or compromise symbolic structures, they may change
the nature of the organization's output through the adoption of production criteria other than those socially
sanctioned. As long as output remains difficult to calibrate, insiders are free to adopt novel
problematizations of their domain. Organizational convenience often intervenes between the problems
posed externally and the "solutions" extended inside. Loose coupling enables organizations to survive by
claiming victory in the face of impossible tasks and turbulent environments. However, the specific pattern
of loose coupling, more than its very existence, is consequential for organizational results (see Weick,
1976; Orton and Weick, 1990).
The decoupling of the ethical issues in accounting practice allow the high-minded ethical dialogue to
simultaneously exist with a primarily technological justification for action by the profession. Preston et al.
(1990) assert that moral claims are pegged to a minimally acceptable level and lack any truly moral ideas.
This supports the existence of accounting practice that is driven by purely technological and economic
imperatives. This bifurcation provides a specific instance of Larson's (1977) more general claim that codes
of ethnics actually insulate all professions from the consequences of their acts, rather than force an
accountability for them.
A more obvious form of decoupling exists in the difference between the code as written, and the code as
enforced. While the written code is held out to external parties as the ethical standard of accounting, lax
enforcement ensures that very minimal ethical impediments to the practice of choice actually exist. This
janus-like conditions suggests that the lack of enforcement resources may not be the easy justification it
purports to be.
A similar decoupling also pervades accounting education. The drum for more and better ethical training
has been sounded often enough so that some structural changes (i.e. ethics integration, special courses)
have occurred. However, these measures may be cosmetic insofar as they may often be compromised in
their implementation through the prioritization of the "more important" content of procedure and technique.
The half-hearted deployment of resources to ethics projects cannot be readily observed by external parties.
Elementary operational issues have not been solved nor has greater career credibility for ethics
specializations among academics been achieved (see Loeb, 1988). Furthermore, ethics may have been
used by accounting educators and practitioners as a means to pursue more self-serving agenda such as
the expansion of the minimum educational credentials for entry into the profession (the "150 hour
legislation") now law in a majority of states in the U.S. It remains to be seen whether the quality of ethical
instruction will increase by a percentage commensurate with the expansion of the accounting curriculum.
The logic of confidence
Institutional theory predicts that organizations that have adopted the correct structures will avoid any
detailed inspection by external parties. Signalling symbolic conformity to the values and expectations of
critical constituents is rewarded with the bestowal of the "logic of confidence" in that organizational insiders
are presumed to be most qualified to make important decisions (Meyer and Rowan, 1977). The inherent
uncertainty surrounding operation of the organization can thus be absorbed as long as its leaders
consistently demonstrate good faith. Inspection is not abandoned, but it is ceremonialized in ways that
maintain categorical relationships and reproduce the appropriateness of the delegation of substantive
responsibility (Ritti and Silver, 1986).
Regulatory initiatives in government concerning the accounting progression have followed financial
scandal and unexpected bankruptcy that question the value of the audit. Direct regulation has not resulted
for a variety of reasons including the belief that accountants have put their own "house" in order (see Moran
and Previts, 1983). Despite the role of this profession in the integrity and accuracy of financial reports to
the capital markets, Congress and the Securities and Exchange Commission have left accountants in
charge of admission, good standing, and professional work standards. Direct sanctioning by the federal
government, while legally possible when publically traded companies are involved, remains quite rare (see
Campbell and Parker, 1993). Congressional inquiry, which has occurred about once every decade, seems
to be the particular province of only one or two elected officials (see Turner and Jensen, 1987). These
circumstances suggest the operation of the logic of confidence for the highly dynamic accounting
profession.
Although the role of the code of ethics in this process is hard to clearly discern, several have seen the
development of the correct code as necessary to avoid the curtailment of the profession's freedoms (e.g.,
Higgins and Olson, 1972). For these purposes, the code creates an official hierarchy of values that is taken
as the profession's intent to reform itself. Since those reforms that are really needed are difficult for
outsiders to second-guess, the good intentions expressed therein, have become as ersatz equivalent of
substantive ethical progress.
Conclusion
This paper has critically assessed the way accountant ethics are conventionally understood by both the
practitioner and academic communities. A call for research that questions some of the implicit assumptions
of past studies has been made. Toward this end, institutional theory provides a robust and mature
perspective the implements alternative first order conditions. Most importantly, it is capable of recognizing
macro-level phenomenon in a way that does not diminish the differentiations within the profession.
Furthermore, institutional theory provides an ability to allow for the separation of the rhetoric of ethics and
ethical action.
The structure of the argument in this paper is not limited to the accounting profession. The systematic
limitations of past ethics studies of other groups in the business world also exist. Therefore, the need to
infuse sociological analysis into the ethical evaluation of other groups would be just as keen. Institutional
theory could be expected to follow, mutatis mutandis, a similar application. Further research is necessary
in order to gain an appreciation for the link between differences in institutional environments and
possibilities for strategic professional action on a comparative basis.
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