Accounting Professionalism: A Fundamental Problem and the Quest for Fundamental Solutions
Wyatt, Arthur R., Gaa, James C., The CPA Journal
At a plenary session at the 2003 annual meeting of the American Accounting Association (AAA), Professor Arthur R. Wyatt spoke on "Accounting Professionalism-They Just Don't Get It!" His far-ranging observations and incisive analysis drew upon his long experience in the profession. At a later session during the AAA annual meeting, Professor James C. Gaa took Wyatt's observations a step further, using them to delineate a thoughtful analysis of moral syndromes in the accounting profession, and a prognosis for the future. The CPA Journal is grateful to both of them for sharing their remarks with its readers.
Accountants' Responsibilities and Morality
By Arthur R. Wyatt
This article is adapted from Professor Wyatt's remarks at the American Accounting Association's Annual Meeting in Honolulu, August 4, 2003.
Over the last few years the accounting profession has been beaten up badly in the media, somewhat justifiably. The forces at work were numerous and complex, and a variety of phenomena created the environment in which Andersen disappeared and the entire profession had its reputation tarnished. Some forces were not new: delivering services that acted to impair independence; becoming too cozy with clients; active participation in finding ways to circumvent accounting standards; simple greed. What was new is that the profession's historical defenses to combat these forces proved ineffective. The profession-indeed, society as a whole-has paid dearly for failing to meet the expectations of investors, creditors, and other users of financial statements.
My observations here today are based on observing the profession's evolution over the past 50 years and participating actively in it for nearly 40 years. I will frequently refer to Arthur Andersen because I had substantive experience there over many years.
The Path to Professionalism
When I graduated from college, Andersen was the 12th-largest firm in Chicago and had about 30 partners. By the mid-1960s it was a part of the Big Eight, probably seventh in size, with about 350 partners worldwide. Accounting education focused more significantly on professionalism and the accounting code of ethics than it has in the recent past. Most entrants to the large firms were recent college graduates whose courses in auditing focused on professional responsibilities and the importance of ethical behavior. The apprenticeship system inherited from the United Kingdom had faded, and hiring experienced individuals with diverse business backgrounds was rare.
The AICPA was primarily a professional organization whose senior committees developed the professional standards that guided accounting decisions and auditing approaches. The Institute's spokesman focused on increasing the awareness of the importance of ethical professional behavior. Later the AICPA became, in effect, a trade association, with only limited impact on matters of professionalism and ethical behavior. The large firms were headed by leading accounting professionals, often people who had risen to their positions based on technical skill and experience and knowledge about diverse accounting issues. These individuals were often active and well known in the larger business community, articulating in articles and speeches the nature of the profession and its importance to our business and commercial system. They spoke out forcefully on the issues of the day, often without regard to whether clients might find their remarks objectionable.
Within the firms, even newer professionals were guided on a path of professional behavior, through formal training and observance of the manner in which the objectives of firm leadership were implemented in everyday practice. At Andersen, and probably other firms as well, a specific approach existed for staff personnel to take to top management any behavior they observed that departed from what they understood to be firm policy. The relatively small size of the firms meant that interpersonal relationships with leaders within the firm were possible. …