A critique of the descriptive power of the private interest model of professional accounting ethics

Irish context

Mary Canning

Accounting Group, Dublin City University, Dublin, Ireland, and

Brendan O'Dwyer

Michael Smurfit Graduate School of Business, University College Dublin,

Dublin, Ireland

Keywords Discipline, Procedures, Accountancy profession, Ethics, Ireland Abstract The primary aim of this study is to examine the descriptive power of the private

interest model of professional accounting ethics developed by Parker in 1994. This examination is undertaken over an extended time period in the Irish context. It develops prior research which concluded that the operation of the professional ethics machinery of the Institute of Chartered Accountants in Ireland (ICAI) facilitated private interest motives on the part of the ICAI. The paper draws on evidence regarding three critical events occurring outside the disciplinary process of the ICAI but impacting directly on its operation as well as on perceptions from within the process. The discourse surrounding the disciplinary process from 1994 to 2001 is examined using media coverage and ICAI pronouncements. This is augmented with in-depth interviews held with members of the ICAI disciplinary committees. The analysis provides evidence of pockets of support for the descriptive power of Parker's model but also illustrates how the rigid and static nature of the separate roles depicted within the model can often fail to capture the complexity of the various changes occurring over the period examined. The study presents evidence which challenges the proposed interrelationships between the various private interest roles depicted in the model and makes some suggestions for the modification of the model, particularly the interrelationships depicted therein.

Introduction Professional ethics reveal a dual and complex role in that both the public and private interests are pursued. While the public interest is readily declared, the powerful private interest often remains submerged. Hence, according to Parker (1994, p. 508) ``the role of ethics in protecting the private interest represents a vital component of the accounting profession's ongoing commitment to

The authors are extremely grateful for the helpful comments of Clare Balfe, Yves Gendron, Lee

Accounting, Auditing &

Parker, Ian Thomson and two anonymous reviewers on earlier drafts of this paper. We would

Accountability Journal Vol. 16 No. 2, 2003

also like to thank participants at the 2002 Critical Perspectives on Accounting conference in

pp. 159-185

New York and the 2002 Irish Accounting and Finance Association conference in Galway for

# MCB UP Limited

further helpful comments. 0951-3574

DOI 10.1108/09513570310472049

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ensuring its own survival''. Parker (1994, p. 508) developed a private interest

model of professional accounting ethics which he envisaged would be subsequently refined and modified with respect to any unique aspects of particular national environments. This paper is responsive to this call given that prior research concluded that the operation of the professional ethics machinery of one professional body, the Institute of Chartered Accountants in

Ireland (ICAI) facilitates private interest motives on the part of the ICAI (Canning and O'Dwyer, 2001). More specifically, the paper subjects elements of the model to critical scrutiny given unique aspects of the Irish national environment. This research comes at a time when the disciplinary arrangements of professional accounting bodies in Ireland and the UK have been the subject of governmental scrutiny and much adverse press comment due to research and publicity alleging audit failures (Canning and O'Dwyer, 2001; Mitchell et al., 1994; Sikka and Willmott, 1995). The paper also represents

a direct response to Sikka's (2001a, p. 759) call for research to be undertaken which ``scrutinize[s] the rhetoric and public interest claims of accountancy bodies''.

Parker's aforementioned model is a comprehensive attempt to conceptualise the private interest role of professional accounting ethics in certain western contexts. Nevertheless, as with all models it is susceptible to examination and may require modification given the impact of changes over time in specific contexts. In this paper, we examine the descriptive power of the model in the Irish context over time by undertaking two main tasks. First, we trace changes in this context over an eight year period, from 1994 to 2001, directly impacting on the professional ethics machinery of the ICAI[1]. These changes are sketched by examining elements of the discourse surrounding three key external events impacting on the disciplinary process over this period. This initial examination focuses on viewing the model given events occurring ``outside'' the disciplinary process but impacting directly on its operation and calls into question aspects of the model's descriptive power. Second, we augment this investigation with evidence drawn from in-depth interviews with members of the ICAI disciplinary committees in order to gain an understanding of the operation of the process from the ``inside''. These interviews further enable us to scrutinise the model's descriptive power. We use this evidence to make some suggestions for the modification of the model, particularly the interrelationships depicted therein. The remainder of the paper is organised as follows: the next section comprises a discussion of the conflict between the public and private interests of the accounting profession and in particular the role played by their ethical codes and disciplinary processes within this conflict. The private interest model of professional accounting ethics developed by Parker (1994) is then presented. This is followed by a description of the methods adopted in the study. The findings emanating from our examination of the three critical events over the eight year period, in conjunction with the interview evidence, are then presented and deliberated on. These findings are used to examine the descriptive power of Parker's model. The final section Parker's aforementioned model is a comprehensive attempt to conceptualise the private interest role of professional accounting ethics in certain western contexts. Nevertheless, as with all models it is susceptible to examination and may require modification given the impact of changes over time in specific contexts. In this paper, we examine the descriptive power of the model in the Irish context over time by undertaking two main tasks. First, we trace changes in this context over an eight year period, from 1994 to 2001, directly impacting on the professional ethics machinery of the ICAI[1]. These changes are sketched by examining elements of the discourse surrounding three key external events impacting on the disciplinary process over this period. This initial examination focuses on viewing the model given events occurring ``outside'' the disciplinary process but impacting directly on its operation and calls into question aspects of the model's descriptive power. Second, we augment this investigation with evidence drawn from in-depth interviews with members of the ICAI disciplinary committees in order to gain an understanding of the operation of the process from the ``inside''. These interviews further enable us to scrutinise the model's descriptive power. We use this evidence to make some suggestions for the modification of the model, particularly the interrelationships depicted therein. The remainder of the paper is organised as follows: the next section comprises a discussion of the conflict between the public and private interests of the accounting profession and in particular the role played by their ethical codes and disciplinary processes within this conflict. The private interest model of professional accounting ethics developed by Parker (1994) is then presented. This is followed by a description of the methods adopted in the study. The findings emanating from our examination of the three critical events over the eight year period, in conjunction with the interview evidence, are then presented and deliberated on. These findings are used to examine the descriptive power of Parker's model. The final section

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concluding the study.

accounting ethics

Literature review Since their inception, most accounting bodies, like all established professions have been self-regulatory (Lee, 1995). Functional perspectives on professions identify self regulation as one of the privileges professions seek in exchange for

making their knowledge and skills available[2] (Willmott, 1986). As part of the self-regulatory process, some professions impose requirements on members as to their behaviour through the establishment of ethical codes. These requirements are enforced by way of disciplinary penalties.

If a profession, and in particular a self regulated one like the accounting profession, wishes to achieve public recognition, then ethical codes together with rigorous, accountable and transparent disciplinary processes which enforce them, are essential (Maurice, 1996). Such disciplinary processes are seen by Sikka (2001a, p. 755) as ``always political in that they enable accountancy bodies (and their members) to advance their social claims for colonization and control of jurisdictions, markets and niches''. Through readily declaring the public interest, these ethical codes have been accused of facilitating the profession's claims to act in the public interest (Parker, 1994) thereby maintaining confidence in the profession among the public and the state bodies (Cohen and Pant, 1991; Preston et al., 1995). They are seen to act as

a mechanism aimed at assuring the public and the state authorities that members are competent, have integrity and that the profession intends to maintain and enforce high standards (Ward et al., 1993). The credibility of the profession and its self-regulatory regime are therefore dependent on the enforcement of these codes being seen to be effective. By reporting selected misconduct by members, the profession is shielded from having public scrutiny of its ``broader professional values'' (Sikka, 2001a, p. 755). In other words, such enforcement will thereby ensure the respect of the community and the avoidance of the risk of losing the power and privilege of self regulation to the state.

Ethical codes and disciplinary processes: the conflict between public and private interest roles Ethical codes are promoted by accounting bodies as serving a public interest role in that they ``protect the economic interests of professional members' clients and of third parties[3] who place reliance on the pronouncements and advice delivered by both the professional body and its members'' (Parker, 1994, p. 509). However, recent research directly questions this proclaimed public interest role of ethical codes and their disciplinary arrangements which are in place to enforce them, in particular in the Irish, UK and Australian contexts (Canning and O'Dwyer, 2001; Mitchell et al., 1994; Parker, 1994; Sikka, 2001b). This research suggests that, in effect, these codes and arrangements are part of

a strategy involving the use of explicit professional signals in order to provide

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a public interest face to what is essentially a process driven by private

(economic) interests (Lee, 1995). Parker (1994) argues that ethical codes are often expressed in altruistic tones and that while encouraging a sense of social responsibility on the part of the professional member, they also assist in justifying professional self-interest. This, he argues, is contradictory in that while ethical codes apparently seek to

fight inequality in society, at the same time they preserve inequality through their defence of the professional privileges of wealth, status and power (Parker, 1994). Therefore, although the codes themselves readily declare the public interest, the private interest remains submerged yet powerful, as the demonstration of an effective and accountable disciplinary process may reduce the chances of a profession losing its self-regulatory status. Their disciplinary processes can also be recognised as part of the territorial battles which enable professional bodies to ward off challengers and retain their ascendancy (Dezalay, 1992), or, in other words, to view them as ``a proven mechanism for diffusing criticisms, restoring the aura of independence and professionalism and, in this way, protecting the profession's jurisdiction'' (Sikka and Willmott, 1995, p. 561).

As already pointed out, disciplinary arrangements exist so as to promote adherence to ethical rules. Parker (1994) notes that while some have promoted them as a powerful stimulus towards adherence to ethical rules, others view distinct disciplinary processes and periodically observable disciplinary actions enforced as mere symbolic actions created to illustrate the profession's supposed ethical attitudes and assurances to outsiders. Parker (1994) describes this latter viewpoint as a form of disciplinary symbolism which, he argues, is aimed at projecting an image of the accounting professions' ethical attitudes, commitment and behaviour. Sikka (2001a, p. 756) suggests that ``it is as though the symbolism of disciplinary arrangements is considered to be sufficient to secure public confidence''. Parker (1994) claims that the disciplinary symbol lends support and reinforcement to the various dimensions of his private interest model of professional accounting ethics which we now proceed to discuss.

Parker's private interest model of professional accounting ethics Parker (1994) developed, as depicted in Figure 1, a private interest model of professional ethics in an accounting context. The model conceptualises five interrelated roles that ethics codes fulfil in serving the private interest of the accounting profession. Professional insulation is identified as the primary private interest role served by the ethics code whereby the profession is insulated from inspection and assessment by outside parties through its creation of ``professional mystique'' which according to Burns and Haga (1977, p. 710) requires ``the work to be seen as esoteric, incomprehensible and consisting of doing things that ordinary mortals cannot do''. Such mystique hinders ``outsiders from scrutinising, understanding, or evaluating its [the profession's] activities'' (Parker, 1994, p. 514). An example of this is the exercise

Professional accounting ethics

Figure 1. Parker's private interest model of professional accounting ethics

of restrictions on disciplinary cases disclosure (Parker, 1994). By creating this ``professional mystique'', the profession is allowed to operate with minimum outside interference[4] (interference minimisation) and is granted the freedom to control its own activities and members (self-control). The relationship depicted in the model is one where professional insulation is seen to facilitate both interference minimisation and self-control and not vice versa (see Figure 1). Interference minimisation and self-control are, however, seen to be interrelated in that self-control can only exist where interference by outside parties in the profession's activities is minimised and interference minimisation will only be granted where the profession can demonstrate the adequate operation of self- control. The ethics code's facilitation of the roles of professional insulation, interference minimisation and self-control are deemed to be targeted towards the maintenance of professional authority, which Parker defined in terms of the profession's ability to obtain professional autonomy and exclusivity over its technical knowledge base, and public trust and approbation with respect to its claimed service ideals. The roles of professional insulation, interference minimisation and self-control are therefore seen to be subordinate and contributory to professional authority. There is therefore a presumption that professional authority cannot be attained without the ethics codes successfully fulfilling these three former roles. The underlying intent of professional authority is its ability to preserve the profession's socio-economic status ``in terms of social legitimacy and perceived social standing of the profession and the level of economic rewards achievable by members'' (Parker, 1994, p. 515). Equally, however, socio-economic status preservation is seen to reinforce the public's perception of the authority of the profession. These latter two roles are identified as mutually reinforcing and ``together serve as the focal private interest roles'' of the ethics code of professional accounting bodies (Parker, 1994, p. 515).

According to Parker (1994, p. 515), the model ``clearly sits within a wider social, political, institutional and economic context''. He claims that the complexity of this context is such that the model does not attempt to encapsulate it. While we accept this complexity, we examine how the model sits

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within a changing Irish context. Given the apparent static and absolute nature

of the five roles depicted within the model we illustrate how these roles, as depicted, struggle to incorporate fully the impact of change in this context over time.

Research methods

The evidence in this study was collected using two methods. Firstly, a content analysis of media reporting and ICAI pronouncements regarding three events with public interest implications relating to the ICAI disciplinary process was undertaken. While these three events, which occurred between 1994 and 2001, happened ``outside'' the disciplinary process, they impacted directly on its operation. The analysis focuses on whether Parker's model adequately describes the operation of the ICAI disciplinary process over time in response to these external events. Secondly, semistructured in-depth personal interviews with eight individuals who had direct involvement with the ICAI disciplinary process were undertaken. The purpose of these interviews was to draw on perceptions from ``inside'' the process to inform the analysis of the descriptive power of Parker's model.

Content analysis The content analysis (see Holsti, 1969; Krippendorff, 1980; Weber, 1985) involved a comprehensive review of media and ICAI pronouncements surrounding the three events examined: the Report of the Tribunal of Inquiry into the Beef Processing Industry; the Report of the Tribunal of Inquiry (Dunnes Payments); and the Parliamentary Inquiry into DIRT (Deposit Interest Retention Tax) by the Dail (Irish Parliament) Public Accounts Committee (PAC). A number of key words and categories were developed and agreed by the researchers in order to focus this analysis. Articles were identified using on- line search systems on newspaper, business magazine and academic journal web sites as well as general searches on library web sites[5]. Where on-line search facilities did not fully cover the period being examined, we examined individual newspapers' content in certain years (particularly, 1994, 1995and 1996) for evidence of articles relating to these three events using microfiche facilities. We also collected and examined information on the ICAI web site for press releases and pronouncements in relation to the three events. The articles were organised according to the event they related to and were examined in detail in order to obtain some understanding of the core issues involved while, at the same time, reflecting on the evolution of the issues and how the ICAI response to them impacted on the descriptive power of Parker's model.

Interview evidence The interviews were guided by a small number of broad open-ended questions[6] and ranged from 45to 90 minutes in duration. Interviews were conducted with three ICAI members directly involved in the internal administration of the disciplinary procedures and who also acted as members Interview evidence The interviews were guided by a small number of broad open-ended questions[6] and ranged from 45to 90 minutes in duration. Interviews were conducted with three ICAI members directly involved in the internal administration of the disciplinary procedures and who also acted as members

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five interviews were conducted with lay members[7] of the various committees.

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Our core focus in these interviews was to examine perceptions of the openness

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and transparency of the disciplinary process and its purported objective to act in the public interest. We initially wrote to the ICAI for contact details of these members as we wished to be open with the ICAI regarding the nature of our research. Before releasing any contact details, the ICAI insisted on liaising with

these members in order to ascertain their willingness to be interviewed. We were also asked to provide a detailed outline of our research objectives in which we guaranteed the confidentiality of the interviewees given the apparent sensitivity of our research. We acceded to this. When interviewees agreed to be interviewed the ICAI provided us with contact details and we proceeded to organise the interviews.

Conducting the interviews Before commencing each interview, the nature of the research was again outlined to each interviewee. It was stressed that it was perceptions we were examining and that we were not looking for definitive, wholly defensible answers to questions. We were extremely conscious not to lead interviewees in any way and attempted to formulate an informed conversation (Patton, 1990; Smith, 1972). It should be noted that while we made extensive attempts to establish a relaxed atmosphere and establish a rapport, on two occasions we got the impression that interviewees were somewhat concerned about elaborating in too much depth about the inner nature of the ICAI disciplinary process. However, all other interviewees were extremely forthcoming and elaborative in their responses to questions.

Evidence analysis All of the interviews were recorded by tape and subsequently transcribed (Jones, 1985; McKinnon, 1988). The evidence analysis constituted a pervasive process throughout the study's life. For example, throughout the interview collection phase, ongoing analysis was aided by: extensive notes taken during and immediately after interviews; recorded de-briefing sessions between the two researchers immediately after each interview; tape-recorded reflections on interviews recorded separately by both researchers as well as each interviewee recording an inner dialogue reflecting on the interviews in separate journals (see Baxter and Chua, 1998; Silverman, 2000). This, in effect, provided us with a provisional running record of analysis and interpretation (see Miles and Huberman, 1994; Tesch, 1990). Initial readings of early transcripts throughout the interview collection phase also meant that in subsequent interviews certain issues that appeared to be arising from these readings were probed more deeply. In conducting the post interview analysis, the broad areas addressed in the interview guide provided a framework/template from which a detailed analysis of transcripts could proceed (Coffey and Atkinson, 1996; Lillis, 1999; Miles, 1979). In total, the transcripts were read on five separate occasions by

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both researchers after data collection had ceased. The first and second in-depth

reading of each transcript was undertaken with the tape of the interview running in order to focus in on emphasis, mood, intonation and so on (Jones, 1985, p. 58). A number of key themes apparent in the evidence were then developed after much discussion and debate. Mind (cognitive) maps were prepared for each interview in order to support or, in some cases, challenge the

themes identified. These also helped in the search for any apparent contradictions in the initial themes derived from the transcript evidence (Huberman and Miles, 1994; Jones, 1985; Patton, 1990).

The detailed field notes, mind maps, tape-recorded reflections, memos, interview summaries, and journals were then re-visited and analysed further. This led to the formulation of an initial ``thick description'' (Denzin, 1994, p. 505) of the interview findings using the interview guide questions as a loose framework (see King, 1999, 1998). This description was then examined using Parker's model as a lens in order to discover if the perceptions gained supported the model's descriptive power. This was a crucial part of our analysis and involved numerous sessions where we discussed and debated the themes identified with regard to Parker's model. Finally, a narrative was developed (Llewellyn, 2001) based on this analysis and this is primarily presented in the second section of the findings detailed below.

Interrogating the descriptive power of Parker's individual private interest roles This section reports on the examination of the impact of three critical events of

a public interest nature on the ICAI professional ethics machinery in the period from 1994 to 2001. These impacts are explored by analysing elements of the discourse surrounding these events using the content analysis of media coverage and ICAI pronouncements in conjunction with the interview evidence analysis. The examination focuses on whether Parker's model, particularly the individual roles depicted therein, adequately describes the operation of the ICAI disciplinary machinery over time in response to these three events. These events were chosen as they represent the three major events of a ``public interest'' nature which directly impacted on the ICAI's disciplinary apparatus from 1994 onwards. The decision to commence in 1994 is due to the seminal nature of the first event analysed which reached its conclusion in 1994 (Bougen et al., 1999). This event represented the commencement of a strong societal push for greater accountability and transparency in Irish public life which has led to greater questioning of powerful, well established professions such as law, medicine and accountancy in this context.

Privacy and secrecy ± supporting the descriptive power of Parker's model Event 1 ± The Beef Tribunal. In 1994, revelations arising from the Report of the Tribunal of Inquiry into the Beef Processing Industry (hereafter the Beef Tribunal) (Beef Tribunal, 1994) into alleged tax evasion and other malpractices in the Irish beef processing industry implicated members of the ICAI in the Privacy and secrecy ± supporting the descriptive power of Parker's model Event 1 ± The Beef Tribunal. In 1994, revelations arising from the Report of the Tribunal of Inquiry into the Beef Processing Industry (hereafter the Beef Tribunal) (Beef Tribunal, 1994) into alleged tax evasion and other malpractices in the Irish beef processing industry implicated members of the ICAI in the

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nature was an extremely rare occurrence in the Irish context at this time

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(Bougen et al., 1999) and the findings prompted private disciplinary inquiries

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by the ICAI given their public interest implications. Consequently, we commence our examination of the descriptive power of Parker's model as applied to the operation of the professional accounting ethics machinery of the ICAI in 1994 around the time of the aforementioned report.

Despite the public furore regarding the Beef Tribunal findings (Bougen et al., 1999) and the questions raised about some of its members, the ICAI never reacted publicly to the report (Murdoch, 1997; 1998a,b). The absence of

a public response combined with the private nature of the disciplinary hearings into possible breaches of its ethical code were representative of a body focused on insulating the process from public view (professional insulation) in order to minimise interference in its internal workings (interference minimisation). For example, despite disciplining one member, neither the name of that individual nor any indication of the outcome of the internal inquiry was published (Murdoch, 1997). This successfully created a sense of mystique around the process undertaken, further strengthening professional insulation. In fact, the profession was so focused on professional insulation in order to minimise interference in what it perceived as its internal affairs and was so resistant to any external threats to its professional authority that it actually stifled public debate on the issues involved. For instance, it was widely reported that a former president of the ICAI considered the issues raised to be so serious that he tried to raise the matter, and other related issues, in a letter to the ICAI members' journal Accountancy Ireland in 1996. The journal, however, refused to publish the letter lest it ``pre- judge the disciplinary process that was underway'' given ``the sensitivities of some of the issues'' (Murdoch, 1997; 1998a)[8]. This stance seems to have been aimed at maintaining a perception that the body exercised sufficient self- control over its members through procedures held behind closed doors. The ICAI was, in effect, asserting its self-perceived professional authority by ensuring that its ethics code (and the disciplinary process surrounding it) successfully fulfilled the roles of professional insulation, interference minimisation and self-control thereby operating in the ICAI's private interest. Its concern for the socio-economic status preservation of its members was illustrated by its refusal to publicly name the member disciplined or the outcome of the process (Murdoch, 1998a). A number of interviewees were highly critical of the ICAI's reluctance to publicly name the member disciplined:

I never agreed with the reluctance of the Institute (ICAI) to publish names of members ... It seemed there had been a customary practice not to do so unless somebody had done something absolutely gross . . . [There was] a misguided sense of justice and I disagreed with that . . . The process [wa]s flawed [and] I believe [publishing names] would have given more confidence in the process to members [and the public] . . . [Even now] it is far too tentative in the way it does publish things (M1)[9].

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We d[id] take people to task, but [under the old system] . . . nobody knew about the end result

16,2 . . . (M2).

In summary, at this time, it was apparent that the ICAI did not consider its internal procedures to be the domain of the wider public despite the public interest implications of the Beef Tribunal findings. From the outside looking in, there was a sense that the ICAI considered itself to be immune from public

scrutiny by virtue of the professional authority it felt it possessed. Therefore, the private operation of the ICAI disciplinary process combined with its lack of

a public response to findings regarding its members' actions which had a public interest dimension suggests that Parker's model adequately describes the operation of the ICAI professional accounting ethics machinery in its own (private) interest at this time in this (Irish) context. The ICAI effectively depended on its professional authority supported by professional insulation, interference minimisation and perceptions of self-control in order to preserve the socio-economic status of its members. However, the ensuing years brought two further critical external threats to Parker's depiction of the individual roles and their interrelationships within his model. The following sections examine these threats and the ICAI response to them. In doing so, despite illustrating some further support for the model's descriptive power, they overwhelmingly indicate a number of threats to this power.

From privacy and secrecy to ostensible openness and transparency ± support for and challenges to the descriptive power of Parker's model Event 2 ± The McCracken Tribunal. In August 1997, the Report of the Tribunal of Inquiry (Dunnes Payments) (hereafter the McCracken Tribunal) (McCracken, 1997) into, inter alia, claims of payments to politicians named a number of prominent ICAI members thought to have been involved in the process[10]. As part of its disciplinary apparatus, the ICAI set up a committee to investigate these members. By establishing this committee, the ICAI, under the disciplinary rules existing at this time, effectively acknowledged the public interest nature of this case. This investigation would have proceeded along similar lines to the Beef Tribunal (i.e. in a completely private manner) but for severe external pressure imposed on the ICAI, initially emanating through the print media. For example, when the operation of this committee was threatened by outside interference with the media calling for public hearings, the ICAI adopted an extremely defensive stance and insisted that its investigation be held in private, as was normally the case heretofore. The ICAI made this clear in a public statement declaring that it ``wishes it to be known that its procedures and affairs are private, and that the (investigation) committee has not issued or authorised the issue of any comments or reports on its activities'' (Murdoch, 1998a). Effectively, the body was asserting its professional authority and was unwilling to permit this to be undermined by allowing any interference in its disciplinary procedures as it was well capable (in its own view) of exerting self-control over its members. This statement further illustrates the insular nature of the ICAI disciplinary proceedings at this time. It From privacy and secrecy to ostensible openness and transparency ± support for and challenges to the descriptive power of Parker's model Event 2 ± The McCracken Tribunal. In August 1997, the Report of the Tribunal of Inquiry (Dunnes Payments) (hereafter the McCracken Tribunal) (McCracken, 1997) into, inter alia, claims of payments to politicians named a number of prominent ICAI members thought to have been involved in the process[10]. As part of its disciplinary apparatus, the ICAI set up a committee to investigate these members. By establishing this committee, the ICAI, under the disciplinary rules existing at this time, effectively acknowledged the public interest nature of this case. This investigation would have proceeded along similar lines to the Beef Tribunal (i.e. in a completely private manner) but for severe external pressure imposed on the ICAI, initially emanating through the print media. For example, when the operation of this committee was threatened by outside interference with the media calling for public hearings, the ICAI adopted an extremely defensive stance and insisted that its investigation be held in private, as was normally the case heretofore. The ICAI made this clear in a public statement declaring that it ``wishes it to be known that its procedures and affairs are private, and that the (investigation) committee has not issued or authorised the issue of any comments or reports on its activities'' (Murdoch, 1998a). Effectively, the body was asserting its professional authority and was unwilling to permit this to be undermined by allowing any interference in its disciplinary procedures as it was well capable (in its own view) of exerting self-control over its members. This statement further illustrates the insular nature of the ICAI disciplinary proceedings at this time. It

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sustain interference minimisation and self-control over its members. This was

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ultimately perceived as upholding its professional authority. Hence, the nature

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of this response further indicates how Parker's model adequately reflects the operation of the ICAI professional ethics machinery in its own (private) interest at this time.

The unravelling of professional insulation Given the public interest nature of the McCracken tribunal findings, the defensive approach outlined above was widely criticised in the media for its lack of openness and transparency and continued concerns were expressed as to why the disciplinary hearings were not held in public (Murdoch, 1998a). The well established mystique (professional insulation) surrounding the ICAI disciplinary process was directly challenged as the ICAI's internal processes became subject to greater assessment from outside parties. Consequently, the strength of the foundation stone of Parker's model (professional insulation) came under threat.

The power of professional insulation, interference minimisation and hence, professional authority came under further direct external threat when the Tanaiste[11], Mary Harney, publicly called for the ICAI to act in a more open and transparent manner. She met with the ICAI and insisted that an observer

be allowed to sit in on their disciplinary hearings. The ICAI initially refused categorically (Creaton, 1998), once more apparently fearing that this potential erosion of professional insulation would lead to increased outside interference in their internal affairs (reduced interference minimisation) and a consequent threat to professional authority (in line with the indicated role relationships in Parker's model). However, Harney persisted and issued a thinly veiled threat indicating she would reconsider the delegated self-regulatory status of the ICAI if they did not accede to her request. In a speech to a rival accountancy body, Harney highlighted the huge privileges accountants enjoyed in society and warned that, as a result of these, they must be prepared to give something back to society and punish any wrongdoings among their members (Suiter, 1997). This pressure eventually prevailed and the ICAI relented and allowed a government observer to attend the ICAI hearings. The ICAI also appointed a former Supreme Court judge, Mr Justice Blayney, to chair the inquiry and made

a commitment to making public the inquiry's final report (ICAI, 1997)[12]. This represented further evidence of a shift in the operation of the ICAI disciplinary procedures from a focus on mystique and insulation to a form of acceptance (in public at least) of the need for more openness and transparency, thereby eroding entrenched professional insulation.

Reducing professional insulation in order to maintain interference minimisation In an apparent response to the concerns raised as a result of the above two tribunals, the Council of the ICAI approved proposals to make its disciplinary

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process more open and transparent in May 1998[13]. Under the new proposals,

certain inquiries would now be held in public, the procedures for dealing with complaints were to be speeded up, a greater representation of non-accountants (lay members) was allowed on the disciplinary committees and sanctions imposed by the process were to be publicised more extensively (ICAI, 1999a). Furthermore, the level of fines was to be increased (ICAI, 1999a). These

changes represented an about-turn from the body who greeted the Beef Tribunal findings with silence and a degree of annoyance that any external body or person should question, or indeed intervene in, the private operation of their disciplinary proceedings. Pierce Kent, the newly elected president encapsulated this volte-face when stating ``we now recognise that open justice is far more convincing than private discipline. The changes approved by the Council will help reassure the public'' (O' Sullivan, 1998). A former president hailed the new procedures as reflecting a new ``open institution'' challenging perceptions of the body as a ``self protective organisation (given) the private nature of current disciplinary hearings'' (The Irish Times, 1998). The proposed changes were overwhelmingly supported by ICAI members[14].

The ICAI's gradual acceptance of an erosion in professional insulation suggests a perception of reduced professional insulation facilitating the maintenance of interference minimisation. For example, many interviewees argued that by making their disciplinary procedures more transparent and open in order to show that they were regulating themselves adequately (in effect, reducing professional insulation) the ICAI minimised the possibility of outside interference (maintaining interference minimisation). They perceived the nature of the relationship between professional insulation and interference minimisation as hindering rather than facilitating in nature. This tends to indicate, as depicted in Figure 2, some form of perceived tension or negative relationship (represented by (±)) between professional insulation and interference minimisation, a tension Parker's model does not consider. Instead, Parker's model suggests the opposite, that decreased professional insulation contributes to decreased interference minimisation, i.e. an absence of tension or a positive relationship.

Lee (1995, p. 64) has argued that one of the results of the accountancy profession's public response to criticism is the ``gradual exposure of the

Figure 2. Tension between professional insulation and interference minimisation Figure 2. Tension between professional insulation and interference minimisation

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accountancy'' which has ``made it easier for non-accountants to criticise

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practice'' (through reduced professional insulation). Our analysis suggests that

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some erosion of this mystique was embraced as it was ultimately perceived as ensuring that external criticism eventually abated and failed to evolve into interference in the ICAI's internal operation of its disciplinary process. It was perceived that the nature of the external pressures ensured that interference

minimisation was not served by attempting to enhance the mystique surrounding the ICAI (increased professional insulation). In essence, professional insulation was traded off against interference minimisation.

In summary, our evidence suggests that at the commencement of its investigation into the McCracken Tribunal findings the ICAI had hoped to conduct its disciplinary procedures in a completely private manner, along similar lines to its actions around the time of the Beef Tribunal. However, severe external pressure for more open and transparent procedures was imposed on the ICAI and led to the setting up of the Blayney Inquiry. The ICAI response to these external pressures in conjunction with the interview evidence suggests a perception of reduced professional insulation facilitating the maintenance of interference minimisation. This tends to indicate some form of tension or negative relationship between professional insulation and interference minimisation in the Irish context, which Parker's model fails to identify. Instead, Parker's model suggests a positive relationship, i.e. that decreased (increased) professional insulation contributes to decreased (increased) interference minimisation. We therefore argue that this analysis challenges the descriptive power of elements of Parker's model in the Irish context at this time. We will now consider the third external threat to the ICAI professional accounting ethics machinery and its implications for the descriptive power of Parker's model.

Event 3: The DIRT Inquiry. The Tanaiste initially stated that she would await the outcome of the Blayney Inquiry before making any decisions regarding the delegated self-regulatory status of the accounting profession (Keena, 1998). However, subsequent events overtook the Blayney Inquiry and led to an earlier appraisal of the appropriateness of delegated self-regulation. Revelations regarding the widespread non-payment of deposit interest retention tax (DIRT) on bank deposit accounts led to the setting up of a Parliamentary Inquiry into DIRT by the Dail (Irish Parliament) Public Accounts Committee (PAC) (hereafter the DIRT Inquiry) which was televised live. Auditors came in for severe criticism given their failure to uncover the wide-scale use of bogus non-resident bank accounts and their failure to signal potentially large DIRT liabilities which could have affected the solvency of some banks in the 1980s and 1990s[15]. Serious question marks over the delegated self-regulatory status of the accounting profession and, in particular, concerns as to the effectiveness of the disciplinary process of the ICAI, were raised and publicly debated. This represented yet another intrusion into a process that a mere six years earlier operated in a completely private manner (thereby threatening professional insulation and interference minimisation).

AAAJ 16,2

Supporting the descriptive power of Parker's model On foot of a recommendation by the PAC, a review group on auditing (RGA) was formed to investigate, inter alia, the operation of delegated self-regulation within the accounting profession. A key recommendation included therein was the setting up of an independent statutory oversight board (IAASA)[16] to supervise the regulation of accountants by the various accountancy bodies (RGA, 2000). It was to be independent of both the profession and government with the power to impose sanctions where supervisory failures occurred, including a e127,000 fine. The most controversial element of the suggested amendments to the disciplinary process involved the right of the proposed oversight board to intervene in misconduct cases (thereby severely reducing interference minimisation). This potential role in ``operational'' issues was objected to by the ICAI as not being consistent with a supervisory function and they claimed that it would totally undermine the ability of the accountancy bodies to effectively regulate members (thereby threatening self-control). David Simpson, the then ICAI president, warned that the ICAI would not tolerate this board undermining its own disciplinary work and questioned whether ``this oversight board would have the expertise to effectively regulate the whole accountancy profession in Ireland?'' (Creaton, 2000).

This initial ICAI response to the RGA report was surprisingly negative given the apparent weight of public opinion behind the report (Harding, 2000). The ICAI president spoke of the RGA proposals creating the ``toughest regulatory regime in the world'' and potentially increasing business costs (Canniffe, 2000; Smyth, 2000). The RGA chairman responded indignantly, claiming that this ``sort of ponderous reaction by accountancy bodies is exactly the kind of thing that has contributed to their problems. They should grab the opportunity to tidy up their public image'' (Creaton, 2000). One interviewee was adamant that this ``aggressive and defensive'' (M1) stance was indicative of a body still out of touch with public opinion. The ICAI's aggressive resistance to interference by the IAASA in their internal decision making processes is reflective of the perceived private interest nature of their procedures as reflected in Parker's model. For example, the formation of the IAASA indicates an imposed erosion of professional insulation. From the preceding analysis, the ICAI seemed well disposed to some erosion in professional insulation as it was perceived that this might lead to less direct interference in their affairs (maintaining interference minimisation). However, in this instance the reduction in professional insulation was accompanied by further interference (reduced interference minimisation) via the proposed interventionary role of the IAASA in overriding disciplinary decisions. Hence, the robust public displeasure expressed by the ICAI. As Parker's model indicates, in this instance

a reduction in professional insulation contributes to a reduction in interference minimisation and a threat to the ICAI's self control over its members. The erosion of these three private interest roles was viewed as diminishing the professional authority of the ICAI given the IAASA's proposed powerful oversight role.

The static nature of the private interest roles

Professional

While the ICAI's initial negative reaction to the role of the IAASA in

accounting

disciplinary affairs tends to reflect the interrelationships between the different

ethics

private interest roles depicted in Parker's model, it also provides evidence questioning the apparent static nature of the roles depicted therein. Despite the ICAI's willingness to allow some erosion of professional insulation (by ostensibly making its disciplinary proceedings more open and transparent)

with the aim of maintaining interference minimisation, the RGA report indicated that interference minimisation would be threatened regardless, especially given the proposed intervention role of the oversight board. Consequently, despite the ICAI reducing professional insulation, this failed to maintain interference minimisation. While, as outlined above, this conforms to the relationship proposed in the Parker model (reduced professional insulation leading to reduced interference minimisation), it may be that the RGA perceived the level of the reduction in professional insulation as being too small, and therefore interference minimisation was further threatened. For instance, while many interviewees agreed that the ICAI attempted to make its disciplinary process more transparent and open (thereby reducing professional insulation), they maintained that the extent of this reduction needed to increase substantially. Otherwise, the ICAI would fail to achieve what they perceived as its ultimate goal: the maintenance of delegated self-regulation, in essence, the avoidance of outside interference (the maintenance or enhancement of interference minimisation):

I actually think it [ICAI] needs to go further [reduce professional insulation further] because otherwise the internal review will be taken from the Institute [ICAI] and there will be another review system imposed by the state authorities [thereby reducing interference minimisation] (L1).