The Code of Ethics and the development of the auditing profession in Greece, the period 1992–2002

Preston

In recent decades, a well-established body of literature dealing with Anglo-American accountancy1 has drawn attention to the “political” role of the profession showing that it primarily seeks to advance the sectional interests of the membership (Mitchell & Sikka, 1993; Mitchell, Puxty, Sikka, & Willmott, 1994; Preston, Cooper, Scarbrough, & Chilton, 1995;Sikka & Willmott, 1995). It has been maintained that the profession ceaselessly strives to legitimise its practices in order to attain and retain social privileges such as the monopoly of auditing practice and self-governance which “confer wealth and power upon the individual professional … and autonomy … upon the professional body” (Preston et al., 1995, p. 508). The success of its legitimation efforts depends upon the acceptance of claims to “credibility” and “ethos” by powerful institutional bodies “perhaps most importantly the state and its agencies …” (Preston et al., 1995, p. 510). To reinforce such claims and facilitate “trust” and confidence in its practices, the profession had introduced, refined and appealed to the efficiency of the disciplinary processes relating to the Code of Ethics seeking to build the image of a “credible” and “trustworthy” organisation. Thus, the Code is viewed as a legitimation device which plays a major role in assisting the Anglo-American profession in sustaining its privileged position within the economic context (Mitchell & Sikka, 1993; Mitchell et al., 1994 and Sikka and Willmott, 1995).

Though the literature has provided insights into the role of the Code and ethical arrangements in the advancement of the Anglo-American profession, little is known about their role in emerging contexts.2 Greece, for instance, is an interesting case to examine as, in the period 1992–2002, the self-governing auditing profession3 faced a difficulty in controlling the conduct of its membership and an increasing erosion of public confidence in its practices which was echoed in the press. Moreover, the profession’s jurisdiction was challenged by the intention of the state to set up an independent organ to supervise its practices and operation. Against this background, this paper examines how local professionals responded and whether they used their Code of Ethics and disciplinary processes to refine their image as a “credible” organisation. To achieve this, the paper draws upon the imperialism of influence framework to illustrate the political and economic influences that shaped the local settings within which the local profession operated. The paper is based on primary and secondary archival sources of the auditing profession, ministerial decisions and relevant Laws, academic publications, papers presented at conferences and the media. Furthermore, interviews were conducted with professionals who played an important role in the formulation and application of the 1997 Code of Ethics (see Appendix A for more details).

The remainder of this paper is organised into the following sections. The second section constructs the framework for understanding the role of ethical pronouncements in the development of the profession in an emerging economy. The third section provides a brief account of the political and economic context of Greece in the period 1992–2002, sketching the broader backdrop against which the profession was restructured according to the Anglo-American model. The fourth section draws attention to the challenges facing the profession and the strategies employed to respond to these difficulties. Moreover, it focuses upon the impact of the Enron episode upon the image of the local profession and the defensive tactics it adopted to re-establish its “credibility”. It is shown that the Greek Code of Ethics and disciplinary processes were employed by the profession to respond to public concerns and criticisms of its role and operation. The last section discusses certain aspects of the process of the Code’s formulation and sheds light upon its role as a legitimation device used by the local profession to maintain its position within the Greek context.

2. Understanding the role of the Code of Ethics in the advancement of the local accountancy profession

To understand the role of the Code of Ethics one has to be acquainted with views and notions found in the literature on the Anglo-American accountancy profession. The relevant literature could be divided into two broad branches. The first comprises conventional approaches which mostly rely upon professional proclamations and views regarding the professionalisation of accountants. The second is the critical branch which draws upon Weberian and Marxist theories to situate the analysis of the emergence and ascendancy of occupational groups in the broader social, political and economic context (for an analysis see Robson and Cooper, 1990, Saks, 1983 and Willmott, 1986).

Insights into the conventional approaches can be found in journals such as The Accountant and the Journal of Accountancy.4 Mostly written by professionals, articles published in The Accountant defined the Code of Ethics as a set of rules and principles designed to “rule out undesirable activities” (House, 1956, p. 367). These rules were aimed at prohibiting members from allowing commissions or brokerage, engaging in incompatible activities, certifying accounts not verified by them and soliciting clients or encroaching upon the work of other members. Other rules made explicit references to the public interest, integrity, objectivity and independence of the membership. Such rules outlined the broader context within which accountants had to exercise their activities (Cooper, 1907, Montgomery, 1907, Price, 1900b, Richardson, 1936 and Sterrett, 1907). Accountants argued that these sets of rules were distinctive elements of “professionalism”, which distinguished professions from other occupations (see also Carey, 1956 and Cooper, 1907). It was also maintained that accountants’ associations comprised a professional body and as “every profession worthy of the name evolved with its growth a kind of moral code” (Dicksee, 1909, p. 380; Price, 1900a, p. 922).

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