Reviewed by Tom Lee University of Alabama

INTRODUCTION

The accountancy profession is nearly one hundred and fifty years old. Formally organized in Scotland in the mid 1850s, it has expanded rapidly worldwide to become one of the leading professions in terms of the number of people it employs, the quantity and variety of services it offers and renders, the size and pervasiveness of its public firms, the extent of its provision and use of educational and research resources, the degree of influence it has in its relations with the state, and the social status and economic rewards enjoyed by its members. Yet, it still must cope with persistent and seemingly intractable problems such as the dubious meaning of reported accounting figures, inconsistencies in accounting rules, education orientated solely to training for current practice, a lack of research influence on practice, and managing the ethical behavior of practitioners.

For these reasons, and more than ever before, there is a need to explore the origins and development of the accountancy profession — that is, to discover the reasons why it came into existence, and the means by which it has prospered despite its long-standing problems. Hopefully, such historical studies will not only provide the profession’s current and future members with an understanding of their roots, but will also signal clues as to possible resolutions of at least some of its problems.

With these thoughts in mind, this review essay is intended to provide some historical perspective on the modern accountancy profession by critiquing the recent study of Dr. Kedslie into the origins of the earliest professional accountancy bodies formed in Scotland in the mid 1850s [Kedslie, 1990].1 It would be arrogant to claim that these bodies were necessarily different in character, origin or purpose from other bodies formed at about the same time in England and elsewhere. Nevertheless, there is a curious fascination about the founding fathers of any enterprise. For example, consider the attention given to Pacioli regarding the introduction of double-entry bookkeeping despite knowledge of its existence prior to the date of his publication [see de Roover, 1974].

Given this natural curiosity about ‘beginnings,’ what is most surprising with respect to the Kedslie text is that it represents one of a very few scholarly studies of the Scottish origins of the modern accountancy profession. One of the earliest and often-quoted texts is that of Brown [1905], a leading Scottish chartered accountant at the beginning of this century, who wrote very generally of the origins of the profession in Scotland, the establishment of the first societies, the first chartered accountants, and the work and problems of these early professionals [pp. 181-231 and 314-42]. Pre-professional accounting in Scotland is covered in a detailed study by Mepham [1988] of eighteenth century accounting and accountants, the main feature of which is the considerable intel-lectual capacity of the men behind the accounting ideas which were part of the Scottish Enlightenment [pp. 381-3].

Post-professionalization in Scotland has also been studied by accounting historians, and in a number of ways. First, there is an anonymous general history of the early development to 1954 of the main Scottish professional body, described within a context of accounting activities and leading Scottish accountants of the period [ICAS, 1954/1984]. Second, Stewart [1977/1986] produced a historical review of Scotland’s professional beginnings in accounting in the form of a series of brief biographical sketches of the original Scottish chartered accountants to 1879. Third, Winsbury [1977] has written a history of a leading international public accountancy firm which originated in Scotland. Fourth, Lee [1984] has edited a book of papers which were delivered over a seventy-year period to Scottish accounting student societies by leading accountants, revealing the type of persistent issues which were brought to the attention of Scottish accounting practitioners and their apprentices over several decades. Fifth, Walker [1988] recently wrote an extensive empirically-based social history of re-cruitment to the earliest Scottish accountancy body, with specific references to the social mobility of the recruits.

Kedslie’s text touches on most of the activities and issues covered in these earlier studies. It is particularly related to that of Walker [1988], in the sense that both historians have observed and interpreted the main factors which they perceive to have comprised the origins of the earliest Scottish accountancy bodies. However, lest any reader feel that there is duplication between these two recent studies, it should be stated at the outset that Kedslie’s study provides a broad observation and commentary on a multiplicity of connected issues. It establishes what Carr [1987, p. 104] has described as one of the essential roles of history — “a rational and logical quilt of knowledge.” In this case, knowledge concerns the origins of professional accountancy in Scotland. Walker, on the other hand, has produced a more socio-scientific study of certain specific variables which he argues determined the nature and size of the recruitment and self-recruitment to one of the founding professional bodies in Scotland. In particular, his study is of developments from the origins of Professionalization, with specific emphasis on the openness of professional accountancy in Edinburgh to the phenomenon of upward social mobility.

PLEA FOR KNOWLEDGE

Kedslie’s study of the early Scottish accountancy profession must be seen in the context of several recent pleas for more and better knowledge of the origins of accounting generally, and the accountancy profession particularly. The particular motivations behind these urgings are the need to understand the role of accounting and accountants within the context of significant organizational and societal change; not to study these phenomena as if they were static and neutral; and, more specifically, to observe accounting (and presumably the accountant) becoming what they were not [see Burchell et al., 1980; Willmott, 1986; and Hopwood, 1987]. Kedslie’s text is compatible with these ambitions for the study of accounting history, although it is not necessarily faithful to them all and at all times. The purpose of this review is to identify the compatibilities and incompatibilities between Kedslie’s thesis and prior historical prescriptions, remembering the warning of Carr [1987, p. 22] that history is not just about facts; it is also about the historian, and the problem he or she has in separating fact from interpretation, and the unique from the general. It is also perhaps relevant to note the view of Collingwood [1974, p. 37] that the proper task of historians is to penetrate the minds of those persons they seek to study historically. Each of these points will be touched on at appropriate parts of this review, But, first, a summary of Kedslie’s thesis with, where relevant, comparisons to that of Walker.

CONTENT OF KEDSLIE [1990]

Kedslie’s study is of the origins and events surrounding the formation of three Scottish professional accountancy bodies in the mid 1850s (chronologically, in Edinburgh, Glasgow and Aberdeen). What is fascinating about these developments is not the formations themselves, but why they took place in Scotland at that time. Kedslie’s careful research has provided some interesting answers, and she has managed to present them (both in her book and related paper) in a way that is accessible not just to the accounting historian, but also to the practitioner and the student of accounting. Indeed, her study provides a data base for further research as much as definitive conclusions on the issues concerned. In this respect, and as will be explained later in this review, arguably its main weakness is its failure to use such a data base to support or reject hypotheses which could be specified with respect to familiar models of professional behavior.

Kedslie’s study begins with an examination of the accounting and accounting-related activities with which identifiable accountants were involved prior to Professionalization in Scotland. She reveals evidence of these accountants as connected in a variety of ways, and to different degrees, with such businesses as canals and railways [pp. 15-28]; banking, insurance and stockbroking [pp. 28-39]; and, most particularly, bankruptcy [pp. 39-54 and 114-34]. In general, Kedslie discovered from data gathered from directories, court records, and other relevant sources, there were significant differences in pre-professional activities in the three geographical locations researched, depending on the nature and preponderance of different businesses in different regions. For example, Edinburgh was a legal and financial center, whereas Glasgow had an industrial and stockbroking focus. These inevitably led to the founding fathers of chartered accountancy in Scotland having different social backgrounds, and being involved and specializing in different accounting and related activities depending on the city in which they did business. For example, Edinburgh accountants entering the new profession were more likely to have family connections with the legal or financial communities than were their colleagues in Glasgow [p. 82]. At least within the context of Edinburgh, these findings are consistent with those of Walker [1988, p. 265].

One thing above all others is clear from Kedslie’s thesis. Pre-professionalization, accountants as a social grouping were significantly involved in bankruptcy work and this was the principal factor leading to the formation of the three Scottish professional bodies [pp. 50-77 and 114-34]. Indeed, a threat of change in bankruptcy law at the time, which would have led to lawyers rather than accountants undertaking such work, was the indisputable catalyst for action to form the Edinburgh body [p. 59], and then the Glasgow and Aberdeen bodies. In the end, the legal change did not take place, but it was sufficient to create the beginnings of modern professional accountancy. Involvement in bankruptcy and related legal work continued to be a major source of business for the early Scottish chartered accountants, to the point that they appear to have established a near-monopoly of such activity during the decades following the founding of the three professional bodies — that is, until a decline at the end of the nineteenth century [p. 134]. Indeed, Walker [1988, p. 34-40] provides data in the Edinburgh context from which a similar conclusion can be drawn. The main change in the mix of business appears to have been to company auditing — for example, in relation to Scottish banks [Kedslie, 1990, p. 145] and railway companies [Kedslie, 1990, p. 166]. Walker [1988, p. 40] confirms this trend with more general corporate data.

Kedslie examines the social origins of the early Scottish professional accountants [pp. 78-113]. When compared with the work of Walker [1988], the analysis is not as statistically de-tailed and argumentatively complex as his interwoven themes of recruitment factors [pp. 30-193], and his self-recruitment demographic model [pp. 203-64]. Kedslie’s conclusions, however, are no less clear and concise. For example, her evidence indicates that the earliest recruits to the Scottish profession tended at first to come from an upper to middle class background [pp. 79-81]. This varied, however, between Edinburgh, and Glasgow and Aberdeen. Edinburgh’s earliest recruits tended to be more upper to upper-middle class than their colleagues elsewhere. Later recruits in all three regions tended to come from a more uniform middle class background [pp. 81-96]. This matches the specific Edinburgh findings of Walker [1988, pp. 83-9]. Kedslie [1990, pp. 96-104] also found the earliest recruits usually had a sound education at fee-paying schools, with some having uni-versity education [pp. 101-4]. Walker [1988, pp. 89-95] presents similar data for Edinburgh recruitment. Finally, Kedslie [1990, pp. 110-12] also demonstrates the earliest chartered accountants in Scotland were active in public life and so-called ‘good works’ in the community.

In other words, these early accounting professionals were predominantly members of an elite grouping in their communities prior to entry to membership of their professional bodies, and later members tended to come from reasonably similar backgrounds — with some differences over time and between bodies. Coming together at this time in such an organized way is a clear signal of some form of self-protection involving economic employment and social status. Kedslie reveals the several post-professionalization actions of Scottish chartered accountants which evidence such self-protection. Interestingly, despite differences in the composition and background of members of the three bodies, this evidence reveals unanimity of attitude and purpose over the issues concerned.
The first matter centers on the expansion and then decline in the second half of the nineteenth century in the involvement of Scottish chartered accountants in legally-driven work such as bankruptcies, and a compensating expansion of their involvement in other areas in which they had previous connections (such as auditing banks, insurance companies and railways [Kedslie, 1990, pp. 114-34 and 135-71]. Kedslie clearly reveals the adaptability and success of the early chartered accountants in capturing significant areas of accounting-related activity — to the point at which they occupied a near-monopoly position (as in the audit of railways) [p. 71].

The second example of protectionism cited by Kedslie [1990, pp. 179-217] is the increasingly explicit use by the three Scottish professional bodies of methods of restricted entry. This started with entry by invitation to a selected few with an appropriate background and experience. Then to indenture, apprenticeship and informal examinations. And, finally, to a unified national examination system. Several things above all others evidence deliberate barriers to entry — the high financial cost of entry to membership and the length of training prior to entry [for example, pp. 184-8]; and the rapid stiffening of educational and examination standards designed to provide chartered accountants with a knowledge which was directly relevant to their involvement in practice [for example, pp. 188-97].

Legal conflicts with rival accountancy bodies to prevent them receiving a charter of incorporation, and thus protect the exclusive use of the label of chartered accountant, comprises Kedslie’s [1990, pp. 218-9] third example of professional closure. These protectionist actions were successful, although the rival bodies survived to be later absorbed into larger bodies in England. This defending of what amounted to a professional monopoly has been well documented and discussed by Walker [1991], with the particular conclusion that its success rested on appeals to the public interest being best served by restricting the title of chartered accountants to the then existing Scottish chartered bodies [p. 279].

The final example provided by Kedslie [1990, pp. 239-61] of early Scottish chartered accountants attempting to establish professional closure concerns the issue of registration of such accountants as the only ones licensed to practice as such. This was intended to be achieved by legislation and, over several years, numerous unsuccessful attempts were made by the Scottish and other UK bodies to do just that. As Kedslie [1990, p. 260] remarks, these attempts appeared to be deliberately explicit displays of national and inter-organizational rivalry. The Scottish activities have been extensively explored by MacDonald [1985].

A THEORY OF PROFESSIONAL BEHAVIOR

The value of Kedslie’s work is in its provision of a “quilt” of related topics which, when gathered together, give the reader a sense of how the Scottish bodies came into being in the mid 1850s, and then proceeded to restrict their membership and capture specific work for their members. In this respect, however, the quilt tends to lack a pattern which would help explain why these developments took place when and where they did. In other words, there is little or no specification of a general model or individual hypotheses of professional behavior with which to relate the data and derive explanatory conclusions of the type desired by writers such as Burchell et al. [1980], Willmott [1986] and Hopwood [1987]. Kedslie [1990, pp. 262-74] does attempt briefly at the end of her book to provide such a scenario — in the sense that she discusses various views of the attributes of a profession and its members. These include such well-known writers on the subject as Carr-Saunders and Wilson [1933] and Hall [1969].

Kedslie uses each of these studies to describe attributes or characteristics of professionalism such as a theoretical body of knowledge; social prestige through charters of incorporation;

training, examination and licensing; independence from the client and a code of ethics; the use of rituals, symbols and specialist languages; a legal monopoly; and the power and authority given to self-regulate. These are used briefly by Kedslie [1990, pp. 270-4] with reference to her findings on the Scottish bodies — that is, to evidence that, because these attributes could be demonstrated to have existed in the formation of these bodies, then each such body clearly had the characteristics of a professional body [p. 273].

Such a conclusion is logical and necessary in such a historical study. However, it limits the latter in its potential to explain the rationale of the professional accountancy body and its Scottish origins. Kedslie provides considerable data to make such a case. She fails to take the opportunity — despite having access to several authorities which could have assisted her. For example, she refers to Carr-Saunders and Wilson [1933] in terms of professional characteristics, but does not present this study as an example of the functionalist approach to the study of professionalism. This is the view that the professional exists to provide a functional service within the public domain, and that his actions are primarily guided by altruism — of putting service to the public before economic or social self-interest. Kedslie [1990, p. 262] also makes brief and incidental reference to Larson [1977], a principal advocate of the alternative critical school of professionalism — but without mentioning his model of the professional as a person seeking market control over needed services and upward social mobility by a process of public legitimation of his actions.

In other words, the evidence provided by Kedslie of the emergence and development of professionalized accountancy in mid to late nineteenth century Scotland is presented without a formal theoretical framework. In particular, the extensive and valuable data which she has gathered have not been discussed or interpreted from either a functionalist or critical perspective. For example, there is a considerable literature on the power-knowledge relationship in the context of professional activity — that is, where there is a body of knowledge, there is the exercising of power, and vice versa. Johnson [1972, pp. 41-7] discusses this concept in terms of a profession creating a structure of uncertainty [p. 42-3] which can be both threatening and exploitative [p. 44], and thereby exercising occupational control [p. 45]. Bledstein [1976] argues in similar terms — of the professional having power through command of his discipline [p. 90], special rituals reinforcing the mystery of his power [pp. 93-4], invoking disasters to in-crease client dependency [pp. 99-100], and cultivating irrationality by uncovering anomalies [p. 102]. Larson [1977], also writes of the ideology of (professional) competence creating a societal image that subconsciously fuses power with superior ability and self-development [p. 241], but which uses the work ethic, universal service and noblesse oblige as components of a marketable commodity [p. 220]; professionalism as a means of controlling educated labor and co-opting elites [p. 237]; professionals constructing reality on their terms, thus obtaining a minimum of social authority [p. 231]; and professionals having a monopoly of competence as well as practice in terms of authority over a body of knowledge [p. 231].

Putting these ideas in the context of professional accountancy, Kedslie could have hypothesized that the early Scottish professional accountants acted in a concerted way to monopolize a body of knowledge or competence which they could exclusively practice; created an atmosphere of dependency for such services by pointing out the need for altruistically-driven superior abilities to successfully remove observable uncertainties to maintain the public interest; and reinforced such superiority by explicit signs of elitism and status. The evidence provided by Kedslie is certainly consistent with this model. For example, attempting to achieve professional monopoly in the areas of bankruptcies [pp. 50-77 and 114-34] and company audits [pp. 135-71]; involving a need for skilled professionals to deal with complex issues in bankruptcies and audits [p. 57, 62, 75, 141-2, 156, 160-1 and 168]; creating an image of elitism and status in terms of specific entry standards including apprenticeships, entry and membership fees, and education and examination [pp. 188-217]; and using the idea of the public interest to exclude other bodies from the domain of public accounting [pp. 218-39], protect the title of chartered accountant [pp. 239-49], and attempt to register only chartered accountants [pp. 249-61].

Kedslie does make some oblique references to these issues and interpretations, but her thesis is weakened by a lack of explic-itness. In particular, she fails to provide her reader with a strong flavor of the ultimate challenge for the early Scottish chartered accountants — that is, what Montagna [1974, pp. 4-5] has described as the conflict between public interest and self-interest, and the need to balance these opposing responsibilities. In addition, because of her lack of a theoretical framework, she has neglected to relate her findings explicitly to the research of other writers in the same area — for example, the factors relating to recruitment and self-recruitment in the Scottish bodies [Walker,

1988]; the use of the examination process to create occupational control [Hoskin and Macve, 1986]; the standardizing of knowledge and the institutionalizing of training to gain social rewards [Richardson, 1988]; and social closure through occupational registration [MacDonald, 1985]. She has presented facts about actions without necessarily attempting to clearly “get behind” the thinking behind the actions as recommended by Collingwood [1974, p. 37].

CONCLUSIONS

As stated at the beginning of this review, there is a need to know how professional accountancy came to be what it was not. However, much of this process of investigation and explanation is subject to the constraint of the historian. In this case, Kedslie has provided much useful material to describe the emergence of professionalism in accountancy in Scotland. What is still required is an interpretive approach to such data to provide explanation and understanding. As she reveals in her preface [Kedslie, 1990, p. xiii] and conclusion [p. 274], recent events in the history of The Institute of Chartered Accountants of Scotland suggest that the process of Professionalization is a continuing affair which will require further investigation and explanation. Dr. Kedslie is to be encouraged to continue that process as part of the larger task of understanding the role of professional accounting and public accountants in society.

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