From “colonial reciprocity” to international supremacy: Scottish chartered accountancy and its “discourse of superiority” in context,1854 to the present

The genesis of the Scottish chartered institutes: establishing “an authority recognized by public opinion, the law and government” (Foucault, 1972: 42)

A “discourse of superiority” began to make itself felt as the Institute of Accountants in Edinburgh was formed to contest the imminent threat to the income which previously unincorporated accountancy partnerships received from bankruptcy and insolvency work (Walker, 1995). Walker concluded that the formation of accountancy institutes in Edinburgh and Glasgow in 1853 out of a number of these firms was “precipitated by a challenge to what was perceived as their occupational property” from a new Bill promoted in Parliament by London merchants and their supporters, which was intended to take bankruptcy and insolvency work away from Scottish accountants and give it to officials of the courts as happened in England (1995: 305). It was soon seen, however, by members of the new Institutes formed to contest the legislation that it was advantageous in arguing against the bill to claim that “all unqualified and incompetent parties should be excluded from the office of trustee” (Walker, 1995: 306). Indeed, one member of the new Institute of Accountants and Actuaries in Glasgow argued it was wrong that “any man, whatever may be his abilities or qualifications, may be elected trustee” (Walker, 1995: 300). This strand of discourse, operating to counter the claims of the London merchants, their supporters and representatives made through the press, courts and in other less formal contexts, reinforced arguments for the retention of accountants, in particular the members of the new professional bodies, as those best qualified to carry on bankruptcy and insolvency work. According to Walker (1995: 300 –306), the Bill failed because of the volume of objections, which may be characterized in Foucauldian terms as negative discourse, leaving Scotland with its own bankruptcy legislation intact and most of the work in the hands of members of the new societies. It should be noted that the creation of qualifying associations had not been the first objective of the new bodies (Walker, 1995), which had professionalized in order to be seen to be speaking with one voice (which may be interpreted as an attempt to control the discourse by the Edinburgh accounting firms), but it was a secondary step which took on new significance: there was now a binary divide among accountancy practitioners, enabling a basis for exclusion, founded on claims of professional superiority, to be laid.

This was taken further when a royal charter was granted in 1854 to the Society of Accountants in Edinburgh (SAE) and to the Institute of Accountants and Actuaries in Glasgow (IAAG) and the Society of Accountants in Aberdeen (SAA) in 1855 and 1867 respectively, bringing soon afterwards the right to use the designation “chartered accountant” and the designatory letters “CA” (Walker, 1995). This became a “discursive practice”, in the sense of a practice, as opposed to a verbal representation, symbolizing exclusion, exclusivity and thus further empowering the possessors of these professional designations, a highly successful strategy which ensured the new CAs were rapidly recognized by the business sectors which used their services (McKinlay and Starkey, 1998: 38–39).

As context, during the years 1853/54, the National Association for the Vindication of Scottish Rights (NAVSR) became involved on the margins of the bankruptcy law controversy. This body campaigned for a fair share of government functions for Scotland (Pittock, 2001) and for its national identity to be preserved. It included a number of Edinburgh accountants in its ranks (Walker, 1995). The NAVSR was one of a number of expressions of Scottish identity that had been made over the years. After Scotland emerged as a country out of separate ethnic groups about 900 AD, a sense of national identity was occasionally manifested, for example, when the cross of St Andrew was adopted as a national symbol or the Declaration of Arbroath was made in 1320. These developments may be considered part of a discourse of national identity that was continued in the seventeenth century during the years of religious strife after 1603, the year in which Scotland and England began to be ruled by the same sovereign and after the union of parliaments in 1707. Later that century, many Scots had a sense of dual Scottish and British identity (Lynch, 1991). Sir Walter Scott (1771–1832), through his poems and novels, gave Scots a new sense of identity synonymous with the wearing of tartan and a Romantic notion of Highland history that, in spite of its inappropriateness to the whole of Scotland at the time, still prevails today. The crossing over of the accountants’ discourse of superiority and the reinforcing effect of the discourse of national identity is consistent with Foucault’s characterization of discourses as being “sometimes juxtaposed” (Foucault, 1981: 67).

It is clear from the statistics uncovered by Walker (1991) that in 1895, Scottish CAs were carrying out over 80 per cent of public accountancy appointments, accounting for most of their value. Within two or three decades of incorporation, the Scottish chartered accountants, as Walker (1991: 262) has put it, had “succeeded in creating a status dichotomy between themselves and competing accountants”. Scottish CAs had created what was almost a monopoly of accounting services, which would not have been possible but for events and strategies triggered by an exogenous challenge to their livelihoods. These early accountants can be viewed as responding to “discontinuity and rupture” in history (Foucault, 1972: 21), out of which their “discourse of superiority” emerged.

This position was attacked at various points in succeeding decades. In 1884, the newer Scottish Institute of Accountants petitioned for a Royal Charter and permission to use the CA designation, tried in 1886 to unite the Scottish accounting profession, tried again between 1889 and 1890 to achieve a Royal Charter, and in 1891, an attempt was made by the Corporation of Accountants to incorporate under the Companies Act and for its members to use the letters “CA”. Each of these attempts was blocked by the three chartered societies, who objected at appropriate points in the ensuing legal proceedings that it was not right that members of a different body should be allowed to share the “reputation and public confidence” which their members enjoyed, nor was it right that “CA” should stand for “corporate accountant”, as one of the protagonist institutes requested, when it had stood for “chartered accountant” for so long, nor did the CAs wish to join with the institute that had proposed unification (Walker, 1991: 264–266). Two more attempts were made by the Scottish Institute of Accountants to be able to use the title “Chartered Provincial Institute of Accountants” (CPIA), spanning the period 1895–98, while a further two attempts were also made by the Corporation of Accountants Ltd (1900–1905) to increase their status, one by using the designatory letters “MCA” and another by using the letters “FCRA”. The net result of the long and arduous representations of these newer bodies and the counter-arguments put up by the CAs, both of which can be characterized as discourse due to their nature as statements designed to enhance the power of those who uttered them (Foucault, 1972), was that the newer institutes were unsuccessful in all but the last of these attempts, which was not objected to by the Scottish CAs as it did not directly threaten their position (Walker, 1991).

Central to the decisions made by the judiciary in supporting the chartered accountants was the notion that the “use of CA was … an invasion of the Royal Charters [of the Edinburgh, Glasgow and Aberdeen Societies] and the appropriation of the status and pecuniary benefits by individuals not bound by the charters constituted a legal wrong” (Walker, 1991: 265). Foucault’s language is appropriate here: the CAs had become “an authority recognized by public opinion, the law and government” (Foucault, 1972: 42). At various points in the legal proceedings they had been accused of being “self-interested” in their objections to the other institutes but had defended their monopolies on the grounds of the superior standard of their services and the need to protect the public from what they considered to be lesser practitioners, stating that their adversaries were not professionals. The three chartered institutes’ claims of qualitative superiority had been endorsed by the courts and their designatory letters and chartered status protected.

It should be noted that there had been growing interest at the end of the nineteenth century in Scottish nationalism, related to agitation by crofters for ownership of their land and promises by Gladstone to give home rule to Scotland as well as Ireland in his Midlothian campaign of 1880. There was a revival of Scottish architectural style and associated arts and crafts in the 1890s. A Scottish Grand Committee of MPs was created to review Scottish legislation in 1894 and was re-established by the Liberals in 1906 after disbandment by the Tories (Pittock, 2001). These matters may have been in the chartered accountants’ minds, but the defensive process in fending off the newer institutes had become a legal one and nationalistic arguments were unnecessary.

By what types of discursive medium had the chartered institutes’ creation and protection been achieved, and by whom had their “discursive statements” been made? The new institutes had used a number of obvious mechanisms to promote or suggest their superiority: individual and collective submissions to courts and to parliament emphasizing their competence as bankruptcy practitioners, articles in their new professional journals and representations at public meetings, all conforming to Foucault’s open-ended view of the many means by which discourse may be imparted (Foucault, 1972). Apart from these official statements, members of the new chartered institutes aired their own views, such as the following:

I’m a “Chartered Accountant”, it sounds rather loud,

As a “Chartered Accountant” I feel rather proud,

For a “Chartered Accountant’s” a noble degree,

As a “Chartered Accountant” confers £.S.D.

Aside from being an amusing piece of doggerel, this poem is a rare surviving example of a discursive statement arising from “naive knowledges, located low down on the hierarchy” (Foucault, 1980: 82). Foucault was interested in the various levels of “knowledge” and power which existed in the different layers of an organization or society and how these operated. In this case, the example given shows the depth of pride of ordinary members in the worth of their qualification, a matter which was to have considerable future significance, although not always in a way that would please the professional hierarchies which ran their institutes.

To summarize, the new Scottish institutes were soon engaged in “discursive practices” (McKinlay and Starkey, 1998). As explained earlier, Foucault meant by this term that discourse, normally expressed through words, could also be conveyed by means of symbols or practices which came to be associated with power and which came to have cumulative force in the public consciousness: the use of the letters “CA” and the term “chartered accountant”, as was indicated, are clear examples. Before long the Scottish CAs were sharing these designations with the English and Welsh Institute, which had received its Royal Charter in 1880. The completion of professional examinations by apprentices, which became a signifier of quality and which increased in importance as the standard of examination was raised over the decades, may also be interpreted as “discursive practices”. However, as Foucault stated, examinations were also “a political means of maintaining or modifying the appropriation of discourse, with the knowledge and powers that it carries with it” (Foucault, 1981: 64). The step-changes from having no examinations at all for the Scottish CA bodies, at the height of the pressure from external forces in the 1850s, to a position of having central examination arrangements for the three Scottish CA bodies by 1892, as the newer accounting bodies made sustained attacks on their professional privileges, may also be read as further defensive measures.

These educational initiatives proved to be much more, as the in-house training of apprentices (the method chosen and perpetuated until the present day) provided an opportunity to tell the trainees that their institute was the world’s first professional accounting body and provided the best and most rigorous training available. ³ The Accountant’s Magazine, the journal of the Scottish CAs, in its first edition, referred to “Scotland … the cradle of the profession … where it has attained its highest development” was sure to be noticed by students (Accountant’s Magazine, January 1897, No.1).

First half of the twentieth century

During the early years of this period, Scottish chartered accountants made a gradual and disproportionate impact across the empire, as part of the Scottish “diaspora” (Devine, 2011). Whereas in 1909, the Institute of Chartered Accountants of England and Wales (ICAEW) had 4,000 members, only 7 per cent worked outside Britain, while there were 1,100 Scottish CAs, some 33 per cent working beyond the borders of Scotland, implying a larger proportion than that of ICAEW working overseas (Accountant’s Magazine, 1909: 274). As they worked overseas, many Scots CAs expressed their native cultures, one example being a correspondent who styled himself “Kilt”, a name referring to Scots national dress, and who wrote of his overseas investigations work in 1924 (Accountant’s Magazine, 1924: 610). Back in Scotland, a standing Joint Committee of Councils of the Chartered Accountants of Scotland was formed in 1915 (Bruce, 2004).

In 1898, the Scottish chartered accountants had started an association for Scottish CAs resident in London. Its purpose was to offer “opportunities for consultation on the matters of mutual interest affecting Members’ position as CAs in London, and for social intercourse” (NAS GD470/5/189). In 1914, there was much discussion of the need to achieve reciprocity for Scottish CAs in English parliamentary bills, which was referred to the joint committee of the three Scottish institutes that had been set up in 1904. By the end of World War I, apprentice accountants were being consulted about what was needed in their training as CAs. It is recorded that in 1926 London trainees were being taught to the Scots syllabus. From 1928 to 1932 they were using the ICAEW library at Moorgate. In 1934, there were 36 CA firms in London whose partners were wholly Scottish, 15 firms whose partners were 50 per cent Scottish CAs/50 per cent English CAs, while there were 21 firms with a minority of Scottish CA partners. Another 22 firms did not return questionnaires to the London association. The firms not replying to the questionnaires had 96 partners, 114 apprentices and 147 qualified assistants (NAS, GD470/5/73). Some 8 per cent of Scottish CAs worked in London.

This period was characterized by a growth in the number of accountancy institutions operating in Britain to service the changing market, eliciting a proliferation of discourse from the bodies concerned. There were now professional bodies to cover costing (The Institute of Cost and Works Accountants [ICWA]) as well as public finance and accounting (The Institute of Municipal Treasurers and Accountants [IMTA]), plus a number of smaller organizations whose examinations overlapped the territory covered by the older institutes (Walker and Shackleton, 1995). A sense of general national unity developed in Britain after the outbreak of World War II. The Accountant spoke of the need for government departments to be able to communicate with the profession as a whole and not to have to deal with the “confusing array” of accountancy organizations (Walker and Shackleton, 1995). A pamphlet entitled “Time we got together” advocating rationalization was published early in 1942 by the Institute of Chartered Accountants of England and Wales. The government minister concerned stated in July 1942 that “a high standard of accountancy qualifications should be required after the war from all in the profession in order that the public should be assured of expert service” (Walker and Shackleton, 1995: 479). A joint consultative committee of the principal accounting bodies had been suggested in 1941, and a Coordinating Committee was planned.

Problems were experienced in persuading the Scottish chartered societies to become involved and the president of ICAEW, Palmour, thought that the Scots were “being difficult” while a senior civil servant, Jowitt, wrote to the Secretary of State for Scotland in October 1942 asking him to encourage the Scottish CAs to participate. The Scottish chartered societies reluctantly decided in November to take part. Walker and Shackleton (1995) have suggested that the reluctance of the Scottish Institutes and their feelings that “this whole matter is being rushed” might have had some connection to the travelling difficulties between Scotland and England during wartime and the slowness in producing responses caused by the three institutes having to confer before replying. More probably, there had historically been suspicion for some time in Scotland surrounding suggestions coming from south of the border, arising from the earlier attempts by newer institutes to appropriate the letters CA or the “chartered” designation.

One of the major proposals arising from the various consultations was that registration of accountants should be undertaken, avoiding the need for the professional bodies to merge. This was seen as a danger to the independence of the Scottish chartered accountants, tellingly described as “the thin end of the wedge of giving away our birthright” and offering the prospect of “Scotland becoming subservient to the ICAEW” and going on to describe the representation of the then Association of Certified and Corporate Accountants (ACCA) on the proposed Public Accountants’ Council as disproportionate for a body “which has so little real qualification as accountants” (Walker and Shackleton, 1995: 489). There was also anger at there being a single credential of “public accountant” which suggested an equality of status between certified and incorporated and chartered accountants. Clearly, the “discourse of superiority” had been submerged, but as the above communications suggest, was still alive and in strong voice when called upon.

The Secretary of State for Scotland advised the Scottish chartered accountants to insist on a separate Scottish registration scheme in order to “keep the Scottish point of view well to the fore” (Walker and Shackleton, 1995: 490). This must be understood in a Scottish political context. After World War I, the Scottish economy, formerly a powerhouse producing 120 per cent per capita of average UK GDP in the pre-war years, was in deep depression, with socialism rapidly increasing as a result of high levels of unemployment and hardship. Of those born in Scotland between 1911 and 1980, 23 per cent were to emigrate. As Pittock suggests, “The development of nationalism against such a background is not surprising”, but its impact was limited, as the Labour Party set itself up as the Scottish party, using its London influence to manage Scottish decline. By 1934, the Scottish National Party (SNP) was set up, with the Scottish Office moving from London to Edinburgh in 1937, as a response to circumstances. The Secretary of State for Scotland, Tom Johnston, who had also arranged for the Scottish Grand Committee to meet in wartime Edinburgh in 1941 (Pittock, 2001), was making a pragmatic point consistent with his own political position, but which was also congruent with the inclinations of Scottish CAs. This may be interpreted as another example of the interplay between the nationalist discourse and the “discourse of superiority”.

The separate registration scheme for Scots accountants was never introduced, being superseded as the war ended, and the new Bill which became the 1948 Companies Act took up attention, culminating in the legal affirmation of the major UK accounting bodies as company auditors, to the exclusion of other institutes. Walker and Shackleton (1995) have explained that the formation of ICAS in 1951 from the three Scottish chartered societies was a positive outcome of the wartime negotiations, which would also lead to the merger of the Society of Incorporated Accountants (SIA) with ICAEW in 1957, an arrangement that allowed SIA members to choose to join ICAEW, ICAS or Institute of Chartered Accountants in Ireland (ICAI). However, the Scottish amalgamation, if anything, strengthened the feelings of independence of the Scottish CAs, now together and without any dilution of their influence or status. Of note was the use of the term “birthright” in connection with the wartime negotiations. There was an ongoing consciousness that the chartered accountants had created the world’s first professional body, dominant in Scotland, with its members powerful in London and in the “colonies”, with which reciprocity of recognition had operated for many years (NAS, GD470/5/189, NAS, GD479/5/271, NAS, GD470/5/104). This consciousness had been sustained through communications with other accounting bodies, government departments and by informal methods, including conversations and remarks between colleagues in accountancy offices as well as comments between chartered accountant tutors and their students, all of which may be seen as discourse, in a Foucauldian sense.

Repelling merger attempts – the “birthright” argument returns

The 1960s saw the return of attempts to merge the accounting profession. These have been covered in detail elsewhere (McDougall, 1980; Shackleton and Walker, 2001). The essential fact is that, between 1962 and 1965, ICAEW was planning a restructuring of the profession. This would have involved dissolving the Association of Certified Accountants, the Institute of Cost and Works Accountants and the Institute of Municipal Treasurers and Accountants. Members of these institutes were to be allowed to join one of the three Institutes of Chartered Accountants. Discretion was to be given to the members of the bodies taken over to choose the chartered institute they wish to join. McDougall (1980) has pointed out that it was never suggested by the ICAEW that they should take over ICAS, although Shackleton and Walker (2001) have reached the conclusion that it was their intention to do so. Nevertheless, the initiative was interpreted by the ICAS Council as an attempt at takeover, one to which they did not object, fearing that, unless accountancy woke up to the challenges of rapidly growing numbers of graduates and the needs of the rapidly expanding economy, a fragmented profession would lose out. In spite of the views of Council, when the matter was put to members by means of indicative votes in the closing months of 1968 at local meetings all over the country, votes against the scheme were recorded at Dundee and Glasgow, the latter the city where over one-third of Scottish CAs were located. In total, only 50.4 per cent voted for the scheme in the final poll, far short of the two-thirds required by the ICAS constitution.

A majority of the ICAS Council, as Shackleton and Walker (2001) have shown, were in favour of the merger, expressing regret to the other institutes involved that the membership had not given authority for ICAS to proceed. The other institutes decided, nevertheless, to go ahead without Scotland, contrary to the original agreement that if all the institutes concerned did not sanction it, it would fall. Scottish ambivalence at this point, which was expressed before the votes of the various English bodies were taken, weakened support for the merger amongst members of the ICAEW, the last of the bodies to vote (Shackleton and Walker, 2001). Prior to the ICAEW vote, the council of ICAS had taken the risk of going back to the membership with a different question which asked for a vote as to whether or not Scotland would, in effect, be prepared to participate in the merger if all the English institutes voted for it. This played on fears of isolation and the possibility that ICAEW could become a dominant force in Scotland by absorbing ACCA, ICWA and Institute of Public Finance and Accountancy (IPFA) members located there, who would now become English chartered accountants. ⁴ Of those voting, 77.7 per cent favoured the ICAS joining in as the least worst option and giving full authority to proceed. By the time the ICAEW membership came to vote on the matter, in spite of the necessary majorities having been achieved by all other institutes, a combination of the Scots’ original ambivalence and clever campaigning by two ICAEW members, Nicholson and Sutherland, caused ICAEW members to turn against the scheme. They had been persuaded that the “dilution” of the profession through the admission of non-chartered, non-auditing profession-based accountants was a danger to their power and status. Only 44.8 per cent were in favour (Shackleton and Walker, 2001).

The debacle of the failed merger talks may be given as an example of two opposing discourses at work in Scotland. The first of these was the official discourse within the Institute of Chartered Accountants of Scotland, the production of which was, in Foucauldian terms, “controlled, selected, organized and redistributed according to a certain number of procedures, whose role is to avert its powers and dangers, to cope with chance events, to evade its ponderous, awesome materiality” (Foucault, 1981: 52). Foucault’s meaning here is clear enough, in spite of his typically opaque expression. ⁵ The second discourse was the informal discourse of accountancy offices, partners and members of the Institute, who ensured by their voting that such manoeuvrings and urgings from the top failed to persuade the membership in anything like sufficient numbers. Even when the Council varied the question and gained a positive vote based on alarmism, a matter of disputed legality, English chartered accountants had already been swayed negatively by the initial Scottish vote. They later stopped the merger by voting against it, influenced by the discourse of chartered superiority they had heard from their Scottish counterparts, which enhanced similar notions they themselves had long held (Shackleton and Walker, 2001).

How might this outcome be interpreted in relation to the discourse concerning nationalism and national identity? A Scottish National Covenant for Home Rule, promoted by the activist John McCormick, attracted two million signatures between 1949 and 1952, but was ignored by the Westminster government. By 1962, the SNP, formed in 1934, had only 1,000 members. UK governments tried to manage the ongoing decline of shipbuilding and steel through nationalization, but only delayed the inevitable. The 1960s saw substantial growth of the SNP, with their first post-war MP, Winnie Ewing, winning the Hamilton by-election in 1967, and the party gaining control of Stirling Council the same year, causing the Westminster government to examine the introduction of a devolved Scottish assembly. In 1969, leadership of the SNP was taken over by Willie Wolfe, a Scottish CA, who was to take it to new heights of success, proving that nationalist arguments and a sense of Scottish identity could still appeal to the middle classes, and strongly suggesting the 1969 vote owed something to the discourse on Scottish identity and nationhood.

The Institute’s rising ambition for greater international prominence was made manifest in a speech by Sir John Shaw at the ICAS St Andrews Summer School in 1969, after the failure to effect a merger that year. Shaw stated that “Our object must be to ensure the predominance of the Scottish Institute among the professional societies of accountants throughout the world”, which was to be attained by “aggressively” making the Institute “demonstrably intellectual” so as to “attract men and women of the highest possible calibre as the basis of predominance” (McDougall, 1980: 29). This strong discursive statement arose from defeat for the Council and secretariat of the Institute as it turned its face to the future and to the growing importance of internationalization. It marks a turning point in the Institute’s overseas focus away from mundane considerations of reciprocity of recognition between professional accountants of different nations and towards achieving pre-eminence among them.

The Institute’s international influence was to blossom after the introduction of accounting standards in 1970, the year the Accounting Standards Steering Committee (ASSC) was established as a partnership of the English and Welsh, Scottish and Irish Chartered Institutes. This arose as a result of the arguments in the press of Professor Edward Stamp, a Canadian CA who subsequently joined the Scottish Institute (Whittington, 2004). From 1976 to 1978, Scottish CA President Sir William Slimmings chaired the Accounting Standards Committee (ASC), as the new body, which by this time included the other non-chartered bodies as members, was then called. This body was superseded by the Accounting Standards Board (ASB) in 1990. Its first chairman was Scottish CA David Tweedie, who remained in the position until 2000. Tweedie has always been strongly identified with the Institute, where he had previously been Technical Director. He was also a member of the International Accounting Standards Committee (IASC) from 1995. The standards created by the ASB did much to curtail “creative accounting” and are still influential today. Foucault has argued the appropriation of technical definitions, taxonomies and the like, “systems of norms, techniques, types of classification” is a powerful form of discourse, (in)tending to increase the economic and social power of those who control them, namely certain professional accountants, and that state sanction for these activities greatly strengthens the power and influence of those who carry them out (Foucault, 1972: 41–45). For the Scottish chartered accountants, in the person of Tweedie, to place themselves at the heart of the standard setting process was a major reputational coup.

According to Bruce (2004), the trigger for the next attempt at merger was the European Eighth Directive, which, among other things, called for the regulation of auditors. The ICAEW felt that one way of achieving an improved system of regulation was the merger of the Scottish and English chartered societies, and this possibility made its way into the press early in 1987. The incoming ICAS president, Norman Lessels, recognized at the outset that this proposal was “unlikely to find favour” with his membership. It seemed to have dawned on the Council there was what may be interpreted as a “discourse of superiority” of unshakeable proportions alive and well in their institute. In May 1987, a thinly-veiled pro-merger article in The Accountant’s Magazine, published by ICAS, argued that in deciding on the profession’s future, while recognition of Scottish cultural and historical distinctiveness should be borne in mind, “Scottishness is not enough and never should be” and that a “well-informed and rational analysis of all the factors at work” was required (Bruce, 2004: 165–166).

Government ministers “warned that the profession had to integrate” (Bruce, 2004: 166). A joint working party set up between ICAS and ICAEW and senior partners of the “Big Eight” firms started informal discussions to form a view from within the profession. The Accountant’s Magazine informed readers that “the Institute was clear that full account was to be taken of the Scottish dimension to the profession”, but had no doubt that “the need for change” would emerge (Bruce, 2004: 166). Correspondence from one member expressed the view that “Scotland is in danger yet again of being dictated to by London” (Bruce 2004: 166). The report of the working party considered many options, recommending a merger into a British Institute of Chartered Accountants in May 1988, with the Scotsman newspaper announcing that “the death-knell has sounded for the oldest accountancy body in the world” (Bruce, 2004: 167). It was hoped that a positive vote would enable the merger to commence in 1989 and be completed in 1993. The Council was to consist of 15 Scots and 50 English members. Presidents would be selected by a committee that had a 25 per cent Scottish membership. The head office was to be in London, with the Milton Keynes office of ICAEW handling administration and Edinburgh handling the important portfolio of education, research and IT services (Bruce, 2004).

These proposals were debated and discussed in The Accountants’ Magazine which noted that the issue was “linked to perhaps one of the most strongly developed senses of national identity in the world”, but added that “the history of mankind is littered with the victims of nationalism” (Bruce, 204: 168). The 1980s were the Margaret Thatcher years in the UK, witnessing the rapid wind-down of shipbuilding, steel and coal mining, conflict with the trades unions, deregulation and privatisation, policies which were not popular in Scotland, with its collectivist values. The introduction of the Community Charge (the “Poll Tax”) in Scotland in 1989 ahead of the rest of the UK was deeply unpopular, contributing to Thatcher’s eventual removal as Prime Minister.

A trio of notable dissidents spoke against the merger, Professor Tom Lee of Edinburgh University, Ewan Brown of Scottish merchant bankers Noble Grossart, and Ian Valentine of Binder Hamlyn. They articulated the view that the proposals would favour the interests of the large international accounting firms (that were considered by many to be marginalizing Scotland) and which offered a wide range of financial services. This would destroy the idea of a profession of individuals rather than firms. Brown suggested that the problem of auditor regulation could be solved in a much less radical way by the creation of a joint monitoring and regulatory unit. Nevertheless, on 12 January 1989, the proposals were approved by a majority of the ICAS Council. ICAEW felt it had bent over backwards to give ICAS a disproportionately large role and representation. The Accountant’s Magazine felt the terms were the best ICAS could ever get. A leader in Accountancy Age noted that “With the growth of the international accounting firms and with the expansion of international business and industries, the UK profession, when it comes to the ordinary members, has already merged” (Bruce, 2004: 172). While 94 per cent of ICAEW members were in favour of the merger, the proposal attracted the support of only 45 per cent of ICAS members who voted, and the merger failed. Bruce has ascribed the failure to a complex blend of nationalist feeling, antagonism against the large accounting firms, as well as many other factors. As before, the ICAS Council and secretariat were taken aback at the power of what may be read as the “discourse of superiority” among members, although they were in possession of information which should have prepared them for the failure. As in 1969, the merger rejection led to a reconsideration and strengthening of the examination schemes. “CA: the Brand” was introduced as a marketing strategy, taking the Institute in an almost diametrically opposed direction to what had been planned only months earlier, in a programme surrounded by more than a whiff of overcompensation. What has been termed here the “discourse of superiority”, furthering the Institute’s image as the best in the world, became part of official Institute policy again, thanks to the unpredictability and destructive power of the views of members. ⁶

After 1989

A Constitutional Convention was instituted to examine Scottish devolution, which led to the setting up of a devolved Scottish parliament in 1997 and gave Scottish identity, pride and patriotism a further boost. A strong Scottish identity was not synonymous with support for the Scottish Nationalists, who would only achieve their first overall majority in 2011. Scottish identity, as recent polls have shown, is now deeper than any other identity felt by Scots, and is not inconsistent with feelings of Britishness or the ethnic origins of immigrants (Murphy, 2008). As a sense of Scottish national identity and nationalism strengthened, in 2000 it was agreed by the finance ministers of the European Union (EU) member states that all companies listed on EU stock exchanges would be required to prepare accounts on the basis of International Accounting Standards. Since 2001, these had been prepared by the International Accounting Standards Board (IASB), which succeeded the IASC that year (Whittington, 2004). The production of International Standards, it can be argued, increased the discursive stranglehold of professional accountants through disciplinary knowledge (Foucault, 1972). Sir David Tweedie, as he had by now become, was the first chairman of the IASB, remaining until 2011 (Whittington, 2004), consolidating his reputation as an uncompromising defender of integrity in accounting standards and becoming possibly the world’s best known and most respected accountant, presiding towards the end of his tenure at a time of international financial crisis. Looked at from the point of view of discourse, Tweedie raised the status of ICAS immeasurably by embodying values he publicly ascribes to his training as a CA. Always closely identified with the Institute, he has stated that “I owe so much to the Institute. ICAS made me what I am” (The CA, May 2012: 5). ⁷

One of the first challenges facing new chief executive of ICAS, Anton Colella, in 2006 was in smoothing relations with ICAEW, which the previous year had proposed, while attempting a merger with IPFA (which subsequently failed), to adopt the name the “Institute of Chartered Accountants”. This ignored the geographical implications of ICAS’s name, which was a threat to its status. This infuriated Scottish CAs, and the help of the Scottish Parliament’s First Minister, Jack McConnell, was enlisted to stop this move, proving that what has been styled ICAS’s “discourse of superiority” was consistent with the official (by then) devolved Scottish government’s independent stance. Noting that ICAS was “still and will always be the world’s first professional body”, Colella explained that it intended to remain in a position of “thought leadership” and to campaign for “principles based” standards. Having spoken on education at the 2006 World Congress of Accountants in Istanbul, Colella has gone on to become chair of the Global Accounting Alliance, which operates in harmony with the International Federation of Accountants, and was founded in 2005 by 11 of the world’s leading professional bodies, a considerable distinction for one of the world’s smaller institutes. ICAS is now represented in a forum which provides inputs into the setting of global standards for accounting education, audit and ethics, takes an interest in the development and smooth operation of the international economy and is interlinked with the major accounting bodies in each of its member countries. Colella observed that “We are seeing the emergence of one of the first truly global professions” (The CA, November 2011: 24). ⁸

Today represents a high point for ICAS, coinciding with Scotland’s devolved parliamentary status within the UK and a sense of national identity perhaps at an all-time high. ICAS’s online student brochure speaks of “The CA Qualification: in a World-Class of its Own” (2012), describing CAs as “world class business professionals” and ICAS as “a Global body of CAs”. Prospective trainees are advised that “As a CA, you hold the world’s most prestigious accountancy qualification available. This carries weight and influence the world over” and that “always acting in the public interest, ICAS is the first professional body for accountants and was created by Royal Charter in 1854”. Today, what has been termed the “discourse of superiority” is expressed openly and is the cornerstone of ICAS policy, but is required to sit alongside a new drive within the Institute to recapture professional values such as personal integrity and a public interest focus. This involves newly-qualified CAs in making an oath of commitment to integrity and the public interest. ⁹ Today, one trainee in three is being trained outside Scotland, most CA training outside Scotland takes place in London and ICAS targets graduates of English and Welsh universities. In an attempt at inclusiveness associated with these developments, ICAS has altered its “corporate identity”, which can be interpreted as a form of “discursive practice”, by substituting the letters “ICAS” for the Institute’s full name on stationery and signage (The CA, December 2011: 11), a step which to some extent may in future compromise the Scottish membership’s long-standing sense of Scottish identity. The Institute is not unique in dealing with designatory letters in this way, as a kind of logotype or brand rather than as shorthand for an institute name (Parker, 2005).

General observations

It is worthwhile pausing to summarize the nature of the “discourse of superiority” which has been discussed in this article. Table 1 lists the main “superiorist” arguments that have emerged in the account given above.

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Table 1.

Aspects of “superiority” of the CA in discourse.

1890s–1900s	1940s	1969	1989
Superior public esteem and preference, superior efficiency, integrity, respectability, accountancy specialization, more difficult examinations	Scottish- focused profession, CAs “public accountants”, CA “birthright”, superior status, comparatively long training	CA qualification a “birthright”, educationally superior, ICAS should aim for international “predominance”	CA was world’s first accounting body, Scotland a distinguished nation, concerns about educational dilution
Source: Walker (1991)	Source: Walker and Shackleton (1995)	Source: McDougall (1980)	Source: Bruce (2004)

Across the years, the discourse has consistently been based on the “lineage” argument, that Scots CAs should never lose through merger the right to be referred to as the “world’s first professional body of accountants”. Chronological “firstness” does not of course necessarily denote qualitative “firstness”. At times the discourse has been based on the notion that Scots CA training and examinations were the “best” or “hardest”, or that the audit work in which many CAs were involved was superior to the industrial or commercial work done by others, an argument that has carried less weight reducing since the 1970s as industrial accountancy has developed and the other major institutes have upgraded their syllabi. Much of what has been argued has been unsupported assertion. The nationalist argument has been present throughout, but more strongly in recent times. The fear of educational dilution through merger has reduced recently in official circles. In the case of each merger crisis referred to above, in so far as the opinions of the voters have been available, these arguments have been intermixed, showing above all else and without a doubt, an overwhelming desire for exclusivity.

The unspoken nationalist arguments are worth speculating upon. A pride in being Scottish has been present, along with pride in the great Scots who invented television, the telephone, tarmac roads, improved the steam engine, discovered penicillin, advanced antiseptic medicine or laid the foundations of modern nuclear science. Add to this, deep native admiration for the bravery of Wallace or Bruce, the genius of Burns, Scott, Smith or Hume, Adam or Rennie Mackintosh, the achievements of Andrew Carnegie or Sir John McDonald, the (Scottish) first Prime Minister of Canada, and the sense of pride in a nation that has “punched above its weight” easily takes wings. It is not difficult to add Sir David Tweedie as another outstanding Scot capable of evoking these feelings and linking this, too, with a desire to retain Scottish CAs’ exclusivity.

Is this exclusivity justified? Apart from the fact of the Society of Accountants of Edinburgh being indisputably the world’s first professional body of accountants, the superiority of the CA qualification or training compared with that of other accountancy professional bodies has never in the last half-century been rigorously tested nor has auditing work ever been proved at any time to be “superior” to other accounting work, whatever “superior” may mean. It has not been demonstrated, either, that the CA qualification is any better suited to international work than other qualifications. It would of course in any event be an absurdity to suggest that all CAs are “the best accountants in the world”, which is a matter of personal as much as of educational capital. What has been demonstrated is that many CAs have believed, or do believe, in the superiority or supremacy of their qualification, and that this has been passed from one generation to the next, often by word of mouth, with the results already discussed. This has resulted in a number of top-class students wanting to become Scottish CAs, some of whom have come to occupy senior positions thus perpetuating the myth that it is the qualification, not the individual, that is responsible.

If CA supremacy is a myth, except in relation to outstanding individual CAs is it correct that it should be spread, as it will have led and will lead to accountants with that qualification being preferred before others of equal or greater talent? Ideally, no, but Foucault’s position was that power needs to be considered as “a productive network, which runs through the whole social body, much more than a negative instance whose function is repression”, necessary to the smooth operation of an ever more complicated society, and so such myths may be seen as a small price to pay for social functioning. The alternative to power-seeking accountancy (and other) bodies is the risk to society of unqualified anarchy on the one hand or state control on the other (Foucault, 1980: 119). Further, an inescapable fact from the above account has been witnessed: at points when ICAS’s self-esteem and self-promotion as an organization or body of accountants has never been higher, as in the last few decades, and as Sir David Tweedie has led developments in international accounting, ICAS, through Tweedie and others, has done immeasurable good in the cleaning up of standards. In a similar vein, Colella, ICAS’s chief executive, “sees no contradiction between the Institute’s role as a policeman and its status as a body helping promote members’ interests” (Fraser, 2007). There is no inherent conflict between the two activities, especially if it is borne in mind that ICAS operates in a competitive business world, where the exploitation of “first mover advantage” carries no moral opprobrium. That is precisely what ICAS has been attempting to do for 158 years, at times influenced by national feeling.

The purpose of this article, as stated at the outset, was principally to examine the “discourse of superiority” which has characterized a professional body over the years and not to ignore all the good it has done through the services it and its members have provided. Indeed, ICAS, with its current ethical emphasis, may be in the forefront of what Foucault referred to as a changing “episteme”: a moment which involves a mindset shift away from the excesses of unrestrained liberal capitalism towards a more ethical climate (Foucault, 1980: 196–197). Time alone will tell whether or not ICAS’s renewed commitment to ethics, mentioned above, will prove to be lasting and comprehensive and whether or not it is just another discursive tactic to set ICAS apart from other professional accountancy bodies. One opportunity to prove that it is serious is in the area of tax avoidance, where the large accountancy firms have made huge profits from “tax planning”. This has now become a matter of great public and political concern as state revenues suffer in consequence (Financial Times, 2013).

Foucault is, finally, also equally clear that “there are no relations of power without resistances” (1980: 142), holding that the subversive power of discourse is available to all individuals or bodies who feel oppressed – victims of discursive strategies. In that connection, a further research agenda beckons: the study of how other accountancy bodies, such as ACCA, now in possession of chartered status and huge in terms of world membership, has dealt with the discursive challenges of Scottish and other chartered accountants. It would also be enlightening to study another even smaller institute such as NIVRA, the Royal Netherlands Institute of Registered Accountants, to discover why it is that certain small accounting institutes seem able to “punch above their weight”, and how this relates to discourse.

The advantages of a Foucauldian discourse analysis

The above article, it is submitted, is ample proof of the usefulness of Foucault’s concept of discourse and related insights. It has shown that the “discourse of superiority” emerged in this case study at times of crisis, emphasizing how discontinuities in history can be significant, as Foucault has maintained, continued in between times, and was associated with the “power/knowledge” nexus through changes to examination systems after crises, adapting itself to the international environment. In short, a “discursive formation”, not seen before as a distinctive entity, has been identified and its “emergence” traced from the beginning of ICAS’s existence through to the present day (Foucault, 1972: 44). Existing studies of the progress of ICAS, rich in episodic detail, were extensively used as a source of evidence for the existence of the “discourse of superiority”, whose general sweep was identified.

A second advantage has been to show holistically that “interdiscursivity” has applied across the whole period, with particular reference to the nationalistic discourse that has fluctuated in Scotland over the period. Again, many insights in this regard were obtained from existing studies of particular episodes in the history of ICAS. A third advantage of the Foucauldian approach has been to show that, across the period, much of the “discourse of superiority” has been contingent upon unpredictable external events, notably the series of attacks on ICAS’s privileges, status or independence, which have in turn produced a discourse that was initially defensive but has led in more recent times to proactive self-promotion by the Institute. This cumulative account has emphasized that the emergence and ongoing success of ICAS might never have happened, again corroborating Foucault’s emphasis on discontinuity in history (Foucault, 1972). A related advantage of the Foucauldian approach has been to highlight internal conflicts within the Scottish chartered accountancy profession, where latterly members and Council have chosen opposing directions for the Institute, with ensuing modifications of strategy and discourse, proof of Foucault’s statement that discourse brings “powers and dangers” which should not be ignored (Foucault, 1981: 52).

A final advantage of the Foucauldian approach is that it works on the principle that power is not necessarily negative (Foucault, 1980) and can be attained by entities which exercise some benevolent influence on society, which ICAS has arguably done. The existing, episodic studies of ICAS have tended to emphasize its “self-interest” (Larson, 1977), as opposed to the public interest focus of Carr-Saunders and Wilson (1933) at particular points in history, for example, in the “critical-conflict” approach adopted by Walker (1995), but Foucault reminds us, as does Lee in the title of a 1995 article (Lee, 1995), that self-interest and public interest are not necessarily opposed. For the individual professional body, the lessons from Foucault are clear: for professions and professionals to remain in a position of power and influence, they must be part of a network that is socially productive. As Foucault put it, “if power were never anything but repressive … do you really think one would be brought to obey it?” (Foucault, 1980: 119).