Accounting Professionalism in Decline - Assignment Example

Answer 1: In a commentary on accounting standards, Wyatt (2004) makes it clear that there have been changes in the standards and stature enjoyed by accounting firms with a change in the culture of accounting over the past century. This commentary, according to the author, is important given the fact that the profession itself has been in trouble in the media given the negative publicity it has garnered over the past few years in the media. Much of the essay is a discussion on the need to reestablish professionalism following the recent accounting scandals. For the purpose of explaining the change in the culture of accounting, the essay tracks the loss of relevance for accounting as a profession back to the decade of the 1940s, when even the biggest of the accounting firms weren’t as big the law firms. The author draws on the Anderson firm as a point of inspiration for explaining the fall of the accounting couture. Where firms such as Anderson were concerned, according to the author, there was a trend toward growth. By 1970s, the firm had over 350 employees across the globe. While it is correct that these firms were in fact guided by professional codes of functioning, most of these firms adhered to a strict code of hierarchy which provided little scope for autonomous growth for the junior accountants. The other problem was that related to the issue of marketing or more likely the absence of it. Accounting firms did not indulge in any kind of advertising for the skills or services set that they would want to sell the consumer reliant largely on existing business and the culture of necessity where accountants and accounting was concerned. The Anderson example is again brought in here to explain how the firm resigned from a railroad contract because of e rigidity of their rejecting an accounting principle that was later accepted by the industry at large. After having explained the rot that had set in the manner in which most accounting firms chose to operate the author focuses on the rise of the accounting executive’s nemesis-the process of consulting which in the beginning of the decade of the 1960s began as a small spark and took off during the 1980s and 1990s. While beginning purely accounting firms most had from the start assisted clients with internal controls. While these services were important, the idea remained to view these as additional and singular responsibilities. This changed somewhat with the advent of the computer and the resulting phenomena was known as the consulting services. While in the beginning these were encouraged by and large supportive of the consulting role, there came a point where the role started to take over the accounting spectrum itself. The skill set itself that was developed within the scope of the consulting services could no longer be contained-services offerings were expanded, so that many more revenue generating services could be undertaken. Expansion of services spurred the expansion of technology used and consequently that of people hired. Gresh Brebach and George Shaheen were examples of this very trend. Accounting courses were slowly eliminated and new managers would need to pass the CPA exams. New hires then did not even have an accounting background, and progressed within the firm despite the absence of professional training in accounting services. These were high paid personnel with capacities to generate high margin fees. The idea therefore is that with the push to revenue generation came the need to enhance the consulting function that was a success where the revue earning realm was concerned. Anderson itself captured some of the biggest auditing and consulting contracts wile others developed their own functional specialties. With this came also the change in the hiring pattern. Youth gave way to experience because with this would come the ability to get the big contracts. In the decade of the 1990s, there was an increasing pressure for the function to be formally recognized and accepted as paying a large chunk of the profit making arm of the firm at large. The pressure came externally as well with the Securities and Exchange Commission expressing concern about the range of services of offer and the large billings that resulted. In conclusion therefore, one could trace the change in the accounting culture to the factor if greed and money making where the culture underwent a transition from deliverance of professional service to emphasis on growing revenue and profitability, with the replacement of accountants with corporate managers. Thus the culture and the demise of accountancy could be attributed to the commercial interests assuming the core of accounting services. Answer 2: In the second article by Gough, Grey and Robinson (2000) the idea remains on the focus of socialization in professional accounting firms. The authors describe these firms as “professional service firms” given the self usage by most such firms themselves. While accepting the commercial lineage of accountancy as a profession, the authors underlie at the beginning that profession is not one devoid of ethics. In their study the authors focus on client aspect of the debate, while also underlining the prerogative aspects of the research nature. At the very beginning the authors outline the assumption that there is a requirement of placing things in context, which they do y stating that most accounting forms originate in accounting but have then diversified into consultancy activities. The idea however that they seek to further would place in context the answers of cultural evolution of accountancy that Wyatt looks to further in the above answer. So while accepting that consultancies dominate the crux of functioning where most accounting firms are concerned currently, it would be incorrect to state that there has been a divorce from accountancy, given that the accounting principles form the very basis of the consultancy services that these firms currently provide. Socialization is described in the article as the numerous formal and informal processes that enable individuals to become successful and functional members of a collective community. This assumes importance given the fact that these are important factors in ultimately shaping the notions of professionalism. Assuming these to be typical of the professional the authors interviewed their candidates. Here they also bring in the concert of the presentation of self which they state is central to the accountant feeling like a part of the team. Here they bring in the importance of motivation of trainees in dealing with the process of client servicing, which juxtaposes the culture of accountancy today and accountancy in the past. They stress training and tutelage in creating managers and not accountants, given especially the fact that the key unction of the firm now is seen as the need to service client and manage operations rather than account and audit their balance sheets. The authors are also clear in the fact that the impact of the focus on the client has repercussions in the manner of the firm’s functioning given the fact that this would tend to pervade organizational working strategy in the modern accounting firm. This focus, on the client is the constituent factor behind the framework of self regulation that not only focuses on one set of others but tends to downgrade claims that others might have on the individual. According to the authors, the dominant role played by client in accounting of events within these firms and more importantly in the very notions of professionalism so that these tend to assume a significant role in even the perceptions about loyalty and priorities at the workplace itself. What transcends therefore is the recruitment of those that are outgoing social people rather than those that are good at what they do, or specialists in the process of accounting itself. The culture of profit maximization also has meant that there is a compromise with the family and the need for it-every waking hour is supposed to be spent at work. The idea brought forward by the discourse relating to the idea discussed by Wyatt is that with the growth of the culture of consultancy over auditing and accounting there is a need to place the client at the centre of the work and the office priority. This centrality is implied in an array of power effects especially those that relate time-keeping, appearances and conduct. While the authors disregard the tendency to perceive this as a bad thing, it does according to them, place materialism at the centre of the work priority over the substance, and theory that define accountancy. This is where the core of the article relates to the change of accounting culture which Wyatt has written about later. Reference: Gough, F. A., Grey, C., and Robson, K., (2000). ‘In the name of the client: The service ethic in two professional services firms’. Journal of Human Relations. 53(9). Pp1151-74 Wyatt, A., (2004). ‘Accounting professionalism: They just don’t get it’. Accounting Horizons. 18(1). 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