The accounting professional project and bank failures

Garry D. Carnegie

13 citations0/0 files storedJournal of Management History

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Auditing, Earnings Management, Governance Accounting and Financial Management Management and Organizational Studies

Abstract

Purpose The purpose of this paper is to examine the strategies and dynamics of the fledging accounting professional project in the context of boom, bust and reform in colonial Victoria. In doing so, the study provides evidence of the association of members of the Incorporated Institute of Accountants, Victoria (IIAV) (1886) and other auditors with banks that failed during the early 1890s Australian banking crisis, and addresses the implications for the professionalisation trajectory. Design/methodology/approach The study uses primary sources, including the surviving audited financial statements of a selection of 14 Melbourne-based failed banks, reports of relevant company meetings and other press reports and commentaries, along with relevant secondary sources, and applies theoretical analysis informed by the literature on the sociology of the professions. Findings IIAV members as bank auditors are shown to have been associated with most of the bank failures examined in this study, thereby not being immune from key problems in bank auditing and accounting of the period. The study shows how the IIAV, while part of the problem, ultimately became part of a solution that was regarded within the association’s leadership as less than optimal, essentially by means of 1896 legislative reforms in Victoria, and also addresses the associated implications. Practical implications The study reveals how a deeper understanding of economic and social problems in any context may be obtainable by examining surviving financial statements and related records sourced from archives of surviving business records. Originality/value The study elucidates accounting’s professionalisation trajectory in a colonial setting during respective periods of boom, bust and reform from the 1880s until around 1896 and provides insights into the development of financial auditing practices, which is still an important topic.

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References

2002Economy and Society: An Outline of Interpretive Sociology 1978The Rise of Professionalism: A Sociological Analysis.1989Social Closure: The Theory of Monopolization and Exclusion.1986Organising the profession: A theoretical and historical examination of the development of the major accountancy bodies in the U.K.2003What counts as “theory” in qualitative management and accounting research? Introducing five levels of theorizing 1980The Rise and Fall of Marvellous Melbourne 1998The dynamics of “closure” amidst the construction of market, profession, empire and nationhood: An historical analysis of an Australian accounting association, 1886–1903 1993Rethinking the profession-state dynamic: The case of the Victorian charter attempt, 1885–1906

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