Your Honours, An Appeal: Re-litigating ‘Accounting on Trial’ A Response to Moore’s (1991) “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting”.

Your Honours, An Appeal: Re-litigating ‘Accounting on Trial’ A Response to Moore’s (1991) “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” David Carter Assistant Lecturer and PhD Candidate School of Accounting and Commercial Law Victoria University of Wellington PO Box 600 Wellington NEW ZEALAND David.Carter@vuw.ac.nz +64 463-5233 extn 7009 “Your Honours, An Appeal: Re-litigating ‘Accounting on Trial’” I FOREWORD In 1991, Accounting, Organizations and Society published a paper by David Chioni Moore entitled “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting”.1 This exploratory paper sought to identify various lessons for critical or radical accounting from the Critical Legal Studies movement [CLS hereafter] In particular, Moore identifies some tentative theoretical links between the two disciplines, which is possible, given the relatively similar historical roots.2 From this, Moore develops the thesis that in relation to CLS the critical accounting movement, at the time of writing, was undertaking a ‘realist’ examination of accounting One of the prime reasons for writing a response to the Moore article is that there has been no substantive engagement or response with the paper In my mind this is concerning, and in that capacity, I am moved to respond It is not that the essential thesis is problematic in respect of critical accounting, but rather that the mode of comparison between law and accounting, and thus, between CLS and critical accounting is incomplete and concerning In terms of the interface of law and accounting from a critical perspective, there is limited research,6 although there is a body of work that considers the boundaries of the interface.7 At about the same time as the publication of the Moore article, Bromwich and Hopwood published an edited collection of essays entitled Accounting and the Law.8 This essay collection provides some guidance for considering the scope of the interaction between accounting and law The book is largely an exploratory work and has more of a pragmatic focus Little work is done on identifying any interconnecting or explanatory theory between the disciplines Furthermore, although interdisciplinary in nature, with work by both legal and accounting academics, there is no criticism of the interaction or relationship between the two disciplines The chapter by Napier and Noke considers, historically, the relationship between accounting and the law, tracing historical factors in the growth of the professions Although Napier and Noke comment that the two professions seem to be compatible and David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763-791 Moore, above, 765-766 Moore states: “Lawyers and Accountants are much closer cousins to each other, for example, than either of them is to engineers, physicians …” Moore continues drawing similarities for two pages of the article, noting amongst other things, the ability to bear the name profession, their role in society, that they are both tools of social and organisational control Moore, above, 768 Moore, above, 768 There is the risk that Moore’s work will be seen as the authoritative or seminal work on the interface between critical legal studies and critical accounting Of course, this is mediated by the fact that there is little or no response to the article However, it is often cited in interdisciplinary articles in accounting What the citation represents is beyond the scope of the paper, but perhaps it suggests the article is seen as authoritative For example, this includes David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763791; Christopher McCrudden (ed) Regulation and Deregulation: Policy and Practice in the Utilities and Financial Services Industries (Oxford, Oxford University Press, 1999); and Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) But not necessarily the interface itself of the two disciplines Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) Christopher Napier and Christopher Noke ‘Accounting and the Law: An Historical Overview of an Uneasy Relationship’ in Bromwich and Hopwood, above have a history of a close and good ‘working’ relationship, 10 the authors note that there is apparent conflict between the two professions, as “the role of accounting in [the] relationship has been an essentially subordinate one” and “the respective claims of the accountants and lawyers to professional expertise have been expanding, bring the professions into increasing commercial rivalry”.11 The chapter by Bromwich and Hopwood is much more about the intertwining of the two professions, but takes a strongly pragmatic focus 12 It is largely concerned with presenting an overview of the contents of the collection of chapters, but it looks closely at the regulation of accounting by law.13 This paper seeks to add to the debate, and accepting that critical accounting can learn from CLS, this paper will focus on two questions in particular: 1) What lessons can CLS teach critical accounting? It will be argued that critical accounting needs to be careful in drawing lessons from CLS, in that, there are sufficient subtle, but important, differences between the two disciplines of law and accounting, that it is not merely a case of translating CLS to critical accounting 2) What is the interrelationship between law and accounting? The relationship is two-way: law tends to shape accounting, and increasingly accounting relies on law to provide the space for the practice of accounting, but equally, accounting plays a vital societal role, defining expectations, interaction, and power relations, through the provision of information For example, law is increasingly reliant on accounting for the provision of a wealth of information that the law requires in order to function II THE APPEAL: INTRODUCTION The predominant issue concerning this re-examination of Moore’s 1991 paper is the interrelationship between law and accounting, and in particular, the lessons that critical accounting can draw from Critical Legal Studies Moore’s conclusion in the paper is that there are series of lessons that CLS can teach critical accounting While this paper accepts the basic premise, the aim of this paper is to consider that subtleties and limits of both disciplines in drawing out these lessons In other words, careful attention must be paid to the differences between law and accounting There are a series of primary concerns in relation to the Moore paper These include, Moore’s conception of the CLS movement; Moore’s rationale behind how critical accounting can learn from CLS, and finally, the lessons that critical accounting can learn from CLS As stated earlier, I am not disputing Moore’s essential thesis that in relation to CLS the critical 10 11 12 13 Napier and Noke, above, 31 Napier and Noke, above At this point in time, the paper is not a paper, necessarily, on professional or professions literature There is a vast array of literature concerning professional development and professions building This is not the focus of this paper Michael Bromwich and Anthony Hopwood ‘The Intertwining of Accounting and the Law’ in Bromwich and Hopwood, above Michael Bromwich and Anthony Hopwood ‘The Intertwining of Accounting and the Law’ in Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) accounting movement14 was undertaking a ‘realist’ examination of accounting 15 Rather, the aim of this paper is to draw out some of the lessons that critical accounting should take from CLS that Moore fails to acknowledge, and that in drawing these lessons, we must be mindful of the differences between the two disciplines 16 Thus, this paper is organised around two sections, following the introductory comments: 1) Differences between law and accounting, and consequently between CLA and critical accounting that Moore does not acknowledge 2) Further lessons that critical accounting should draw from CLS that Moore fails to acknowledge III BACKGROUND TO THE APPEAL A The Interface between Law and Accounting Let us begin with a brief outline of the background to the appeal, including an outline of the 1991 “Accounting on Trial” article The starting point for this discussion is that accounting and law are intertwined social institutions Thus, the critical accounts of law and accounting should equally be intertwined and should prove illuminating Napier and Noke acknowledge that at the interface of law and accounting, “[l]aw provides a framework for accounting while accounting produces information for the processes of law”.17 Progressively, accounting relies on the law in at least two distinct ways: 18 first, in terms of the day-to-day practice of accounting; and second, through the law’s influence over the scope and shape of the discipline 19 In terms of practice, the law often affects accounting in that legal parameters define the operation of accounting 20 In New Zealand, for example, Parliament, by law, designated the Accounting Standards Review Board (ASRB) as the appropriate authority to determine the delegated legislation of Financial 14 15 16 17 18 19 20 David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763, 768 Moore, above, 768 That is, in drawing out the lessons from CLS to critical accounting it is not a matter of copying one tradition and applying the results to another Rather, it is that there are sufficient differences (subtle as some of them may be) that require the tradition of CLS to be ‘translated’ to the different tradition of critical accounting Christopher Napier and Christopher Noke ‘Accounting and the Law: An Historical Overview of an Uneasy Relationship’ in Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) It is worth noting that the interface is not unidirectional, in that it is not simply a process of law exerting its influence over accounting, but it is a multidirectional and multifunctional process of each discipline interfacing with and influencing the other discipline Craig Deegan and Grant Samkin New Zealand Financial Accounting (McGraw-Hill Book Company, Auckland, 2001) 273 Napier and Noke, above, 32 Of course, there are a number of examples where law does not define the scope of accounting information including social and environmental disclosures, as well as other voluntary disclosures Reporting Standards,21 which provide legal guidance in the preparation of financial reports 22 Not only are the general range of transactions and events that accountants deal in and with governed by law, but much of the work of accountants is conducted “within particular legal structures”.23 Financial reporting, tax, audit, trusteeship, and insolvency, to name a few, require a thorough knowledge of the law surrounding the area Law also, seemingly, plays a vital role in shaping accounting as a discipline These links between law and accounting are reinforced through education For example, in order to qualify for chartered accountancy in New Zealand, it is necessary for the accounting student to undertake a series of commercial law subjects alongside the mainstream accounting requirements 24 In increasingly more areas of the law, the law “consumes” accounting information, 25 and as a consequence the interrelationship between the two disciplines is increasingly significant Thus, as the uses of accounting information vary widely, it is difficult to draw the boundaries of the use of accounting information in the legal process There are two trends: 1) Areas of law and accounting draw closer together to the point where they intersect or perhaps overlap (this category includes areas such as tax, industrial relations, auditor’s liability, and perhaps intellectual property);26 and 2) An increasingly broader range of legal processes require an increasingly broad range of accounting processes and information flows (while there is no direct overlap or intersection between the two disciplines, the interface arises as these areas require accounting information, such as the law of contract, conveyance, banking law, company law, insurance law, and torts to name a few) Although the interface between law and accounting is incredibly vast, and it continues to grow, what is most interesting about the interface is that the law very rarely passes direct judgment upon accounting, the accounting process, or the accounting number Hadden and Boyd comment that irrespective of the apparent simple marriage of the two disciplines, there is considerable conflict between them.27 21 22 23 24 25 26 See, in general, the Financial Reporting Act 1993 For the establishment of the Accounting Standards Review Board (ASRB), see the Financial Reporting Act 1993, s 22 Section 24 of the Act defines that the prime function of the ASRB is to, if it thinks fit, approve financial reporting standards However, Parliament reserves the right under section 33, subject to the Regulations (Disallowance) Act 1989, to disallow any approved financial reporting standard or to overturn a decision of the ASRB to revoke a previously approved financial reporting standard The ASRB, for example, determined that New Zealand should adopt International Financial Reporting Standards (IFRS) The Regulations Review Committee is the Parliamentary Select Committee responsible for checking that all delegated legislation (regulations, codes etc) are essentially legal, in that they not exceed the governing statute that proscribes the power of delegated legislation Parliament reserved the right, in the Financial Reporting Act 1993, to overrule any financial reporting standard promulgated pursuant to the Act This power has yet to be exercised, and one expects that this will be the case New Zealand simply does not have the commercial lobbying parties as powerful as exist in the United States It is noted, though, that it is not necessary for lobbying to be solely from commercial interests, but the point is more that the United States’ commercial lobbyists are very strong, well-organised, and increasingly powerful Christopher Napier and Christopher Noke ‘Accounting and the Law: An Historical Overview of an Uneasy Relationship’ in Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) 31 In particular, the commercial law requirements in order to qualify for entrance into the professional chartered accountancy training programme include a compulsory company law paper and at least one compulsory contract paper The New Zealand Institute of Chartered Accountants (NZICA) recently undertook a review of the requirements for education at tertiary institutions NZICA restated the importance of a grounding in the knowledge of legal principles during this review Christopher Napier and Christopher Noke ‘Accounting and the Law: An Historical Overview of an Uneasy Relationship’ in Bromwich and Hopwood, above, 30 There may even be inter-disciplinary competition, such as within tax, with competition for tax consultancy between ‘accounting’ firms and ‘legal’ firms In relation to the use of accounting information in legal processes, accounting information (both financial and non-financial) plays important and useful roles in the law of trusts, partnerships, company law, criminal prosecutions (especially in fraud), negligence (and torts in general), insurance law, competition law, consumer law, insolvency law, banking law, matrimonial property, contracts, property valuation, and even in public law (such as commercial State Owned Enterprises and the use of the public funds) 28 Furthermore, recent legislative changes in New Zealand resulted in the scope for increased information disclosure (including accounting information) in collective bargaining in employment law.29 Thus, legal processes, be they judicial, legislative or other, are increasingly requiring accounting information In relation to this information-provision role, McBarnett and Whelan argue that the greatest challenge, amongst many challenges, facing legal regulation is ‘creative accounting’.30 Although they define creative accounting broadly, they include specific examples such as uncommon acts of direct fraud or flagrant breaches of accounting standards However, McBarnet and Whelan point to more subtle attempts to ‘subvert’ the regulatory process, the passive resistance evidenced by regulated entities ‘playing the system’ Tactics employed in ‘playing the system’ include calling the bluff of the regulator through challenge, or by being aware of litigation budgets of regulators (which are usually grossly under funded) In respect of ‘creative accounting’, it is often incredibly difficult to recognise, and if one is able to uncover that which appears to be ‘creative’, the next difficulty is pinning it down The legal process is inherently subjective, and rhetoric is a vital component – ‘creativity can still be perfectly legal’ – loopholes exist McBarnet and Whelan argue that in seven years of investigations by the United Kingdom’s Financial Reporting Review Panel (from 1989-1996), no case went to court The ‘might of the law’ is perhaps not so mighty.31 In this light, certain of the historical literature concerning the interface of law and accounting may be useful, including, but not limited to work by Napier and Walker 32 27 28 29 30 31 32 Tom Hadden and Denis Boyd ‘The Legal Control of Accounting Standards: A Critical View’ in Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) 57 This list is modified and reconsidered in light of New Zealand legislation However, the mechanics of the list derive from Tom Hadden and Denis Boyd ‘The Legal Control of Accounting Standards: A Critical View’ in Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) 58 See, in particular, Employment Relations Act 2000, s 31 (entitled “Providing information in bargaining for collective agreement”) Doreen McBarnet and Christopher Whelan “Challenging the Regulators: Strategies for Resisting Control”, in Christopher McCrudden (ed) Regulation and Deregulation: Policy and Practice in the Utilities and Financial Services Industries (Oxford, Oxford University Press, 1999) For further information, see Doreen McBarnet and Christopher Whelan “The Elusive Spirit of the Law: Formalism and the Struggle for Legal Control” (1991) 54 Modern Law Review 848-873, Doreen McBarnet and Christopher Whelan “Creative Compliance and the Defeat of Legal Control: The Magic of the Orphan Subsidiary” in Keith Hawkins (ed) The Human Face of Law (1994); Doreen McBarnet and Christopher Whelan Creative Accounting and the Cross-Eyed Javelin Thrower (John Wiley, London, 1999) Doreen McBarnet and Christopher Whelan “Challenging the Regulators: Strategies for Resisting Control”, in Christopher McCrudden (ed) Regulation and Deregulation: Policy and Practice in the Utilities and Financial Services Industries (Oxford University Press, Oxford, 1999) 69-76 Christopher J Napier “Intersections of Law and Accountancy: Unlimited Auditor Liability in the United Kingdom” (1998) 23 Accounting, Organizations and Society 105-128; Stephan P Walker “Laissez-Faire, Collectivism and Companies Legislation in Nineteenth Century Britain (1996) 28 British Accounting Review 305-324; Dean Ardern and Maxwell Aiken “An Accounting History of Capital Maintenance” (2005) 32 Accounting Historians Journal 23-61; Robert Baxt “True and Fair Accounts – A Legal Anachronism” (1970) 44 Australian Law Journal 541; and Roy A Chandler and John R Edwards British Audit Practice: 1884-1900 – A Case Law Perspective (Garland Publishing Inc, London, 1994) There are This problem facing the legal process perhaps sheds more light on Napier and Noke’s comment that there is apparent conflict between the two professions.33 Fact plays an important role in law In considering the representation of accounting information within law, the day-to-day practice of law (legal positivism) seemingly treats accounting as a ‘fact’.34 The label ‘facts’ holds considerable power for the processes of law 35 By equally, our conception of ‘fact’ is a complicated concept:36 ‘Facts’ are no longer facts when alternative interpretations are possible; nor they have the same ‘factual’ quality when what is being measured or described is not susceptible to precision ‘Facts’, so regarded, become the pabulum of discussion, of argument, or of negotiation Communication of ‘facts’ is no longer merely a process, but the imperfect representation of a situation, an essay in persuasion or an act of outright propaganda The scope for complete objectivity is rare; the name of the game, successfully played … it will convince some but not others, or depending on circumstances, convince nobody Much depends on trust, much on shared knowledge or values … Undoubtedly, such a charge is not unique to accounting, and the representations of accounting within law However, the fundamental question revolves around the descriptive noun of ‘fact’ To label as ‘fact’ invokes certain notions of truth, of objectivity, of general acceptance, and of correctness – vital in a realist-based ontology The consideration of ‘fact’ within accounting raises some fundamental considerations It is clear that one set of financial information could lead to a variety of accounting answers due to the ability to manipulate and vary accounts due to the indeterminacy of language in general, 37 and the particular skills of accountants.38 Accounting, in this sense, “… has been created and developed to accomplish various desired objectives and, therefore, it is not based on fundamental laws or absolute precepts”.39 Morgan depicts accounting professionals and the accounting process as active “constructers of reality”.40 That is, the skills and tools of accounting enable certain ‘pictures’ to be created representing a particular accounting conception Broadbent puts it in a slightly different light, in relation to ‘our desire’ for accountability:41 33 34 35 36 37 38 39 40 many more, and these are just a brief selection Napier and Noke, above At this point in time, the paper is not a paper, necessarily, on professional or professions literature There is a vast array of literature concerning professional development and professions building This is not the focus of this paper Tom Hadden and Denis Boyd ‘The Legal Control of Accounting Standards: A Critical View’ in Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) 57-58 and Christopher Napier and Christopher Noke ‘Accounting and the Law: An Historical Overview of an Uneasy Relationship’ in Bromwich and Hopwood, above, 36 This extends to the confining the decision that can be made in terms of the application of the law to the case at hand, to the processes of law including appeals The notion of a ‘finding of fact’ is highly influential in the law Roger Hussey and Arthur I Marsh Disclosure of Information and Employee Reporting (Aldershot, Brookfield 1983) 154 See, Ludwig Wittgenstein Philosophical Investigations (GEM Anscombe Translation, 1974) para 66-276 and Jeremy Waldron “Vagueness in Law and Language: Some Philosophical Issues” (1994) 82 Cal LR 108 See, Christopher Napier and Christopher Noke ‘Accounting and the Law: An Historical Overview of an Uneasy Relationship’ in Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International (UK) Ltd, Hertfordshire, 1992) 34 Catlett, 1960, 44 Gareth Morgan “Accounting as Reality Construction: Towards a New Epistemology for Accounting Practice” (1988) Accounting, Organizations and Society 477-485 In order to make ourselves accountable and ensure due governance, we seek (or are forced) to render our actions transparent The use of accounting in both its programmatic and its technological sense is associated with this; alongside this is the extensive use of auditing The deep irony is that the tools that are used are themselves not necessarily open and transparent What is intriguing, given the relatively elevated positions of both the professions of law and accounting, is that these professions are not in a vacuum 42 That is, these professions not exist independent of their surrounding society, but in fact, incorporate, rely upon, use, adopt, and co-depend as an entity amongst and as an aspect of society In reading the annals of jurisprudential theory, there are numerous discussions of the contrasting roles of law within society From Plato to Aristotle, Marx to Weber to Durkheim, Foucault to Habermas to Derrida, many of the great philosophers have debated the extent and shape of the societal role for law and the legal system.43 While certain philosophers consider law to be an ‘evil’ force to the detriment of society, the vast majority of philosophers consider law “to be one of the great civilising forces in society”.44 Few such philosophers, though, have considered the position of accounting Apart from Althusser’s conception of accounting as the language of capitalism, there is little philosophical treatment of the societal influences of accounting Perhaps, this is due to the more recent, historically speaking, development of an accounting profession, almost entirely documented in the Twentieth Century B Re-Presenting the Facts – the Case Under Appeal In “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting”,45 Moore argues that the critical accounting movement, 46 at the time of writing, was undertaking a ‘realist’ examination of accounting 47 Hence due to the differing positions of the respective critical theory movements of law and accounting, critical legal studies has important insights into the future direction of critical accounting Moore (1991) argues that ‘critical accounting’ can learn from Critical Legal Studies (CLS), as the CLS movement “has become the most powerful and divisive phenomenon since the 1930s in American academic law”.48 In particular, Moore makes a series of directional comments, observations, and comparisons: 1) Moore observes that critical accounting and critical legal studies share a similar history in the serious criticism of the realist epistemology that a ‘reality consists of a world out there’, capable of objective depiction and measurement, and which exists independently of the social actor 49 Moore acknowledges that critical accounting provides varied attacks on traditional positivism, but criticises critical 41 42 43 44 45 46 47 48 49 Jane Broadbent “Critical Accounting Research: A View from England” (2002) Critical Perspectives on Accounting 443, 445 Dennis Lloyd The Idea of Law (Penguin Books, Harmondsworth, 1983) Preface, and see Gareth Morgan “Accounting as Reality Construction: Towards a New Epistemology for Accounting Practice” (1988) Accounting, Organizations and Society 477, 480-482, as Morgan traces the impact of accounting upon society, with four specific examples: Accounting and Economic Investment, Accounting and Corporate Culture, Accounting and Social and Economic Policy, and Accounting and the Shareholder View Lloyd, above Lloyd, above David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763-791 Moore, above, 768 Moore, above, 768 Moore, above, 763 Moore, above, 774 accounting for, in Moore’s words, “suggest[ing] no serious or consistent consequences for its critique … the critical attacks have placed nothing major at stake”;50 2) Moore criticises accounting’s employment of Foucauldian theory as limited and ill-informed, resulting in “politically conservative” critical accounting 51 Moore notes that the integration of Foucauldian theory in critical legal studies has been both broad and deep, while the integration in accounting, in contrast, has been “less widespread and more … procedural” 52 By this, Moore accuses critical accounting theorists of employing Foucauldian theory “without abiding by the vision of Foucault’s overall project” 53 For Moore, critical accounting is “politically conservative”;54 and 3) Moore’s warns against deconstruction for the sake of deconstruction, as it has the potential to fall foul of the nihilistic critique of deconstruction 55 In this light, Moore argues that deconstruction is not ‘a toy’ or ‘a game’, and quotes Derrida in that such concepts are used for “strategic convenience” 56 4) Moore examines the parallel work in CLS and critical accounting in relation to contracts and contract theory:57 Contracts deserve special mention in this paper since they are a major concern of recent accounting theory as well as an area of focus within CLS CLS and critical accounting challenge the ‘naturalist’ or ‘positivist’ assumptions underpinning much of the contract theory in law and accounting 5) Moore argues that CLS has been “much more aggressive in pointing to the consequences of the various theoretical stances” despite CLS and critical accounting sharing a similar background and theoretical and intellectual heritage.58 Moore presents examples where CLS has ‘gone further’ than criticising the ‘objectivist’ epistemological assumptions of the dominant paradigm a) “Daily-life-of-the-law exposé – For Moore, this is not represented within the critical accounting work of the time CLS scholars have “go[ne] to the street to unmask what effects existing jurisprudence has on … everyday, individual lives”.59 Examples include studies of the perpetuation of racial discrimination, how defining the ‘family’ detrimentally affects freedom for women, collective 50 Moore, above, 775 In contrast, Moore comments, at 775, about the Critical Legal Studies (CLS) movement, that: CLS also sees reality not as objectively available outside of discourse, but as socially constituted in signifying systems But unlike critical accounting, CLS makes clear what is at stake in this battle over reality: control over social ‘facts’, and control over the US Constitution 51 52 53 54 55 56 57 58 59 Moore, above, 773 Moore, above, 772 Moore, above Moore, above, 773 Moore, above, 775 Moore, above, 778 Moore, above, 779 Moore, above, 780 Moore, above, 781 bargaining, and the patriarchal views embedded in definitions of rape and other sexual crimes b) “Maverick posture within the profession” – For Moore, there is a clear “institutional restraint, characteristic of the profession, present in critical accounting work”.60 CLS scholars essentially ‘take no prisoners’ For Moore, the key thing is that CLS scholars “see no difference between the standard legal theory they oppose and the institution that created it”.61 c) “Radical political program” – Moore argues that the CLS “program is antipure-capitalism and anti-hierarchical, quite experimental and often highly spiritual”.62 Moore acknowledges that the development of ‘alternative programs’ is troubling for CLS, “but CLS does attempt to reach out and does engage many of its members in fighting concrete injustices” 63 A serious critique of CLS is that:64 though its critiques are clear enough, with its arcane prose and elusive proposals CLS has not only failed among intellectuals in developing respectable alternatives, it has frozen out the working class and daily-grind leftist lawyers is sought to ally with and empower in the first place 6) Moore concludes by drawing out the reasons underpinning the differences between CLS and critical accounting For Moore, there are several reasons: a) “[T]he traditionally polite and stewardly attitude of its professionals”.65 b) “The hopelessly indirect social-science prose style of accounting research”.66 c) “The effects of accounting may seem to be far more diffuse and far less dramatic … [t]here are no media stars in accounting”;67 and d) “[A] lack of Critical self-declaration of community”.68 Thus, Moore’s overarching thesis is a call to arms of critical theorists, and critical accountants in particular However, before accepting this call to arms, it is necessary to further develop and further consider aspects of the interrelationship between law and accounting and the lessons that critical accounting can learn from CLS C 60 61 62 63 64 65 66 67 68 Critical Theory and Law and Accounting Moore, above, 781 Moore, above, 782 Moore, above, 782 Moore, above, 782 Moore, above, 782-783 Moore, above, 783 Moore, above, 783 Moore, above, 783 Moore, above, 783 10 Thus, there is little public knowledge of what takes place in accounting or what accounting actually is At the crude level, most members of the public have some knowledge of the rules of law, but few have knowledge of the rules of accounting Yet, much of our public and private lives are guided, judged, and measured by accounting While we have a passing knowledge of the laws of theft, as determined by ethical, moral, and practical recollection, very few of us have any knowledge of the rules in relation to the recognition of an asset Morgan (1986) carefully argues as “subjective constructors of reality”, there is a dichotomy between the practice of accounting and the perception of accounting:117 Accountants often see themselves as engaged in an objective, value-free, technical enterprise, representing reality ‘as is’ But in fact, they are subjective “constructors of reality”: presenting and representing the situations in limited and one-sided ways They are not just technicians practising a technical craft They are part of a much broader process of reality construction, producing partial and rather one-sided views of reality, exactly as an artist is obliged to produce a partial view of the reality he or she wishes to represent The clever presentation of accounting and accountants involves the implication of objectivity, science, technical processes, and a reliance on numbers Morgan attempts to dissect the improbability of these goals, holding that the myth of objectivity is important to the public perception of accounting In particular, he quotes Berkeley as saying that “objectivity is always as much as part of the observer as the object observed” 118 In other words, the accountant will always be implicated in their account The technical nature is reinforced by the reliance on numbers Gray, Owen and Adams question the underpinning theoretical framework of accounting implicated in this depiction of accounting:119 If all agents were equal, and if markets were information efficient and if this led to allocative efficiency and if this led, in turn, to economic growth and if this ensured maximum social welfare and if maximum social welfare were the aim of society then accounting is morally, economically and socially justifiable and may lay claim to an intellectual framework Of course, this is not the case As indicated above, Moore acknowledges the common misconception by the layperson that law is about words, and accounting is about numbers 120 Numbers are part of the power of the accounting discourse It is very difficult to argue with numbers First, they are the highly summative being the result of numerous valuation choices and ‘policy decisions’ Second, the accounting number is highly representative These factors render the accounting number deceptively simple, yet are the same, metaphorically, as an iceberg The vast majority of the accounting process is hidden from public view B 117 118 119 120 The General Accounting Expectation Gap Gareth Morgan “Accounting as Reality Construction: Towards a New Epistemology for Accounting Practice” (1988) Accounting, Organizations and Society 477 Morgan, above, 482 Rob Gray, Dave Owen, and Carol Adams Accounting and Accountability: Changes and Challenges in Corporate Social and Environmental Reporting (Prentice Hall, London, 1996) 17 David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763, 765, 766 19 As discussed above, many people have a general idea of accounting, but very little knowledge of the processes of accounting However, the presentation of accounting is one of the key elements of the power of accounting Moore attempts to argue that there is similarity between law and accounting due to equivalences between the sources and form of rules and that there is equivalence between the role of the auditor and the role of the judge For me, this comparison is fraught with difficulty The role of the auditor is vital for the accounting process, lending credibility to the accounting process, through a mix of process, language and perception The auditing process is a self-check process, seeking to determine the ‘accuracy’ of the accounts The role of the auditor in New Zealand is to determine ‘accuracy’, indicating whether the accounts present a ‘true and fair view’ and whether the company has complied with GAAP in their accounts But, what does an auditor actually do? Enter the auditing expectation gap: a) The auditor examines a small proportion of the accounts of a business, ranging between 5-15 per cent in order to form a judgment as to the ‘accuracy’ of the financial accounts This is based on an assessment of risk and familiarity with the business; b) If an error is discovered, the auditor determines whether the error at hand is a significant error, and the standard auditing measure is whether the error represents 1-5 per cent of the value of the business, depending on the size of the business; c) Once satisfied with the accounts, the auditor will sign off on the accounts They will sign that: 1) That these accounts present a true and fair view; and 2) Compliance with GAAP The auditing expectation gap is fully represented here: 1) Auditors only check a small proportion of the accounts, but provides a representation that the accounts are true and fair Much of society is wholly unaware of this 2) Only significant errors matter One to five per cent of value can be a significant amount However, societal perception of the auditing process is that auditors seek out errors, not just significant errors 3) Finally, for me, the key to the misconceptions about the auditing process relates to the sign off This is ‘a’ true and fair view The most important word in that phrase is ‘a’ It is ‘a’ true and fair view In structural linguistics, ‘a’ view implicates that there may well be other ‘true and fair’ views It is not ‘the’ true and fair view, but ‘a’ true and fair view And in saying that, what is a ‘true and fair view’ anyway? In relation to the overarching theme of this paper, then, in comparing law to accounting, and drawing subsequent lessons from CLS to critical accounting, critical accountants should pay careful attention to the general accounting expectation gap The construction and maintenance of the general accounting ‘expectation gap’ is key to this discussion.121 There are two aspects that underpin the general accounting expectation gap: a) A misunderstanding as to the purpose of accounting In New Zealand, the Statement of Concepts provides a depiction of purposes of accounting Essentially, the purposes of accounting are accountability and decision usefulness.122 The Statement of Concepts at paragraph 3.1 states:123 121 This expectation gap differs from the traditional auditing expectation gap 20 The objectives of general purpose financial reporting are to provide information to assist users in: (a) assessing the reporting entity’s financial and service performance, financial and position and cash flows; … (c) making decisions about providing resources to, or doing business with, the reporting entity Although the Statement of Concepts defines accountability as “the requirement for one party to account to another party for its performance over a given period”,124 the theoretical framework underpinning accounting has limited the concepts of accountability and decision usefulness In that sense, the power of the assumptions of positivism, including shareholder wealth maximisation, rational actor theory, and agency theory traditionally has rendered accountability to mean accountable for the use of the investors’ funds That is, in agency theory terminology, as the owners of capital wealth are separated from their capital which they invest in an enterprise, then they are due an information flow to explain the past transactions and events that used the shareholder funds (how have you used my money?) Similarly, the notion of decision usefulness has been limited to reflect the assumptions of positivism In this light, traditionally, decision usefulness reflects the provision of information to prospective shareholders and creditors (should I invest or should I sell my goods to this company?) Napier would argue that this is focus is illustrative of the ‘business company” view of the firm, where the business exists as a matter of right, independent of its shareholders, as a medium for the promotion of capital investment.125 As a consequence of this emotional and practical separation from the company, shareholders no longer view the company as belonging to them, as their company b) A misunderstanding of how the rules of accounting operate This is largely based around the public conceiving accounting rules as though it is like any other law.126 The rules of accounting differ to the general type of law that Parliament provides Although grossly simplified, in the passage of legislative provisions, the law is fairly straightforward and clear That is, parliamentary law is generally black and white In essence, the law of murder is clear – ‘do not murder’ Of course, many critical legal theorists would argue that any law is inherently indeterminate and of course, it is more complicated than this, but it is illustrative Most people, especially in criminal law are generally aware of the law, but few are aware of the rules of accounting Accounting’s rules are much different Accounting’s rules merely provide guidance They are not as ‘black and white’ as the impression held by the general public about parliamentary laws; the 122 123 124 125 126 Of course, each attempt at providing a conceptual framework definition of the underlying purposes sets out a different interpretation of what these terms mean and represent This lead Hines in a series of papers, 1989, 1990 and 1991, to argue that conceptual framework projects are essentially a political process: “a strategic manoeuvre for providing legitimacy to standard-setting bodies during periods of competition or threatened government intervention” Institute of Chartered Accountants of New Zealand [ICANZ] New Zealand Accounting Standards (Wellington, ICANZ, 2003) of the ‘Statement of Concepts’ New Zealand Accounting Standards, above Christopher J Napier “Intersections of Law and Accountancy: Unlimited Auditor Liability in the United Kingdom” (1998) 23 Accounting, Organizations and Society 105-128 Of course, this is not to expect that every member of the public is aware of the legal status of the rules of accounting, as delegated legislation 21 rules of accounting are more ‘grey’ The structure of rules in accounting is equally murky, with the introduction of International Financial Reporting Standards (IFRS), modified IFRS for sector neutrality, New Zealand’s Statement of Concepts, and the overarching notion of authoritative support and GAAP Indeed, the measure of a good accountant is their ability to argue for an accounting treatment that best suits their client, and this results in the old accounting joke, of 100 accountants looking at the same figures providing 100 different results In short, and as an example of this, consider the view that Moore presents of the rules of accounting Moore equates the rules of law with the rules of accounting by holding that there are similarities between the disciplines in the claim to bodies of written and unwritten rules of judgment and conduct.127 Thus, it is submitted that the general accounting ‘expectation gap’ is relevant to the consideration of the lessons that critical accounting can learn from CLS Although the law is riddled with attempts to gain a strategic advantage, the judicial process lays out much of this for public scrutiny This is not the case in accounting; in part, this relates to the difference in the adversarial processes of law and accounting C The Adversarial Nature of Law and Accounting Law is inherently an adversarial process In terms of legal positivism, it is this adversarial nature that often allows law to escape criticism, as it is perceived as being inherently critical For although law is adversarial, it is adversarial within a tight confined framework – that is the confines of legal positivism limit the practice of law to a consideration of a limited notion of adversary – there are degrees of critical But in this light, the adversarial nature is a public process Think of the courtroom The notion of judges, lawyers, witnesses, defendants, and prosecutors is a forum that displays at its every turn, the processes of adversary Lawyers contend, counter-contend, judges intervene and question, witnesses are examined and cross-examined This is a process of adversary Consider for a moment a legal judgment (especially under a common law jurisdiction) Most judgments follow a similar pattern The presiding Judge presents an outline of the case, and the primary issues of law in relation to the case This is usually followed by an outline of the arguments presented before the court The judge the presents his or her (and still this is primarily his) detailed analysis of the issues, law, facts, witnesses, submissions, and any other ‘relevant’ material Based on this the judge will determine the case at hand In this light, it is not uncommon to see the adversarial nature of the judgment process enter into to a judgment, in that a common phrase uttered in the Courtroom is “if I am wrong, then the matter would be decided this way …” What is the point of this discussion? For me as a lawyer and an accountant, this is illustrative of a key point of distinction between the professions If there is a dispute in law, then the public has access to the terms of the dispute But for Moore, the role of the auditor is the equivalent of the role of the judge If there is a dispute in the audit process, the public have access to the terms of the dispute? In most cases, the answer is no, unless the dispute results in a judicial proceeding Law is an inherently adversarial process, but that adversary is deliberately public.128 That is, the legal system has been established with the basic tenet that 127 128 David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763 Of course, there are areas of private law, say a contract, which will never see the light of day, as they will not be disputed before a court 22 law changes over time (that is law is challengeable and changes) Of course the rhetoric of liberal legal theory is that law should change gradually over time, but within the boundaries, due to essential adversarial nature of law, there is scope for change There are a number of ways of course to attempt to persuade a judge: a) The weight of authority - through the process of stare decisis (the rules of precedent) change can occur For example, within stare decisis there exists for scope about authority, including jurisdictional weight That is, in New Zealand, a judgment from the House of Lords or High Court of Australia is likely to have more authoritative effect in a New Zealand Court than, say, a judgment of the United States Supreme Court due to the similarities of the Australian and United Kingdom legal systems in comparison to the Constitutional based Supreme Court b) The presentation of evidence and fact - New Zealand Courts operate within an open adversary process As a consequence, formal briefs of evidence are passed between Counsel Thus the scope for court theatrics is diminished, but there is still scope in cross-examination to convince the court of your particular case c) Public policy – In relation to statutory law, there is a need for interpretation, and again, within a limited framework, there is scope for arguing for alternative meanings and intentions This allows the introduction of other forms of evidence such as Parliamentary debates to provide more informed understandings of the text of statutes Further, the law is open to arguments based on public policy These can be successful, but the general rule is that such arguments should be factually based Accounting, similarly, is an inherently adversarial process – accounting is built around suggested practice, authoritative support, conceptual frameworks, and GAAP Essentially, then, there is an adversarial process within accounting, but it plays a significantly different role than the adversarial nature of law The adversarial nature of accounting is not for public display, nor publicly available – all that the public receives is the public accounts (the annual reports) This numerical document is not particularly informative, and it is even harder to argue with What does a profit mean? How does one challenge it? If the adversarial process that leads to the construction of these results is not publicly open to challenge and is locked in the vault of the accounting firm and the preparing accountants, then this represents a significant difference between law and accounting The process of accounting, then, is not the equivalent of the process of law The practice of accounting, contrary to the impression from Moore’s original paper, is essentially hidden from public consideration, observation, criticism, and discussion This is the power of the categories, representation, summation, and aggregation of the process of accounting Assets, liabilities, revenues, expenses, capital, and profits, for example, are integral accounting concepts, but they are the result of a process of subjective, value-laden choice In that sense, evidence of the adversarial process of accounting is lost in the translation of that process to the technical categories and formal presentation of the accounts of a business At no stage is this paper attempting to deny that accounting has many public functions, or that there is public space within accounting Of course there are examples of public contestation of accounting figures, and there are examples where the Courts and other regulators have ‘questioned’ accounting figures In particular, one of the key policy decisions facing the area in which I live is the ‘best’ method of improving a section of road known as 23 the Western Corridor It is clear that improvements are required to this section of road, or that an alternative route must be constructed This has resulted in considerable public debate about the ‘best’ option, and a number of factions have emerged However, the result of this division is that the Transit New Zealand’s costing estimates are fair game People contest accounting figures, with costs varying for one project from $683 million to $1.3 billion 129 But the degree of this contestation is significantly reduced from the public contestation of law and legal processes, and significantly less common.130 Finally, on this point, the challenge for critical accounting does remain In essence, who is the client? It is my belief that critical accounting should not merely be the sole domain for critical accounting academics CLS, itself, is not solely confined to CLS academics, and can always appeal to the openly adversarial nature of law Critical Accountants, here, face a hurdle If, as Althusser, argued, ‘accounting is the language of capitalism’, then critical accountants will struggle in their pursuits if it is an attempt to convince capitalists that they should change their accountings Clearly, that is a difficult, if not a hopeless task Given the tenets of the accounting system that the neo-classical economic platform of rational actors, shareholder wealth maximisation, and agency theory, there is little room for the acceptance and introduction of alternatives 131 Of course, there will always be exceptions, but are we searching for the exception? The challenge to critical accounting, and this is definitely improving, is to find the client In terms of lessons to be drawn from CLS, critical accountants should be looking to successful CLS work concerning the essentially private areas of law, which are not subject to the open adversarial processes of other areas of law D Evaluating the Differences These subtle theoretical differences between law and accounting, between the position of the two disciplines: critical audience, the accounting expectation gap, and the differences in the adversarial nature of the two disciplines are important We accept that law and accounting are broadly similar, but the differences are significant, and consequently it is difficult to draw direct comparisons between CLS and critical accounting The submission is not that the two disciplines and the two critical movements are not interrelated or that they cannot learn from each other, but that there are significant differences that inhibit and challenge a mere translation between the two disciplines and critical movements Thus, in drawing the lessons from CLS to critical accounting, and mindful of the fundamental difference in audience, we should be aware of certain differences between law and accounting 129 130 131 See for more debate on the proposed Western Corridor road improvements For example, consider a legal or accounting firm In short, what is the driving force behind the success or failure of any accounting firm? Of course, many will argue that profits drawn from a client base is the key to success, but before we can claim that, it is necessary to have human capital That is, without the accountants and lawyers to aid and advise clients, there would be no profits being drawn Question: how does accounting treat the vital component of human capital, so important to success or failure? Accounting treats human capital as a cost Accounting has no ‘accepted’ method for the recording of human capital It is argued that such recognition is too ‘subjective’, and that ‘human capital’ in today’s society is simply too mobile, and that there are difficulties over the notion of ‘control’ within the definition of assets in accounting Yet, what is the implication of treating the lifeblood of a business as a cost? Traditional management accounting theory, of course, would argue (in a simplified form) that any business should seek to minimise costs In some ways, this will serve as a thinly veiled critique of the engagement practices of social accountants and the business-praxis model Many social and environmental accountants favour working with and alongside business I am not sure, personally, if this strategy is likely to be successful 24 V SUBMISSION TWO – THE ‘DEATH’ OF CRITICAL LEGAL STUDIES Moore was correct in that critical accounting could learn from CLS However, this second part of the paper will argue that there are important lessons that critical accounting should draw from CLS that Moore fails to acknowledge There are three areas in particular that draw from the experience of CLS that critical accounting should learn from: 1) The perceived failure of CLS to be ‘critical’, ‘radical’, or to put things at risk; A 2) The need for a supportive, committed community; and 3) The CLS scholars and the tenure wars Putting Things at Risk: Accounting and Law One of Moore’s prime critiques of the critical accounting movement is that it places nothing major at risk However, for me, one of the primary reasons underpinning this difference is critical accounting’s pre-occupation with methodology Moore criticises accounting for “[t]he hopelessly indirect social-science prose style of accounting research” 132 Methodological issues are vitally important, but in attempting to exist in both CLS and critical accounting environs, there is a significant difference between the scholarship of CLS and critical accounting A lot of accounting research is directed to following the pattern of previous research In writing my first accounting research project as an Honours student, I struggled immensely with attempting to follow this pattern: method, methodology, a structured literature review, and research limitations In short, for an experienced researcher in law, this was a completely foreign experience For law, there is a plethora of research, but a dearth of research processes or methodology Legal research focuses much more heavily on the problem, which is a method in its own right However, accounting research focuses much more on methodology In my respectful submission, this is falling into the hands of the accounting positivists That is, accounting positivists are able to essentially ignore the critical attack on accounting by focusing on the methodological differences For example, three common limitations presented in critical research is that the research is subjective, the research is not repeatable, and that the research is not generalisable Provided that there is an accepted or acceptable methodology and method applied to the collection and analysis of data relevant to the site of study, then it is counter-intuitive to attempt to apply ‘objectivity’ criteria to the material If, as Morgan discusses, “objectivity is always as much as part of the observer as the object observed”, then all research is subjective Equally so, on a strict basis, no research is repeatable, because all research is particular to the observer, and further all research is particular to the conditions and time of the original research Finally, in this respect, the failure to generalise from alternative research is an overplayed card – research will always be limited by the particularities of the site of study Let me simply state that critical and alternative research is generally based upon a social constructionist epistemology – subjectivity and subjectivism abounds It is vital that all researchers are aware of alternative research paradigms, as it should provide valuable insight into a researchers particular paradigm at any one time, but there is no meta-paradigm All research should not be adjudged according to the rules of a leading 132 David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763, 783 25 paradigm Just because positivism dominates both the practice of law and accounting should not result in all research being judged in relation to the foundations of the positivist paradigm As Moore notes about CLS and claims to ‘scientific objectivity’, the language of the positivist accounting researcher is “one more rhetorical strategy”, which is “conservative in nature”, and “historically been possessed by those already in power” 133 In my experience in accounting research, compared to legal research, accounting research critical theorists and other alternative researchers spend too much time addressing the positivist paradigm In doing this, it is easy to fall into the positivist traps In this sense, nothing major is placed at risk because serious research is discarded on the basis of methodology and method Evaluating the Risks Taken by Critical Accounting Moore argues that:134 “[Critical accounting] suggest[s] no serious or consistent consequences for its critique … the critical attacks have placed nothing major at stake” In essence, I have never been fully comfortable with this claim, largely due to Moore underlying reasoning for this claim Essentially, Moore argues that critical accounting has failed to put anything at risk, as comparatively, CLS has achieved much more influence and ‘success’ than critical accounting In contrast, Moore comments that:135 CLS also sees reality not as objectively available outside of discourse, but as socially constituted in signifying systems But unlike critical accounting, CLS makes clear what is at stake in this battle over reality: control over social ‘facts’, and control over the US Constitution As a consequence, critical accounting has ‘placed nothing major at stake’, for as Moore discusses:136 Why is this? Is it because accounting’s Critical epistemological theorizing has gone on n closed rooms only? If so, then, this is a major weakness, for how can you claim to have attacked, if your adversaries are still not aware that they have anything to lose … the point for accounting, though, remains: claims to epistemology have consequences, and these consequences must be insisted upon if one wishes anybody to engage you in serious debate Argument over the comparative successes of the critical schools is a particularly misleading and ‘dangerous’ exercise ‘Success’ and critical theory, conceptually, not necessarily see eye-to-eye Critical theory will often seek change, but measures of change are difficult to gauge My worry is that if we begin to consider success, then this seems to implicate natural progression and some finality Sure in law we can point to human rights, gender equality, discrimination laws, and the list goes on; but in accounting we could point to sustainability accounting, increasing access to accounts for Trade Unions and employees, and changes to the education process But in short, a huge number of problems exist in both disciplines And further, are we happy or satisfied with the changes that have occurred: Do we really have equality? Are there issues with the notion of ‘universal’ human rights? Why we need discrimination laws in the first place? Are we really sustainable? Critical theory is not medicinal; it is not supposed to be a panacea In discourse terminology, any ‘solution’ 133 134 135 136 Moore, above, 776 Moore, above, 775 Moore, above, 775 Moore, above, 775-776 26 is contested and contestable Changes not eliminate power from society; power relations still exist and may change form and influence To me, the risk of claiming successes would seem to implicate some sort of positivist agenda, in the capacity of gradual change over time Evaluating the Risks taken by CLS If Moore critiques of critical accounting for the failure to place nothing major at stake, then the impression from this evaluative statement must be that CLS, comparatively, had been successful at placing major things at stake Moore argues that CLS has been “much more aggressive in pointing to the consequences of the various theoretical stances … CLS … is a much broader-gauge movement than Critical Accounting insofar as … CLS has extended the scope of its critiques to may everyday practices, has taken a maverick stance within the legal profession, and has gone beyond pure critique by presenting alternative program for justice”.137 Really? With respect to Moore, this overly romanticises CLS, the significance of CLS, and the success of the CLS movement There is a distinct thread of CLS scholarship that criticises the attempts of CLS for failure to put anything major at risk in liberal legal theory For example, Goodrich, in a ‘famed’ article challenges the politics of the CLS movement in the United States of America 138 “Sleeping with the Enemy” is an essay that examines contemporary CLS and its attempts to create “a justice of the future” For Goodrich, CLS fails in its ‘radicalism’ because it focuses on “a reality whose object is defined by the citation of other critical legal texts” 139 In a call to CLS to engage in the political-praxis invoked by critical theory (and this, in my mind, is one of the lessons that critical accounting must learn), Goodrich argues:140 The politics of legal critique are the politics of a particular profession, a questioning of the law of law, and also a questioning of our place within and responsibility for the tradition The marks of politics in the discourse of critique are neither familiar nor obvious: they not relate directly to a specific content or program but rather to an ethics; they not belong directly to a given tradition but rather to a necessarily ambiguous and potentially subversive place or space in the legal academy … The politics of reason is not simply a local politics; it is oppositional, fragmentary, and frequently obscure Brosnan provides a detailed critique of the CLS movement in relation to its attacks on liberal legal theory (LLT), the dominant (legal positivist) paradigm through which law operates.141 Brosnan carefully enunciates a critique of CLA holding the thesis that:142 CLS … has not succeeded in forming, or perhaps even laying the foundations of, a radical critique of LLT … Simply, Moore has overstated the case for CLS Critical theory, in general, faces this issue, and thus, while critical accounting has not necessarily succeeded in avoiding this problem, neither has law For ‘progressive social change’, critical theory must put something 137 138 139 140 141 142 Moore, above, 780-781 Peter Goodrich “Sleeping with the Enemy: An Essay on the Politics of Critical Legal Studies in America” (1993) 68 New York University Law Review 389 Goodrich, above, 420 Goodrich, above, 422 Boyle raises similar polemical concerns about the nature of CLS jurisprudence in James Boyle “The Politics of Reason: Critical Legal Theory and Local Social Thought” (1985) 133 University of Pennsylvania Law Review 685 Donald F Brosnan “Serious but not Critical” (1987) 60 Southern California Law Review 259 Brosnan, above, 263 27 at risk Critical accounting can learn from the inability of CLS to make significant steps in forming a critique of liberal legal theory B The CLS Community? Moore argued that one of the key problems facing critical accounting in relation to CLS was that there was “[a] lack of Critical self-declaration of community” 143 Moore comments, further, that, “it is worth noting again that CLS has been an independent membership organization since its earliest days in the 1970s” 144 But while the early years were perhaps marked by the existence of the Conference of Critical Legal Studies, this was a fairly short-lived experience, and was essentially gone by the mid-1980s In short, the CLS ‘community’ is non-existent Duncan Kennedy, arguably the most well-known CLS scholar, is famous for commenting that CLS in the United States is “dead, dead, dead’.145 For many contemporary CLS scholars, the lack of a CLS ‘community’ is exactly the challenge facing CLS today For CLS, there is no “venue within which everyone who identifies himself or herself as a critical legal scholar can come together” 146 For example, Tushnet notes that in the early development of CLS, the leading scholars rejected the idea of creating a specialised journal.147 Drucilla Cornell, a well-known Feminist Legal Theorist, comments in an interview that:148 Regrettably there's very little organized presence of either Critical Legal Studies or what were called the `femcrits' in the legal academy in the United States in 1994 In the late seventies and early eighties when I was a law student, there was something that was called the Conference of Critical Legal Studies, and it had the effect of being a movement We had yearly conferences; there was a sense of political intervention in the academy, as well as academic discourse promoted by critical legal studies The femcrits came out of a confrontation of feminists with critical legal studies over the impossibility of feminists being heard … For several years the femcrits were an organized presence, but all that has been dispersed There are still women who would consider themselves as writing in feminist jurisprudence, and there are still people who would consider themselves associated with the Conference of Critical Legal Studies, but the experience of movement has disappeared There was some repression, meaning that people were fired - myself and Clare Dalton being two examples, although there are many more Critical accounting, comparatively, despite the difficulties in achieving institutional ‘acceptance’ has managed to achieve, I would submit, a fairly strong sense of community It is not particularly large, but the community of like-minded or like-motivated individuals are 143 144 145 146 147 148 David Chioni Moore “Accounting on Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting” (1991) 16 Accounting, Organizations and Society 763, 783 Moore, above, 783 See Robert C Ellickson “Trends in Legal Scholarship: A Statistical Study” (2000) 29 Journal of Legal Studies 517, 525 in footnote 21 Mark Tushnet “Survery Article: Critical Legal Theory (without Modifiers) in the United States” (2005) 13 The Journal of Political Philosophy 99 Tushnet also argues that Kennedy over-stated the death of CLS, commenting that: 1) “those who wrote important articles early in the career of critical legal studies continue to so” and 2) “major components of critical legal studies have become the common sense of the legal academy” Tushnet, above, 101 Reasons cited for this choice include the diversion of energy required to establish a journal, that the large number of existing journals provided adequate outlets for publications, and that publishing in a ‘captive’ journal would affect tenure for junior staff The text of the interview with Professor Drucilla Cornell can be found at (last accessed 28 February 2006) 28 committed to the ‘cause’ The existence of the tri-annual cycle of the IPA conference (Interdisciplinary Perspectives in Accounting), CPA (Critical Perspectives on Accounting), and APIRA (Asia Pacific Interdisciplinary Research in Accounting) are illustrative of the success of the drives in accounting to develop ‘community’ In this respect, critical accountants have been, I would argue, more ‘successful’ in fostering a community of support than CLS The lessons to learn include: a) ensuring that there is space for the publication and debate of critical accounting work, and consequently, the ‘alternative’ or critical journal arrangements need to continue; and b) it is vital to continue the conference program, as the conference atmosphere is vital for support, community, and the building of more informed, more developed research C Tenure Wars A short Internet search on Critical Legal Studies and tenure soon highlights the issues for CLS scholars in relation to obtaining tenure in the United States There are many examples, some of them high profile, of ‘tenure wars’ over CLS scholars being denied tenure In particular, major examples include Harvard Law School, Yale Law School, and Minnesota Law School The clashes between the critical theorists and the liberal legal theorists escalated to the extent that Harvard was labelled “the Beirut of legal education” 149 Cornell, in the same interview comments that:150 [The denial of tenure] was seen by people in the Conference of Critical Legal Studies as a response to our association with them I'm a leftist, so when I became a law professor I affiliated with the left that was available to me, but my own intellectual and political history is very different from the Conference of Critical Legal Studies Austin discusses the Harvard conflict at length in a book entitled The Empire Strikes Back He summarises the Harvard conflict in the following manner: The Harvard conflict revealed much about power, motive, and strategy Even with support from a circle of sympathetic friends, the Crits did not have the numbers to pose a serious threat On the Liberal side, the bitterness cut deep, prompting liberals to retaliate against the Crits with the ultimate academic weapon: a lockout on promotion and tenure As a tactic it was successful; as strategy it was a disaster The Crits wrapped themselves in the cloak of martyrdom, yelled about academic class warfare, and accused the dominant Liberal authoritarians of beating up on the vulnerable Critical Legal Studies people They played the oppression game of victimology politics Within a short time the oppressed category was expanded to include feminists and minorities … Push always comes to shove when the issue is scholarship As the Harvard experience demonstrates, scholarship is where the power resides, and control of scholarship is control of the legal academy Since the turn of the century, Liberals have used the treatise and the analytical style of the doctrinal methodology to educate and guide judges, lawyers, and law professors Everything in the academy, from hiring, promotion, tenure, and salary to the world of perquisites, depends on adherence to the accepted criteria of scholarship 149 150 Arthur Austin The Empire Strikes Back: Outsiders and the Struggle over Legal Education (New York University Press: New York, 1998) The text of the interview with Professor Drucilla Cornell can be found at (last accessed 28 February 2006) 29 Perhaps CLS is not dead Tushnet is correct to point out that the leading CLS scholars, “those who wrote important articles early in the career of critical legal studies, continue to so”.151 There have been changes in legal education, and as Moore argues there have been significant institutional, legal changes which could be tied to the CLS movement, such as gender equality and discrimination laws However, Tushnet is equally correct in pointing out that CLS scholars are far less likely to use the label CLS in their work: “Works self identified as critical legal studies, full stop … are rare” 152 In a different sense, critical accounting has dealt with this issue, in relation to journal publications The existence of gatekeepers of knowledge will always be an issue in academia For accounting, the existence of gatekeepers is no better illustrated than in relation to the journals and the Atlantic divide Academic accounting in the United States is dominated by the positivism There are the academic exceptions who have enjoyed successful careers in the US, but few Critical Accountants have managed to enjoy success at the top US business schools – and this partly to with the control that businesses have over US business schools But in saying that, most accounting academics would note that the perceived top accounting journals tend to be positivist, and tend to be based in the US The CLS, tenure experience is a lesson that critical accounting should learn VI CONCLUSION This response does not dispute the main message from Moore’s original article in that critical accounting can learn valuable lessons from CLS, but rather, this response seeks to argue that the lessons to be learned requires modification from those identified by Moore The essence of the original judgment is that critical accounting can learn from CLS, as they are broadly similar disciplines I cannot agree It is not possible, in my submission, to directly translate CLS to critical accounting Rather, there are lessons that critical accounting can draw from CLS, but in doing that, critical accountants need to draw out the nuances and subtleties of accounting that render it sufficiently different from law In particular, this includes the differences in the critical audiences of law and accounting, the general accounting expectation gap, and the private adversarial process of accounting In the latter part of the paper, it is argued that there are a series of lessons that critical accounting could draw from CLS based on the difficulties and challenges faced by CLS These include the perceived failure of CLS to be ‘critical’, ‘radical’, or to put things at risk, the failure of CLS to develop a supportive, committed community, and the experience of CLS scholars in relation to the denial of tenure and the associated tenure wars In short, critical accounting can learn many important lessons from CLS, but unfortunately, it is not a direct translation due to the subtle differences between the two disciplines VII BIBLIOGRAPHY AND REFERENCES Books and Article 151 152 Mark Tushnet “Survery Article: Critical Legal Theory (without Modifiers) in the United States” (2005) 13 The Journal of Political Philosophy 99-100 Tushnet, above, 99 30 Louis Althusser Avertissement aux Lectures du Livre du Captial: Karl Marx, Le Capital (Flammarion, Paris, 1969) Andrew Altman “Legal Realism, Critical Legal Studies, and Dworkin” (1986) 15 Philosophy and Public Affairs Arthur Austin The Empire Strikes Back: Outsiders and the Struggle over Legal Education (New York University Press: New York, 1998) Katharine T Bartlett “Feminist Legal Methods” (1990) 103 Harvard LR 829 Leslie Bender “An Overview of Feminist Torts Scholarship” (1993) 78 Cornell L Rev 575 James Boyle “The Politics of Reason: Critical Legal Theory 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Zealand [ICANZ] New Zealand Accounting Standards (Wellington, ICANZ, 2003) of the ‘Statement of Concepts’ New Zealand Accounting Standards, above Christopher J Napier “Intersections of Law and. .. Trial: The Critical Legal Studies Movement and its Lessons for Radical Accounting”.1 This exploratory paper sought to identify various lessons for critical or radical accounting from the Critical Legal