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’”In 1991, Accounting, Organizations and Society published a paper by David Chioni Moore entitled “Accounting on Trial: The Cr

Your Honours, An Appeal: Re-litigating

PO Box 600 Wellington NEW ZEALAND David.Carter@vuw.ac.nz +64 4 463-5233 extn 7009

“Your Honours, An Appeal: Re-litigating ‘Accounting on Trial’”

In 1991, Accounting, Organizations and Society published a paper by David Chioni

Moore entitled “Accounting on Trial: The Critical Legal Studies Movement and its Lessonsfor Radical Accounting”.1 This exploratory paper sought to identify various lessons forcritical or radical accounting from the Critical Legal Studies movement [CLS hereafter] Inparticular, Moore identifies some tentative theoretical links between the two disciplines,

which is possible, given the relatively similar historical roots.2 From this, Moore develops thethesis that in relation to CLS the critical accounting movement,3 at the time of writing, wasundertaking a ‘realist’ examination of accounting.4 One of the prime reasons for writing aresponse to the Moore article is that there has been no substantive engagement or responsewith the paper In my mind this is concerning, and in that capacity, I am moved to respond.5

It is not that the essential thesis is problematic in respect of critical accounting, but rather thatthe mode of comparison between law and accounting, and thus, between CLS and criticalaccounting is incomplete and concerning

In terms of the interface of law and accounting from a critical perspective, there islimited research,6 although there is a body of work that considers the boundaries of theinterface.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 Thisessay collection provides some guidance for considering the scope of the interaction betweenaccounting and law The book is largely an exploratory work and has more of a pragmaticfocus Little work is done on identifying any interconnecting or explanatory theory betweenthe disciplines Furthermore, although interdisciplinary in nature, with work by both legaland accounting academics, there is no criticism of the interaction or relationship between thetwo disciplines The chapter by Napier and Noke considers,9 historically, the relationshipbetween 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

1 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.

2 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.

3 Moore, above, 768.

4 Moore, above, 768.

5 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.

6 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 791; Christopher McCrudden (ed) Regulation and Deregulation: Policy and Practice in the Utilities and

763-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)

7 But not necessarily the interface itself of the two disciplines.

8 Michael Bromwich and Anthony Hopwood (eds) Accounting and the Law (Prentice Hall International

(UK) Ltd, Hertfordshire, 1992).

9 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 isapparent conflict between the two professions, as “the role of accounting in [the] relationshiphas been an essentially subordinate one” and “the respective claims of the accountants andlawyers to professional expertise have been expanding, bring the professions into increasingcommercial rivalry”.11 The chapter by Bromwich and Hopwood is much more about theintertwining of the two professions, but takes a strongly pragmatic focus.12 It is largelyconcerned with presenting an overview of the contents of the collection of chapters, but itlooks closely at the regulation of accounting by law.13

This paper seeks to add to the debate, and accepting that critical accounting can learn fromCLS, this paper will focus on two questions in particular:

1) What lessons can CLS teach critical accounting? It will be argued that criticalaccounting needs to be careful in drawing lessons from CLS, in that, there aresufficient subtle, but important, differences between the two disciplines of lawand accounting, that it is not merely a case of translating CLS to criticalaccounting

2) What is the interrelationship between law and accounting? The relationship istwo-way: law tends to shape accounting, and increasingly accounting relies onlaw to provide the space for the practice of accounting, but equally, accountingplays a vital societal role, defining expectations, interaction, and power relations,through the provision of information For example, law is increasingly reliant onaccounting for the provision of a wealth of information that the law requires inorder to function

The predominant issue concerning this re-examination of Moore’s 1991 paper is theinterrelationship between law and accounting, and in particular, the lessons that criticalaccounting can draw from Critical Legal Studies Moore’s conclusion in the paper is thatthere are series of lessons that CLS can teach critical accounting While this paper accepts thebasic 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 differencesbetween 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 accountingcan learn from CLS, and finally, the lessons that critical accounting can learn from CLS Asstated earlier, I am not disputing Moore’s essential thesis that in relation to CLS the critical

10 Napier and Noke, above, 31.

11 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.

12 Michael Bromwich and Anthony Hopwood ‘The Intertwining of Accounting and the Law’ in Bromwich and Hopwood, above.

13 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, theaim of this paper is to draw out some of the lessons that critical accounting should take fromCLS 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 twosections, following the introductory comments:

1) Differences between law and accounting, and consequently betweenCLA and critical accounting that Moore does not acknowledge

2) Further lessons that critical accounting should draw from CLS thatMoore 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 thataccounting and law are intertwined social institutions Thus, the critical accounts of law andaccounting should equally be intertwined and should prove illuminating

Napier and Noke acknowledge that at the interface of law and accounting, “[l]awprovides a framework for accounting while accounting produces information for theprocesses 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’sinfluence over the scope and shape of the discipline.19 In terms of practice, the law oftenaffects accounting in that legal parameters define the operation of accounting.20 In NewZealand, for example, Parliament, by law, designated the Accounting Standards ReviewBoard (ASRB) as the appropriate authority to determine the delegated legislation of Financial

14 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.

17 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.

18 Craig Deegan and Grant Samkin New Zealand Financial Accounting (McGraw-Hill Book Company, Auckland, 2001) 273

19 Napier and Noke, above, 32.

20 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 withgoverned by law, but much of the work of accountants is conducted “within particular legalstructures”.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 avital role in shaping accounting as a discipline These links between law and accounting arereinforced through education For example, in order to qualify for chartered accountancy inNew Zealand, it is necessary for the accounting student to undertake a series of commerciallaw 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 increasinglysignificant Thus, as the uses of accounting information vary widely, it is difficult to draw theboundaries 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 perhapsoverlap (this category includes areas such as tax, industrial relations, auditor’s liability, andperhaps intellectual property);26 and 2) An increasingly broader range of legal processesrequire an increasingly broad range of accounting processes and information flows (whilethere is no direct overlap or intersection between the two disciplines, the interface arises asthese areas require accounting information, such as the law of contract, conveyance, bankinglaw, company law, insurance law, and torts to name a few) Although the interface betweenlaw and accounting is incredibly vast, and it continues to grow, what is most interestingabout the interface is that the law very rarely passes direct judgment upon accounting, theaccounting process, or the accounting number Hadden and Boyd comment that irrespective

of the apparent simple marriage of the two disciplines, there is considerable conflict betweenthem.27

21 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).

22 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 do 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

23 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.

24 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.

25 Christopher Napier and Christopher Noke ‘Accounting and the Law: An Historical Overview of an Uneasy Relationship’ in Bromwich and Hopwood, above, 30.

26 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, accountinginformation (both financial and non-financial) plays important and useful roles in the law oftrusts, 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 increasedinformation disclosure (including accounting information) in collective bargaining inemployment law.29 Thus, legal processes, be they judicial, legislative or other, areincreasingly requiring accounting information

In relation to this information-provision role, McBarnett and Whelan argue that thegreatest challenge, amongst many challenges, facing legal regulation is ‘creativeaccounting’.30 Although they define creative accounting broadly, they include specificexamples such as uncommon acts of direct fraud or flagrant breaches of accountingstandards However, McBarnet and Whelan point to more subtle attempts to ‘subvert’ theregulatory process, the passive resistance evidenced by regulated entities ‘playing thesystem’ Tactics employed in ‘playing the system’ include calling the bluff of the regulatorthrough challenge, or by being aware of litigation budgets of regulators (which are usuallygrossly under funded) In respect of ‘creative accounting’, it is often incredibly difficult torecognise, 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 vitalcomponent – ‘creativity can still be perfectly legal’ – loopholes exist McBarnet and Whelanargue that in seven years of investigations by the United Kingdom’s Financial ReportingReview 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 lawand accounting may be useful, including, but not limited to work by Napier and Walker.32

27 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.

28 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.

29 See, in particular, Employment Relations Act 2000, s 31 (entitled “Providing information in bargaining for collective agreement”).

30 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).

31 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.

32 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’scomment that there is apparent conflict between the two professions.33

Fact plays an important role in law In considering the representation of accountinginformation within law, the day-to-day practice of law (legal positivism) seemingly treatsaccounting 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 do 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 ofaccounting within law However, the fundamental question revolves around the descriptivenoun of ‘fact’ To label as ‘fact’ invokes certain notions of truth, of objectivity, of generalacceptance, 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 financialinformation could lead to a variety of accounting answers due to the ability to manipulateand 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 toaccomplish various desired objectives and, therefore, it is not based on fundamental laws orabsolute 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 slightlydifferent light, in relation to ‘our desire’ for accountability:41

many more, and these are just a brief selection.

33 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.

34 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.

35 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.

36 Roger Hussey and Arthur I Marsh Disclosure of Information and Employee Reporting (Aldershot,

Brookfield 1983) 154.

37 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.

38 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.

39 Catlett, 1960, 44.

40 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 oflaw and accounting, is that these professions are not in a vacuum.42 That is, these professions

do 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 lawwithin 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 societalrole 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 ofthe great civilising forces in society”.44 Few such philosophers, though, have considered theposition of accounting Apart from Althusser’s conception of accounting as the language ofcapitalism, there is little philosophical treatment of the societal influences of accounting.Perhaps, this is due to the more recent, historically speaking, development of an accountingprofession, 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 forRadical Accounting”,45 Moore argues that the critical accounting movement,46 at the time ofwriting, was undertaking a ‘realist’ examination of accounting.47 Hence due to the differingpositions of the respective critical theory movements of law and accounting, critical legalstudies 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 CLSmovement “has become the most powerful and divisive phenomenon since the 1930s inAmerican 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 similarhistory in the serious criticism of the realist epistemology that a ‘reality consists

of a world out there’, capable of objective depiction and measurement, and whichexists independently of the social actor.49 Moore acknowledges that criticalaccounting provides varied attacks on traditional positivism, but criticises critical

41 Jane Broadbent “Critical Accounting Research: A View from England” (2002) Critical Perspectives on

Accounting 443, 445.

42 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.

43 Lloyd, above.

44 Lloyd, above.

45 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.

46 Moore, above, 768.

47 Moore, above, 768.

48 Moore, above, 763

49 Moore, above, 774.

accounting for, in Moore’s words, “suggest[ing] no serious or consistentconsequences for its critique … the critical attacks have placed nothing major atstake”;50

2) Moore criticises accounting’s employment of Foucauldian theory as limited andill-informed, resulting in “politically conservative” critical accounting.51 Moorenotes that the integration of Foucauldian theory in critical legal studies has beenboth broad and deep, while the integration in accounting, in contrast, has been

“less widespread and more … procedural”.52 By this, Moore accuses criticalaccounting theorists of employing Foucauldian theory “without abiding by thevision 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 thepotential 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 inthat such concepts are used for “strategic convenience”.56

4) Moore examines the parallel work in CLS and critical accounting in relation tocontracts 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’ assumptionsunderpinning much of the contract theory in law and accounting

5) Moore argues that CLS has been “much more aggressive in pointing to theconsequences of the various theoretical stances” despite CLS and criticalaccounting sharing a similar background and theoretical and intellectualheritage.58 Moore presents examples where CLS has ‘gone further’ than criticisingthe ‘objectivist’ epistemological assumptions of the dominant paradigm

a) “Daily-life-of-the-law exposé – For Moore, this is not represented within thecritical accounting work of the time CLS scholars have “go[ne] to the street

to unmask what effects existing jurisprudence has on … everyday, individuallives”.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.

bargaining, and the patriarchal views embedded in definitions of rape andother sexual crimes.

b) “Maverick posture within the profession” – For Moore, there is a clear

“institutional restraint, characteristic of the profession, present in criticalaccounting work”.60 CLS scholars essentially ‘take no prisoners’ For Moore,the key thing is that CLS scholars “see no difference between the standardlegal theory they oppose and the institution that created it”.61

c) “Radical political program” – Moore argues that the CLS “program is pure-capitalism and anti-hierarchical, quite experimental and often highlyspiritual”.62 Moore acknowledges that the development of ‘alternativeprograms’ is troubling for CLS, “but CLS does attempt to reach out and doesengage many of its members in fighting concrete injustices”.63 A seriouscritique of CLS is that:64

anti-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 differencesbetween 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 lessdramatic … [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 criticalaccountants in particular However, before accepting this call to arms, it is necessary tofurther develop and further consider aspects of the interrelationship between law andaccounting and the lessons that critical accounting can learn from CLS

C Critical Theory and Law and Accounting

One must start by knowing what is going on, by freeing oneself from the

mystified delusions embedded in our consciousness by the liberal legal world

view.69

There are strong critical theory movements in both law and accounting, but given thevariety of constituent elements of a ‘critical theory’ movement, it is not appropriate toattempt to define critical theory However, in relation to why critical theory is appropriate forthe study of law and accounting, Chua quotes from Berlin:70

The history of thought and culture is, as Hegel showed with great brilliance, a changing

pattern of great liberating ideas which inevitably turn into suffocating straightjackets, and so

stimulate their own destruction by new emancipatory, and at the same time, enslaving

conceptions The first step to understanding of men is the bringing to consciousness of the

model or models that dominate and penetrate their thought and action Like all attempts to

make men aware of the categories in which they think, it is a difficult and sometimes painful

activity, likely to produce disquieting results 71

Although it is not appropriate to define critical theory, it is possible to deduce somecommon themes or strands of thinking

Critical accounting challenges the dominant mainstream view that accounting is “anobjective, value-free, technical enterprise, representing reality ‘as is’”, while seekingprogressive social change.72 Critical Accountants, amongst many things, argue:

a) that accounting developed as a tool for the maintenance and continuation ofthe power relationships within society;

b) that accounting is a social and technical process in ‘itself’;

c) that it is subject to contextual and cultural variation between accountants andaccountings; and

d) that the discourse of accounting creates and sanctions conceptions of ‘truth’

Central to this challenge is that “every state of existence, be it an individual orsociety, possesses historically constituted potentialities that are unfulfilled”.73 The criticaltheorist assesses the inherent power struggle in the social situation and recommends certainactions in an attempt to ‘empower’ individuals or groups within society.74 With respect toaccounting, critical theorists target the power of accounting, and in particular, accounting’snorm-shaping potential In some ways, accounting has been very clever and in particular, thisrelates to the use of numbers as a means of expression Numbers are difficult to argue with,irrespective of the condensation, representation, and summation inherent in numeration

69 Alan D Freeman “Truth and Mystification in Legal Scholarship” (1981) 90 Yale Law Journal 1229.

70 Wai Fong Chua “Radical Developments in Accounting Thought” (1986) 61 The Accounting Review

601-632.

71 There is an obvious feminist critique of this quote.

72 Gareth Morgan “Accounting as Reality Construction: Towards a New Epistemology for Accounting

Practice” (1988) Accounting, Organizations and Society 477-485.

73 Chua, above, 619.

74 Chua, above, 619.

Furthermore, critical accountants focus on how accounting processes dehumanise humanbeings and society by reducing social relations to measurable, countable entities, or byexcluding them from the measurement process altogether Hence, strands of criticalaccounting have concentrated on broader social and environmental issues The criticalaccountant challenges the ideological assumptions and foundations upon which accounting isconstructed Accounting is a powerful discourse

CLS is a collection of theoretical approaches and strategies that challenge acceptednorms and standards in legal theory and practice.75 Unsurprisingly, these are not substantiallydifferent to critical accounting Critical Legal Theorists, amongst many things, argue:

a) that the logic and structure attributed to law grew out of the powerrelationships within society;

b) that law exists to support the interests of the party or class that form thelaw; and

c) that law is merely a collection of beliefs and prejudices that legitimise theinjustices of society and the interests of a few

The primary thesis of CLS is that law is the site of politic and it is not neutral or value free.Most ideas about law disguise its political nature and functions Much of the reason for thisrelates to the nature of law and the weight attached to law in ‘Western democratic society’

As a consequence, the existing political order is rationalised in the rhetoric of equality, rights,and the rule of law The dominant legal positivist paradigm disguises the structures ofpolitical power by making legal discourse appear to be neutral, value-free, and scientific, byseparating legal discourse from other discourses, particularly moral discourses, and byimposing legal parameters and concepts upon a multitude of societal relations Legaldiscourse attaches great power to ‘property rights’, a legal mechanism that dehumaniseshuman beings and society, abstracting human beings from their social existence, byconstructing them exclusively as the holders of legal rights and the subjects of legal duties.CLS challenges the judgment process, arguing that the legal process is flawed in logic and inpractice, highlighting such concerns as the over-representation of particular parts of society

as adjudicators.76 Further, legal discourse celebrates the individual, and reifies social andpolitical relations between people.77 The role of the critical theorist is to analyse anddeconstruct the material effects of law and the ideological bases upon which law ismanufactured in order to comprehend the power of modern legal discourse as a dominantintellectual paradigm And thus, CLS focuses on the indeterminacy of language and law, on

75 Roger Cotterrell The Sociology of Law: An Introduction (2 ed, London, Butterworths, 1992) 136.

Approaches and strategies include, but are not limited to, feminist legal theory, critical race theory, postmodernism, post-structuralism, psychoanalysis, post-analytical philosophy, linguistics Some accounts

of CLS even include Law and Economics, due to its alternative agenda, Richard Posner Economic Analysis

of Law (4 ed, Boston, Little, Brown, and Company, 1992) 3.

76 The best example of this is the much-used “reasonable person on the Clapham Omni-bus” CLS scholars point out that judges are very good at applying the “reasonable white, greying, middle-aged man on the Clapham Omni-bus” test, and little else Moore acknowledges this, stating that “the two professions [law and accounting] have been overwhelmingly white, overwhelmingly male, and middle to upper-middle class” See 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

77 Cotterrell, above, 136.

the indeterminacy of the relationship between law and society, and that ‘law’ is a discourse

of power.78 Thus, the following sections seek to draw out the key elements of the CLSmovement

As a movement, CLS aims to challenge and overturn accepted norms and standards inlegal theory and practice.79 In essence, CLS radicalises legal realism, focusing on the fact thatlegal language and law is indeterminate, as is the relationship between law and society.80

Austin summarises the basic cause as:81

Laws, decisions, and regulations are indeterminate, full of choices and options that are

denied the oppressed The solution: topple the Establishment, break up the monopoly on

objectivity, and institute communitarianism

Of prime importance to the movement is challenging the social context of law, and,

in particular, critical legal theorists argue that law is in a political mechanism and therefore isnot neutral nor value free.82 CLS scholars threw down ‘the gauntlet’ by defiantly attackingcore liberal legal values and by identifying “various Liberal atrocities committed againsteveryone from law students to minorities”.83 While the movement focuses on the aim ofrealising a ‘better’ world, whatever that may mean for the particular critical theoryintervention, there are a plurality of approaches and strategies used to question the ‘power’ inthe law.84 For example, the scope of CLS spans feminist legal studies, critical race theory,post-structuralism, and Marxist analyses CLS grounds its critique through the view that thelaw:85

reflects ideological struggles among social factions in which competing conceptions of

justice, goodness, and social and political life, get compromised, truncated, vitiated, and

adjusted.

There is considerable inconsistency between the liberal conceptions of legitimacy and radicalindeterminacy – judges make law – judges encounter a range of choices, and in rendering adetermination a Judge not only makes a choice (inherently subjective), but the Judge makeslaw.86 Consequently, the different schools of thought within critical legal studies have theirown particular criticisms of the legal process For example, feminist legal studies focuses itscritique on identifying and demonstrating how patriarchy shapes the content of the law, andseeks to challenge the ability of judges (usually middle-aged, greying, white male tests) tomake objective and impartial decisions.87 Critical race theory concentrates on how traditionaltheories of jurisprudence include explicit or implicit assumptions about race, as well aschallenging the ability of judges to make objective and impartial decisions.88

78 Cotterrell, above, 134-137.

79 Margaret Davies Asking the Law Question: The Dissolution of Legal Theory (2 ed, The Law Book Company, Sydney, 2002) 167-169 and Roger Cotterrell The Politics of Jurisprudence: A Critical

Introduction to Legal Philosophy (University of Pennsylvania Press, Philadelphia, 1989) 210-211.

80 Roger Cotterrell The Sociology of Law: An Introduction (2 ed, Butterworths, London, 1992) 134-137.

81 Arthur Austin The Empire Strikes Back: Outsiders and the Struggle over Legal Education (New York

University Press: New York, 1998) 3.

As indicated, CLS theories have attacked traditional Western jurisprudence in variety

of ways There is considerable scope for attack given that the essential view that the law

“reflects ‘ideological struggles among social factions in which competing conceptions ofjustice, goodness, and social and political life, get compromised, truncated, vitiated, andadjusted’”.89 The prime critique underpinning CLS interventions is that there is considerableinconsistency between the liberal conceptions of legitimacy and radical indeterminacy.90

Essentially, the critique boils down to a similar critique to legal realism: Judges make law.Critical legal theorists state that inconsistency provides a judge with a range of choices, and

in making a determination a Judge not only makes a choice, but also makes law.91

(a) Feminist Legal Studies

Feminist jurisprudence is fundamentally based on the political, economic, and socialequality or inequality of gender.92 This is not a united school of thought, though, and thereare three distinct schools of thought: 1) Traditional (Liberal) Feminism; 2) CulturalFeminists; and 3) Radical Feminism In brief, each school takes a particular view of the role

of law Traditional feminism asserts that as females are just as rational as males, femalesshould have equal opportunities; law is about ensuring those opportunities.93 CulturalFeminists seek to focus on the differences between women and men, and then celebrate thosedifferences.94 Finally, Radical Feminists assert, essentially through Marxist theory, thatmales, as a class, have dominated the class of women This has created inequality betweenthe genders, and as such, this has led to a power imbalance.95

However, irrespective of the differences in the particularities of the strands offeminist thought, feminist legal theorists tend to focus their critiques on the following strands

of thought:

(a) The prime critique focuses on identifying and demonstrating how patriarchyshapes the content of law.96 For example, feminist legal theorists will consider thepatriarchal influence on the development of Human Rights discourse

(b) In accepting that judges do make laws, feminist legal theorists challenge theability of judges to make objective and impartial perspective.97 For example, intort law, judges are experts at applying the reasonable middle-aged, greying,white male test.98

89 See III.2 Critical Legal Studies in <http://www.utm.edu/research/iep/l/law-phil.htm>, quoting Andrew

Altman “Legal Realism, Critical Legal Studies, and Dworkin” (1986) 15 Philosophy and Public Affairs 1, 12.

90 III.2 Critical Legal Studies, above.

91 Roger Cotterrell The Sociology of Law: An Introduction (2 ed, London, Butterworths, 1992) 149

96 See III.4 Outsider Jurisprudence in <http://www.utm.edu/research/iep/l/law-phil.htm>.

97 III.4 Outsider Jurisprudence, above.

98 See the discussion of this above Also, see Stephen Todd (ed) The Law of Torts in New Zealand (3 ed,

Wellington, Brookers, 2001) 309.

(c) The focus is on erasing gender-based distinctions in the law, and to seek equalrecognition of women’s rights.99

(b) Critical Race Theory

Critical Race Theory tends to focus, in a similar fashion to Feminist Legal Studies, onequality The persistence of racism and segregation is the primary aim of the movement, and

in particular, the law’s role in maintaining such institutions The critique is centred on thechallenge to ‘white supremacy’ and “how that has shaped the law at the expense of persons

of colour”.100 There are three primary areas of focus: 1) Historical Racism, especially fromslavery and emancipation; 2) Economic Segregation, in terms of economic segregationthrough the inequality of opportunities; and 3) Cultural Concerns.101

The central concerns of critical race theory concentrate on:

(a) There is a focus on identifying how most traditional theories of jurisprudenceinclude explicit or implicit assumptions about race.102 For example, it wasdemonstrated that Aquinas’ Classical Naturalism did not regard persons ofdifferent colour as being equal before God and equal before the law.103

(b) In a similar vein to feminist legal studies, critical race theorists challenge theability of judges to make objective and impartial decisions.104 Traditionally, ourlegal systems have been dominated by greying, middle-aged, white males Thiscriticism is also charged at legal practitioners and legislators.105

(c) Critical race theorists seek to evaluate law’s role in perpetuating racial and ethnicinequality, reinforcing racial and ethnic stereotypes, and the iniquitous treatment

of law and legal systems For example, certain critical race theorists challengediscrimination laws as a means of perpetuating and encouraging racial separationand inequality

(c) Post-structuralism

Foucault is most probably the leading theorist in this tradition, although there is work

in Derrida, Laclau and Mouffe, Deleuze, amongst others Post-structural jurisprudentialtheory is largely inspired by the “perceived failure of Marxist socialism to deliver its promise

of a society that overcomes exploitation”.106 Foucault has argued, simply, that:107

There is nothing which is not the effect of power, and no form of knowledge which is not

also a form of power.

99 Anne Bottomley “Feminism: Paradoxes of the Double Bind” in The Critical Lawyers’ Handbook Volume

1 <http://freespace.virgin.net/suzanne/boyce/files/book/1_5htm>, 6.

100 See III.4 Outsider Jurisprudence in <http://www.utm.edu/research/iep/l/law-phil.htm>.

101 Alan Thomson “Foreword: Critical Approaches to Law, Who Needs Legal Theory” in The Critical

Lawyers’ Handbook Volume 1 <http://freespace.virgin.net/suzanne/boyce/files/book/1_3.htm>, 1-2.

102 III.4 Outsider Jurisprudence, above.

103 Roger Cotterrell The Sociology of Law: An Introduction (2 ed, London, Butterworths, 1992) 204.

104 III.4 Outsider Jurisprudence, above.

105 III.4 Outsider Jurisprudence, above.

106 Thomson, above, 4-6

107 Thomson, above, 4.

Post-structuralism has broad theoretical aims, including the identification of power, seeking

‘micro-processes of power’ in order to “reveal the possibilities of resistance”.108 Second,post-structuralism provides an open invitation to reconsider and study text ‘anew’ “todiscover new and suppressed meanings”.109

(a) In a direct attack to legal positivism and legal formalism, poststructuralists arguethat there is no one correct way of applying the law, and in fact, there aremultiple, equally valuable interpretations of the text Legislators, Judges, andlegal practitioners are as biased and fallible as all other citizens.110

(b) As society changes and the implications of language change, a claim to truth willsimilarly change “No text can ever sustain the basis on which it makes a claim totruth”.111 This, potentially, could pose a challenge to precedent based law

Clearly, due to historical position of CLS, and the similarities between the ‘targets’and ‘objectives’ of the critical accounts of law and accounting, critical accounting can learnmuch from CLS In that light, let us turn now to consider the aspect of Moore’s article

108 The main theoretical tendencies and innovations of post-structuralism can be summarised as follows:

1) The critique of Renaissance humanist philosophy, the rational, autonomous, self-transparent, subject of humanist thought, and the privileging of human consciousness by phenomenology and existentialism

2) A Saussurean-informed theoretical understanding of language and culture in terms of linguistic and symbolic systems, where linguistic signs act reflexively rather than referentially.

3) An acceptance of the Freudian notion of the ‘unconscious’ and in hidden structures or historical forces that, to a large extent, constrain and govern our behaviour

socio-4) A shared intellectual inheritance and tradition based upon Saussure, Jacobson, the Russian formalists, Freud, and Marx, among other thinkers This shared intellectual history is a complex theoretical mix.

5) Post-structuralism holds an interest in critical history through a re-emphasis on “diachronic analyses, on the mutation, transformation, and discontinuity of structures”, on repetition, and genealogy

6) Post-structuralism challenges the rationalism and realism that structuralism continues from positivism, with its faith in scientific method, progress, and the capacity of the structuralist approach to discern and identify universal structures of all cultures and the human mind

7) The rediscovery of Nietzsche and Heidegger’s interpretation of Nietzsche as the “last metaphysician”

8) A critical philosophy of technology, in relation to developing Heidegger’s notion of technology 9) A deepening of democracy and a political critique of Enlightenment values.

10) There has been substantial development of political thought and political reason in relation to Foucault’s notion of “governmentality”.

11) Many post-structuralist thinkers focus on the politics and philosophies of difference, and how difference is developed, used, and applied in different ways.

12) There is a suspicion within post-structuralism of meta-narratives, a suspicion of transcendental arguments and viewpoints, combined with the rejection of canonical descriptions and final vocabularies

13) The diagnosis of “power/knowledge” and the exposure of technologies of domination based upon Foucault’s analytics of power

14) Post-structuralism critiques the politics of global knowledge, global information, the global society, and the global economy The new production of knowledge and the global knowledge economy, together with classical assumptions of rationality, individuality and self-interest, are important construction sites for knowledge deconstruction and critique.

109 Thomson, above, 5.

110 Alan Thomson “Foreword: Critical Approaches to Law, Who Needs Legal Theory” in The Critical

Lawyers’ Handbook Volume 1 <http://freespace.virgin.net/suzanne/boyce/files/book/1_3.htm>, 4-5.

111 Roger Cotterrell The Sociology of Law: An Introduction (2 ed, London, Butterworths, 1992) 204.