The Academy of Accounting Historians

The Academy of Accounting Historians
PROFESSIONAL LEADERSHIP AND OLIGARCHY: THE CASE OF THE ICAEW

Author(s): Masayoshi Noguchi and John Richard Edwards
Source: The Accounting Historians Journal, Vol. 35, No. 2 (December 2008), pp. 1-42
Published by: The Academy of Accounting Historians
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Accounting HistoriansJournal
Vol.35, No.2
December2008
pp. 1-42
MasayoshiNoguchi
TOKYO METROPOLITANUNIVERSITY
and
JohnRichardEdwards
CARDIFFBUSINESS SCHOOL
PROFESSIONAL LEADERSHIP AND

OLIGARCHY: THE CASE OF THE ICAEW
Abstract: This paper examinesthe difficultyof achievingrepresenta-
tiveand effective governanceof a professionalbody.The collective
studiedforthispurposeis the Instituteof CharteredAccountantsin
England and Wales (formed1880) which,throughoutits existence,
has possessedthe largestmembershipamongBritishaccountingas-
sociations.Drawingon the politicaltheoryof organization,we will
explainwhy,despitea seriesof measurestakento maketheconstitu-
tion of its Councilmorerepresentative betweenformationdate and
1970,the failureof the 1970 schemeforintegrating the entireU.K.
accountancyprofessionremainedattributable to the "detachment of
officebearersfromtheirconstituents" [Shackletonand Walker,2001,
p. 277]. We also tracethe failureof attemptsto restorethe Council's
authority overa periodapproachingfourdecades sincethat"disaster"
occurred[Accountancy , September1970,p. 637].
INTRODUCTION
Voluntary associationsin commonwithorganizationalenti-
ties in generalhave at the apex of theiradministrative structure
a bodychargedwiththeresponsibility of leadership.In the case
of professionalassociations,such leadershiphas as a central
motivationthe pursuitof the professionalprojecton behalfof
itsmembers.However,Macdonald [1995,pp. 57-58,204-205]ex-
plainshow themembershipofa professionalbodycan constrain
the capacityof its leadershipto mobilize economic,social, po-
Acknowledgments:We expressour gratitudeand appreciationto Stephen

P. Walker,TrevorBoyns,Roy Chandler,and MalcolmAndersonforconstructive
commentsmade at draftstagesof thispaper.This studyhas also benefitedfrom
helpfulcommentsmade byparticipants at the2004 WorldCongressofAccount-
ing Historiansin St. Louis and Oxford,the 2004 AnnualConferenceof the As-
sociationofAccounting Historiansat TokyoMetropolitan Japan,and
University,
fromtheinputsoftwoanonymousreferees.FinancialsupportfromtheInstitute
of CharteredAccountantsof Scotland and Daiwa Anglo- JapaneseFoundation
(smallgrantref:4949) is gratefully
acknowledged.

2 HistoriansJournal,December2008
Accounting
liticai,and organizationalresourcesin pursuitof a professional

project.UsingtheInstituteof CharteredAccountantsin England
and Wales (ICAEW) forthis case study,we findno shortageof
examplesof this happeningin the last ten years or so. For ex-
ample, the Councils 2001 proposal to restructure the ICAEWs
traditionaldistrictsocietysystemwas overtlychallengedand
contendedin a poll [Accountancy, August2001, p. 12]. Councils
plans in1996 and 1999 to introduceélectives(optionalpapers)
into the ICAEWs finalexaminationsmet strongoppositionand
were rejectedby the membership[Accountancy, February1996,
p. 11; July1999,p. 6]. Indeed,membershave been proactiveas
well as reactivein challengingthe authorityof Council. Initia-
tivestakenin 1996 and 1998,designedto achievedirectelection
of the ICAEW presidentby the membershipratherthan by the
Council,althoughdefeatedin a poll,have been judged to effecta
diminutionof its credibility[Accountancy,February1996,p. 12;
July1998,p. 20].
Momentouseventsthatfurther highlightthe persistentlack
of authorityon the part of the Council are the series of failed
mergerinitiatives, includinga numberin the recentpast,where
the aspirationsof the ICAEWs leadershipwere thwartedby the
membership.The fragmentedorganizationalstructureof the
U.K. accountancyprofessioncan be tracedto the diversenature
of the work undertakenby Britishaccountantsin the second
half of the 19th century[Edwards and Walker,2007]. Merger
initiativeshave been intendedto reducetheplethoraof societies
which,forexample,totaledat least 17 in theearly1930s [Stacey,
1954,p. 138] and, as a result,producetheadvantagesassociated
with a more unifiedaccountancyprofession[Shackletonand
Walker,2001, p. 166; Council MinutesBook Y, p. 148]. There
have of course been importantinstancesof successfulmergers
whichincludeamalgamationofthefivesocietiesformedin Eng-
lish cities(Liverpool,London,Manchester, and Sheffield)during
the 1870sto createtheICAEW in 1880;combinationofthethree
city-based(Aberdeen,Edinburgh,and Glasgow)societiesformed
in Scotland in the 19thcenturyto createthe Instituteof Char-
teredAccountantsof Scotland(ICAS) in 1951; and themergerof
the London Associationof Accountantsand the Corporationof
Accountantsin Scotlandto form,in 1939,what is todayknown
as theAssociationof CharteredCertified Accountants[Edwards,
2003]. The only other major reorganizationof the Britishac-
countingprofessionoccurredin 1957 when the second largest
accountancybody in Britain,the Society of IncorporatedAc-
countantsand Auditors,was dissolvedwithits membersjoining

Noguchiand Edwards,ICAEWLeadership 3
one or otherofthethenthreecharteredbodies.
There has been no furthermergerinvolvingany of the
seniorprofessionalbodies in Britainforhalf a century,during
which time many initiativeshave in fact been mounted only
to have then foundered.The firstof these marked an event
which serves as the focal point forthis study- the "disaster"
[Accountancy, September1970, p. 637] thatoccurredwhen the
ICAEW's membershiprejected its leaderships plan to merge
all six senior accountancybodies in 1970. Subsequent aborted
mergerplans include the ICAS with the ICAEW in 1989, the
CharteredInstituteof Public Finance and Accountancy(CIPFA)
withthe ICAEW in 1990 and 2005, and the CharteredInstitute
of ManagementAccountantswiththe ICAEW in 1996 and 2004.
The reasonsforfailureare seen to be broadlycommon,"internal
wranglingand fiercely guardedbrandvalues"[Perry, 2004].1
Everytime a proposed mergerfails,divisionbetweenthe
ICAEW Counciland its membershipis highlighted [Wild,2005],
the authorityof Councilis problematized,and morerepresenta-
tive arrangementsin the Council'scompositionare demanded.
For example,a letterpublished in Accountancy[July1996, p.
130] statedthat:
Elected but out of touch...Not only is thereno means
by which the elected Council membersdo receivethe
viewsof theirconstituents, but theirbehaviorin recent
yearshas shownthemto be seriouslyout of touchwith
members'wishes.The issue of merger,forexample,has
shown time and time again thatthe Council members
did not know,or chose to ignore,theview of theircon-
stituents.
The purposes of this studyare to explain whythe ICAEW
Council came to be "detached"fromthe interestsof the mem-
bership,lost its authoritywith the membership,and subse-
quentlyfailedto re-establishit. To achieve these objectives,the
remainderof thispaper is constructedin the followingmanner.
First,we locate our studywithinthe relevantprioraccounting
Next,we reviewgermanefeaturesofthepoliti-
historyliterature.
cal theoryof organizationto establishan analyticalframework
for examiningthe intra-organizational dynamicsbetween dif-
ferentgroupsof memberswithinthe ICAEW.We thenconsider
whetherthe ICAEW's internalregulationssucceeded in making
provisionfor a democraticallyrun organizationand identify
1See also, "Membership
'TimeBomb'DrivesICAEWMergerPlan"[2004] and
"MembersSpliton ICAEW-CIMA-CIPFA Merger"[2004].

Accounting
and distinguishtypesof criticismsdirectedin practiceat the

representative characterof the leadershipby membersand the
professionalpress. In so doing,and by referenceto the analyti-
cal framework, we traceand analyzethe reformof the arrange-
mentsmade forthe electionof ICAEW councilorsduringthe
period priorto 1970, and considertheireffectiveness. We then
examinethe reasons forthe collapse of the schemeforintegrat-
ing theentireBritishaccountancyprofession,drawingattention
to and presentingevidenceto demonstratethe "detachmentof
officebearersfromtheirconstituents" [Shackletonand Walker,
2001, p. 277]. Finally,we examineand analyzethe failureof nu-
merousattemptsto restorethe Councils authorityovera period
approachingfourdecades sincethatcalamityoccurred.
The main primarysources consulted for the purpose of
thisstudyare located at the GuildhallLibrary,London,and the
ICAEWs officein MiltonKeynes.
INTRA-ORGANIZATIONAL
DYNAMICS IN
ACCOUNTINGHISTORY
There existsa substantialcriticalliteratureon the profes-
sionalization of accountancywhich is marked by studies of
closurestrategies2 pursuedby professionalaccountancybodies.
Many of the works ofthisgenrefocuson externalrelationships-
inter-organizational,inter-occupational, state-
and, particularly,
profession - in the endeavor to offera "coherent explanation
of why some occupations [or segments]successfullybecome
accepted as professionalizedwhilstothersdo not" [Cooper and
Robson, 1990,p. 374]. Thereis also a developingliteraturethat
spotlightsthe significanceof intra-organizational relationships
withinan accountancybody,focusing,in the main,on dichoto-
miesbetweentheleadershipand therank-and-file.
Extendingwork on closure strategies,one strand of the
studiesof internalrelationshipsexaminesthe interfacebetween
the accountingprofessionand the state. Chua and Poullaos
[1993] include an examinationof the need to address the con-
cernsof practitioners and non-practitioners when Victorianac-
countantswere attemptingto secure state recognitionby royal
charterbetween 1885 and 1906. Carnegieet al. [2003] employ
the prosopograhical method of inquiry to explain why key
membersof the IncorporatedInstituteof Accountants,Victoria,
2Murphy[1984,p. 548] definesclosureas "theprocessofmobilizingpowerin

orderto enhanceor defenda group'sshareofrewardsor resources."

transferred theirallegiance to the AustralasianCorporationof

Public Accountantsin order to betterpursue acquisition of a
charterforthose in public practice.Richardson's[1989, p. 415]
studyof the regulationof accountancy"illustratesthe relation-
ship betweenthe internalsocial orderof the professionand its
involvement in corporatiststructuresin one particularjurisdic-
tion/'that of Ontario,Canada. He draws on Gramsci'stheory
of hegemonyto examinethe way in which consentwas manu-
facturedand dissentmanagedduringcreationof the Public Ac-
countantsCouncil. Shackleton's[1995, p. 40] studyof Scottish
charteredaccountantsup to World War I reveals "significant
schisms"withinthe membershipof the dominantSociety of
Accountantsin Edinburgh that problematized relationships
withthestateovertheperiod 1853-1916.Noguchiand Edwards'
[2004a] studyoftheICAEW leadership'sdetermination to ensure
thatits 1944 submissionto the Cohen Committeeon Company
Law Amendment was consistentwithstateprioritiesresultedin
rejectionof unwelcomeproposalsput forwardby districtsociet-
ies and refusalof requeststo make independentsubmissions.
Noguchi and Edwards [2004b] reveal disagreementbetween
practicingand industrialmembersconcerninghow to tacklethe
pressingissue of inflationaccountingbetween 1948 and 1966,
and demonstratehow the Council of the ICAEW resolvedthis
internalconflictwithinthe constraintsimposed by the need to
be seen to behavein the"publicinterest."
A second typeof intra-organizational investigationfocuses
on the interactionbetweenthe leadershipand the membership
of an accountancybody overcontentiousissues such as merger
withotherprofessionalassociations.Often,a keyconcernof the
membersis the loss of productbrandingwhichis deemed to be
an importantpartof members'identityin the marketplaceand,
therefore,"infusedwith value" [Richardsonand Jones,2007,
pp. 135-136].Richardsonand Jonesshow the process through
which the 2004 proposed mergerbetweenthe Canadian Insti-
tuteof CharteredAccountantsand CMA Canada failed,"largely
because of the reactionof membersof each association to ei-
therthe potentialloss of theirdesignation[in orderto join the
mergedbody]or thedilutionof their'brand'equity[bygranting
thecontinuingdesignationto new membersthroughthemerger
ratherthan throughtraditionalentryprocesses]."In the U.S.,
the AICPA'sglobal credentialinitiativewas put to a vote, in
January2002, which "revealeda startlingdisconnectbetween
theeliteof theprofessionand themembersin whose name they
claimed to work" [Fogartyet al., 2006, p. 16; see also, Shafer

Accounting
and Gendron,2005]. Withinthe Britishcontext,Shackletonand

Walkers[2001, p. 235] studyof the period 1957-1970explains
how HenryBensons early (1966) acknowledgmentof the fact
thatthe merger"proposalswould initiallyinvolvedilutionand,
therefore, a reductionin statusas a startingpoint"provedtoo
bittera pill forICAEW membersto swallow.
Following the second line of investigation,this study
conductsa theoretically informedanalysis of conflictof inter-
est betweendifferent groups of the membershiparisingfrom
the constitutionalarrangementsmade for the election of the
ICAEWs Council.In thenextsection,we reviewrelevantaspects
of the politicaltheoryof organizationto establishthe analytical
framework forthisstudy.
POLITICAL THEORY OF ORGANIZATION

Building on Max Webers thesis on bureaucracy,Michels
[1962, p. 365] formulateda political theorycalled "the iron
law of oligarchy"in his book PoliticalParties,firstpublishedin
1911. "Whoeversays organization,says oligarchy,"he argued,
on the groundsthatall formsof organization,as the inevitable
outcomeof theirgrowth,eventuallydevelop into an oligarchic
polity despite the continued existence of formal democratic
practices.Jenkins[1977,p. 569] called thisfacetofMichels'iron
law the "organizationaltransformation" thesis. Scott [2003, p.
343] agrees that "most unions, most professionalassociations
and other types of voluntaryassociations,and most political
partiesexhibitoligarchicalleadershipstructures."
Emergenceof Oligarchy.Following Cassinelli [1953], Jenkins

[1977,p. 571] definesoligarchyas "theabilityofa minority in an
organization,generally the formal leadership,to make decisions
freeof controlsexercisedby the remainderof the organization,
generallythe membership,"and furtherexplains:"For a volun-
taryorganizationofficially committedto pursuingthe interests
of members...oligarchymeans thatthe policies of the organiza-
tion reflectthe preferencesof elites ratherthan the views and
interestsofitsmembers."3
Oligarchyemergesbecause leadersof the organizationwish
to maintaintheirplace on the rulingbodyand "because the po-
sitionsprovidethemwitheconomic rewardsand social status"
3Leach [2005,p. 316] statedthat"oligarchy

is bestunderstoodas a particular
distributionofillegitimatepowerthathas becomeentrenched overtime."

[Osterman,2006, p. 623]. Once leaders are appointed,theyuse

theirpositionto maintain,or ifpossibleenhance,theirpoweror
attendantprestigeby controllingthe flowof information within
the organization and mobilizing their political and organi-
zational resources,withthe resultthatthe rank-and-file of the
organization are of
deprived opportunities to exerciseits own
to
power challenge the et
leadership[Lipset al., 1956]. Accord-
ingto Jenkins[1977,p. 569]:
As the organizationexperiencesmembershipincrease,
the abilityof membersto participatedirectlyin the
makingof policyis curtailed.The membersmay retain
formalcontrolthroughthe election of officers.How-
ever, growth also entails installation of centralized
means of communicationand formalizedprocedures.
Both of thesefactorsinsulateofficersfromcontrolsby
membersdespite the check of periodic elections. Of-
ficerscan use centralizedcommunicationsto control
the agenda of issues and can block challengesthrough
formalproceduresand administrative co-optation.
Importantly, the leaders have the power to co-opt junior
officialswho share theirvalues and orientation,withthe result
thattheoligarchybecomesself-perpetuating.
Subsequent Developmentof Political Theory:Empirical and

theoreticalstudies that followedthe Weber-Michelsmodel of
organizationelaboratedit along threemain lines - an explica-
tion of the sources, dynamics,and consequences of the "iron
law"; an empiricaltestingof the model; and "an examinationof
contingentcircumstancesin which the iron law does not take
hold or when it is reversed"[Osterman,2006, p. 622]. The third
line is particularlysignificantbecause it amends the models
universalityby arguingthatthe adventof oligarchyis not inevi-
table,as Michels claimed,but contingenton a particularset of
conditions.
The case for the contingentnature of oligarchywas per-
suasivelypresentedby Zald and Ash [1966, pp. 328, 340], who
criticizedthe Weber-Michelsmodel as ignoringenvironmental
factorssurroundingorganizationsand insistedthat"theWeber-
Michels model can be subsumed under a more general ap-
proach...which specifiesthe conditionunder which alternative
transformation processes take place." They examined various
conditionalterms,bothinternaland external(includinginterac-
tion withotherorganizations),and concluded that thereis no
evidenceconfirming theinevitableadventofoligarchy.

Accounting
The argumentof Zald and Ash [1966] encouragedsubse-

quent empiricalstudies of the contingentnature of oligarchy.
Jenkins[1977, p. 570], drawingon the resultsof Edelsteinand
Warner[1976] and Rothschild- Whitt[1976], argued that the
advent of oligarchydepends upon such factorsas absence of
influentialfactions,weak proceduralguaranteesin competitive
elections,and differences in ideologicalcommitmentsbetween
elite and generalmembers.Otherstudiesidentify the following
additionalconditionsthatinfluencewhetheroligarchyemerges
- characteristics and social statusof theorganization'smembers
et
[Lipset al., 1956; Clemens,1993], decision-making structure,
characteristicsof the leadership,and age of the organization
[Staggenborg,1988; Minkoff, 1999].
Germaneto this study,the question of how organizations
can reverseor breakaway froman oligarchicsituationhas also
been activelyresearched[Osterman,2006, p. 625]. Voss and
Sherman[2000, p. 304] examinedthe revitalizationprocess of
theAmericanlabor movementthathad suffered "theentrenched
leadership and conservativetransformationassociated with
Michelss iron law of oligarchy,"while Isaac and Christiansen
[2002] depictedthe process of how workplacelabor militancy
was revitalized by civil rights movement insurgencies and
organization.The most widelyrecognizedphenomenoncaused
byoligarchyis loss ofcommitment and energyon thepartofthe
membership, whichZald and Ash [1966, p. 334] called "becalm-
ing."Pivenand Cloward[1977] describedhow membership's en-
ergyis lost when an organizationfora poor peoples' movement
becomes bureaucratized,while Voss and Sherman [2000] re-
vealed thatthedeclineof thelabor union movementwas caused
by the loss of membershipcommitment.In the contextof the
labor union movement,Voss and Sherman[2000, pp. 304-305,
309] identifiedthreepre-conditionsfor overcomingoligarchic
symptomsand restoringorganizationalvitality:
First,some local unions experiencedan internalpo-
litical crisis that fosteredthe entryof new leadership,
either through international union interventionor
local elections.Second, these new leaders had activist
experiencein othersocial movements,whichled them
to interpretlabor's decline as a mandate to organize
and gave themthe skillsand vision to implementnew
organizingprogramsusing disruptivetactics. Finally,
international unionswithleaderscommittedto organiz-
ing in new ways facilitatedthe entryof these activists
into locals and providedlocals withthe resourcesand

legitimacyto make change that facilitatedthe process

oforganizationaltransformation.
Voss and Sherman furthersuggestpotentialfor theirfindings
to be applicable to otherorganizationsby statingthatthe fac-
torsidentified"providea usefultemplatewithwhichto examine
otherinstitutionalized organizationsthat innovatein a radical
directionor failto do so."4AmongthefactorsVoss and Sherman
politicalcrisiswithinthe organization5
identified, and an influx
of new leaders to wield influence,are of importanceto this
study.
We can thereforeconclude that the politicaltheoryof or-
ganizationis a promisingbasis for analyzingthe problematic
leadershipof the ICAEW because the theorypostulatesthatall
leaderships have the potential to become oligarchic as they
grow;the theoryis applicable to voluntaryassociationssuch as
professionalbodies; the theorysuggeststhattheleadershipsde-
termination to maintaincontrolcauses themto pursue policies
thatare in theirinterestsratherthanthoseof the generalmem-
bership;and growthin size and the developmentof organiza-
tional structureslimitthe members'power to influence/control
the leadership.But the theoryalso acknowledgesthe factthat
oligarchyis notinevitable;it dependson internalconditionsand
can be overcomein appropriateenvironmental circumstances.
CONSTRUCTINGA DEMOCRATICALLYELECTED COUNCIL

The organizationalstructureof the ICAEW consistsof the
Council and a varietyof sub-systemswhich include districtso-
cietiesand numerousCouncil-appointed committees.The Royal
Charter(1880) gave Council responsibilityforthe management
and superintendence of theInstitute
s affairsand, as "thepolicy-
makingbody,"it has reignedovertheICAEW throughout its his-
tory.Giventhe purposeof thispaper,it is necessaryto consider
whetherthe ICAEW'sinternalregulationsmatchthe theoretical
characteristics
ofa democraticallycreatedorganization.
Accordingto Merton[1966, pp. 1057-1058],"The democrat-
ic organizationprovidesforan inclusiveelectorateof members
4Voss and Sherman[2000, p. 345] added that"theelementsof crisis,new

leaderswithnovelinterpretations,
and centralizedpressureare likelyto be key."
5Vossand Sherman[2000,pp. 327,343] identifieddisastrousstrikesand mis-
managementof the local union as examplesof politicalcrisesand concluded:
"Thesecriseswereimportant primarilybecause theyresultedin a changein lead-
ership"and that"radicalchangesnecessitatenewleadership."

10 HistoriansJournal,
Accounting December2008
andforregularly scheduledelections." Mertonadds:"Thedemo-

craticorganization mustprovideforinitiatives ofpolicytocome
fromelectedrepresentatives andtobe evaluatedbythemember-
shipthrough recurrent electionsofrepresentatives." Thus,
In one formor another, a democracy mustprovidefor
a legislative
body:a Congress, a Parliament, or a House
of Delegates...
It is, therefore,all the moreimportant
thata voluntary associationslegislativebody,which
usuallyrepresents thenear-ultimate authorityoftheas-
sociation,be representative ofthediverseinterests and
valuesoftheentiremembership.
TheICAEWsRoyalCharter provided thatthepowerofthe
Councilshouldbe subjectto thecontroland regulation ofspe-
cial and annualgeneralmeetings (AGMs). The originalby-laws
provided fortheCouncilto consistof45 members ofwhomthe
ninelongestserving wererequiredto retireeachyearand were
eligibleforre-election.Fillinga vacancyon theCouncilrequired
formalapprovalat an AGM.Provision was madeforadditional
candidatesto be nominated in writing bytenmembers. In the
eventof a vacancyoccurring betweenAGMs,theCouncilwas
empowered to appointa replacement whowouldretireand be
eligible forre-electionon the same date as thepersonreplaced.
At meetingsof the ICAEW,membershad equal votingrights
and,therefore, wereable to maketheirvoicesheardand views
reflected in theorganization s affairs,
eitherdirectly through the
approvalofmajordecisions taken by the Council (e.g.,propos-
als to reform theby-laws)or indirectly through theelectionsof
councilors.
CRITICISMOF LEADERSHIPARRANGEMENTS
The previoussectionrevealsthatthe policyformulation
and decision-making criteria
fora democratically runorganiza-
tionwereformally in thecase oftheICAEW,and one
satisfied
mighttherefore expectthelegislative body,the Council,to be
of
"representative the diverseinterestsand valuesoftheentire
membership" [Merton, 1966, p. 1058].In practice,theCouncil
was,fromveryearlyon,judgedbyboththemembership andthe
accounting pressto consist insteadof self-perpetuatingelites.
Therewerefourinter-related elementsin thecriticism of how
theICAEWs leadership was constituted in practiceover-repre-
sentationofleadingfirms, unbalancedgeographical representa-
tion,biasedre-election
arrangements, andnon-representation of
businessmembers.

Over-Representation ofLeadingFirms:The ICAEWs firstCouncil

includedfivecases of two memberscoming froma single ac-
countingfirm.6 ApartfromThomas,Wade, Guthrie& Co., these
wereall Londonpartnerships. The authoroftheICAEWs official
history, himselfa formerpresident,recordsthatcriticismofthis
featureof the Councils compositionwas aired earlyon [Howitt,
1966,p. 28]:
It was advancedthattheaffairsoftheInstitutewerebe-
ing handledby too small and privilegeda circle,and at
the second Annual General Meetingin 1883 a motion
was proposedto preventany firmof accountantsfrom
being representedby more than one memberon the
Council...The questionremaineda contentiousone.
The Councils response was that this arrangementhad been
given "the most grave consideration...at the foundationof the
Institute"[Accountant, May 5, 1883,p. 13] but allowed to stand.
Indeed, it had been createdbecause of the desire to presenta
strongpublic profile.Accordingto councilor CF. Kemp, cit-
ing the example of representationsmade to the government
concerningthe BankruptcyBill 1883, "itwas necessaryto bring
the greatestpossible influencetheycould obtain to bear,and...
withoutthe recognisednames which theypossessed they[the
ICAEW] would notbe in thepositionwhichtheynow occupied"
[Accountant, May 5, 1883, p. 11]. However,to preventany fur-
therextensionof the representation of leadingfirms,it became
an "unwrittenrule" that "not more than two partnersin the
same firmshouldserveon the Councilat the same time"[Coun-
cil MinuteBook Y,p. 4; File 1490].7
GeographicalRepresentation:The ICAEW was originallyformed

fromthe amalgamationof fivesocieties,of which fourprimar-
ily catered forpublic accountantsworkingin the cities where
theywere formed- Liverpool,London, Manchester,and Shef-
6E. Guthrieand C.H. WadefromThomas,Wade,Guthrie& Co.; R.P.Harding

and F. WhinneyfromHarding,Whinney& Co.; A.C.Harperand E.N. Harperfrom
E. NortonHarper& Sons; W. Turquandand J.YoungfromTurquand,Youngs&
Co.; and W.W.Deloitteand J.G.Griffiths
fromDeloitte,Dever,Griffiths
& Co.
7This rulewas abandonedin 1966 because "itcould
prohibitmemberswho
couldgivevaluableserviceto theInstituteas membersoftheCouncilfrombeing
appointedtotheCouncil"[CouncilMinuteBookY,p. 42]. Fromthatdate,Council
adopteda "ruleof guidance"that"notmorethanthreemembersin directpart-
nershiprelationshipmayserveconcurrently as membersoftheCouncil"[Council
MinuteBook Z, p. 92].

field.Theinaugural 45 Councilseatswere,withtwoexceptions,8
allocatedbetweenthe foundingassociations[Howitt,1966,
p. 24]9and, therefore, wereinevitably heavilybiased in favor
of thosegeographical areas. The geographical distributionof
Councilmembership was questioned at the very AGM
first held
on June7, 1882,whenA. Murray suggested that"Suchtownsas
Newcastle andBristolshouldbe represented" [Accountant,June
10, 1882,p. 10]. G.B. Monkhouse, Newcastleupon Tyne,and
E.G. Clarke,Bristol,wereappointedto the Councillaterthat
year,and the 1883AGMwas informed thatCouncilhad been
"strengthened" by the electionof these"eminentaccountants
fromdistricts hitherto unrepresented" [Accountant, May5, 1883,
p. 13].
The ICAEW'sleadershipdid notimmediately embraceen-
thusiasticallythenotionofgeographical equality,however,with
the GeneralPurposesCommittee (GPC) decidingin July1888
that"itis notdesirabletogo intostatistics ofmembership witha
viewto redistribution ofthemembers oftheCouncilamongthe
variousdistricts in proportion to themembersof theInstitute
residingin those districts"[Ms.28416/1, p. 97].Within a decade,
we detecta softening oftheGPCs stancewhenrecommending
in October1897 thatsouthWalesbe represented forthefirst
timeon theCouncilthrough theappointment of R.G. Cawker
[Ms.28416/2, pp. 10,15].Councilagainremained unmoved, but
gradually to for
responded pressure provincial representationso
that,by 1901, a revised quotasystem had been Of
instituted. the
45 availableplaces,12 wereallocatedto thefourexisting socie-
ties (Birmingham, Liverpool, Manchester, and Northern) and
a further to
eight major cities.The 25
remaining places were
reserved forLondonmembers.
The openingmoveto improvefurther provincialrepresen-
tationoccurredat the 1901AGMwhenW.R.HamiltonofNot-
tingham complained of"theover-representation ofLondon"and
requested the Council to take stepsdesigned achieverepre-
to
sentation on theCouncil"insomemeasurecorresponding tothe
[geographical] distribution ofaccountants" [Accountant,May4,
1901,pp. 534-535]. This plea met with a stonewalling response
8Througheffectivepoliticalmanoeuvring [Walker,2004,chapter11],Edwin
Guthrieand CharlesHenryWade,who belongedto none of thefivemergingin-
werenot onlyadmittedas foundermembersbut werealso allocated
stitutions,
seatson theCouncil.
9Of45 Councilseats,20 wereallocatedto theInstituteorAccountants, 14 to
theSocietyofAccountants, threeto theManchesterInstitute(in additiontoWade
and Guthrie),and threeeach to theLiverpoolSocietyand theSheffield Institute.

fromErnestCooper,president1899-1901,who insistedthat"all
they[the Council] desiredwas the best possible process of get-
tingthe best possible men on the Council"[Accountant, May 4,
1901,p. 536], furtherexplainingthatthe role of the quota sys-
temwas to helpmaintain"a fairproportionbetweenthecountry
membersand the London members."If,instead,the matterwas
leftto the generalbody of members,Cooper believedthat the
inevitableresultwould be "to elect farmore London men than
at present,because the great body would be in London" [Ac-
countant,May 4, 1901,pp. 536-537].10
Continued and persistent complaints from provincial
memberseventuallyproducedpositiveresults,withthe grantof
Councilrepresentation oftenappearingto followas a rewardfor
forminga local society.11A widerdegreeof provincialmembers'
representationon Council was thereforeachieved,withthe se-
lectionof membersbeing made by the Council based on nomi-
nationsfromprovincialsocieties.However,widerrepresentation
fortheprovincesdid not necessarilymean increasedrepresenta-
tion.By 1950, 13 provincialsocietieshad been created,and the
numberof Councilmembersassignedto themwas 2 1, onlyone
seat morethanthe 1901 allocation.The majority(24) of Council
seats continuedto be assignedto London members.
Re-electionArrangements: There were a numberof featuresof

the re-electionarrangementswhich were thoughtto have per-
petuatedcontrolby elites on the Council and to have made it
difficult
to counteritsbiased compositionbothin termsofgeog-
raphy and thefavoritism accordedtheleadingfirms.
Those retiring by rotation wereroutinelyre-elected,causing
a contributor to TheAccountantto complainthat"theCouncilis
notrepresentative as it shouldbe by theBye-lawsofthe Charter.
For the last nineteenyears (I thinkwithouta singleexception)
the Council have re-electedthemselves!"[Accountant,June 9,
1900, p. 533]. Criticismswere also directed,persistentlyand
vehemently, at the practiceof the Council fillingvacancies that
arose betweenannual meetings,an actionwhich,it was felt,de-
10The dissatisfaction
among Nottinghammemberswas settledin 1907,
whenT.G. Mellorsof Mellors,Basden & Mellors,Nottingham was appointedto
theCouncil.TheAccountant[December14, 1907,p. 726] reportedthat"Theap-
pointment is an excellentone in everyway;but perhapsespeciallyso because it
removesa grievanceunderwhichNottingham has been sufferingforsome years
past."
11
Nottingham(1907), South Wales (1913), Leicester(1930), South Eastern
Society(1939),East AnglianSociety(1939)

Accounting
privedthe membershipfromhavingits say at the nextAGM: "If

a councillordies or retiresa Mr.Brownor a Mr.Jonesis given
the situation,and the memberswho annuallyretireby rotation
are re-electednem. con" [Accountant,June 9, 1900, p. 533].12
The issue was raised at the 1901 AGM when Hamiltonreferred
"totheveryold grievanceofthefilling-up ofvacanciesoccurring
in the Councilduringtheyearby the Council,insteadof leaving
those vacancies to be filledup by the members"[Accountant,
May 4, 1901, p. 534]. Proposals that casual vacancies should
be leftunfilleduntilthe nextAGM, made at Council meetings
by such luminariesas FrederickWhinneyin 1882 and George
WalterKnox in 1885,metwithno success [Ms.28411/1,pp. 167,
402; see also, Ms.28411/2,p. 300; Ms.28416/1,p. 97]. Indeed,on
October 14, 1896, Council explicitlyresolved"not to make any
departurefromthe existingpractice"of fillingcasual vacancies
[Ms.28411/4, p. 115].
It could well be argued thatthe membersliterallyhad the
solutionin theirown hands, but thattheyfailedto exerciseit.
A supplementary reportof the GPC, dated February26, 1919,
statedthat"therehas been no noticenominatingcandidatesin
oppositionto retiringmembersof the Council for the last 32
years"[Ms.28435/1 6]. Nor has our examinationof the available
archivaldata revealeda singleinstanceofretirement by rotation
leading to a change in Council membership.The Accountant
[May 5, 1894, p. 408] makes the reasonable point that it was
"a veryinvidioustask for the ordinarymembersto object to
persons who had once been elected." But members'inaction
enabled the Council to respondto criticismas follows:"On one
occasion a votewas taken,so thattherulesofproceduredid not
preventthe introduction of anybody;13or at any ratethe testing
ofthefeelingofthemembersin regardto anypersonwho might
be put forward"[Accountant, May 5, 1894,p. 408; see also, May
9, 1896,p. 396].14
The issue of Council controlover new appointmentsalso
had a moregeneraldimension.Whena memberof a provincial
12Seealso, Accountant, May 13, 1893,p. 453; May 5, 1894,p. 408; May 12,
1894,p. 423; May 12,1894,pp. 424-425;December21, 1895,p. 1031;May9, 1896,
p. 396; June23, 1900,p. 573; March18, 1901,p. 327.
13Thisjustification
was somewhatdisingenuousgiventhatthevotetookplace
onlybecause ofCouncil'sfailure,due to an oversight,to filla vacancycreatedby
a memberssuddenresignation.
14The case referred to was probablythe onlyinstancewe have foundof an
electiontakingplace, resultingin the appointmentto Councilof F.H. Collison,
London,in May 1887[Accountant, May2, 1887,p. 271].

societyretired,the societyhad the rightto put forwardnomina-

tionsforhis replacement,but the Councilreservedthepowerto
choose betweenthe nominees.The positionwas even worse in
London wherethe appointmentremainedentirelyin the hands
of the London Council members.The autocraticnatureof this
prerogativeis furtherunderlinedby the fact that the London
membersof the Councilmaintained,from1899 onwards,"wait-
inglists"ofprospectivecouncilors"in orderto ensurecontinuity
in theworkof the Counciland themaintenanceof its traditions"
[Ms.28435/1 6, emphasisadded].
It was mainlyto address this lattersituationthat,in July
1920, a group of youngerLondon members pressed for the
creationof "a Societyof CharteredAccountantsforLondon on
lines similarto the existingProvincialSocieties...to act together
in a corporatecapacityupon questionswhicharise fromtimeto
timeaffecting the interestsof the profession"[Accountant, July
17, 1920,p. 58; see also, Loft,1990,p. 39]. To appear to respond
positivelyto the London members'concerns,the Council estab-
lished insteadthe London Members'Committee.This arrange-
mentfailedto satisfythe London members'principalaspiration
whichwas to achieve"theprivilege," in commonwithprovincial
societies,of "nominatingmen to fillvacancies on the Council
as and when such vacancies should arise forLondon men" [Ac-
countant,January29, 1921,pp. 121-122].The London Members'
Committeewas, in the estimationof The Accountant[January
29, 1921, pp. 121-122;see also, London Members'Committee
MinutesBook A, p. 4], designedonly to facilitatesocial inter-
courseamongLondon members.
It was to be a further21 years (1942) beforethe anomaly
was addressedand, eventhen,theLondon Members'Committee
(by this time called the London & DistrictSociety)was autho-
rized to make nominationsto Council forfillinga vacancyonly
afterconsultationwith the London membersof the Council.
The survivingrecords of recommendationsmade by London
councilors and the nominationssubsequentlytransmittedto
the Councilby the committeeof the London & DistrictSociety
prove fairlyconclusivelythat the views of London councilors
dominatedthe appointmentprocess [London Members' Com-
mitteeMinutesBooks B, p. 188; C, pp. 7, 108, 177, 200, 245,
263; London & DistrictSocietyMinutesBooks D, pp. 74, 155,
158; E, p. 3].
A final objectionable featureof re-electionarrangements
was the subjectof a leadingarticlein The Accountant[May 21,
1904,p. 669; see also, Accountant,July9, 1904,p. 41]: "Council

Accounting
by a sortof 'apostolicsuccession'fromthe origi-

...hold office...
nal FathersoftheInstitute,and in no realsense have thegeneral
bodyof membershad a voice in eithertheirnominationor elec-
tion."Apostolicsuccession meant that councilors,on death or
resignation,would be replacedby anotherpartnerin the same
firm,and this sometimeswould literallyinvolvea son succeed-
ing his fatherin thatrole. For example,in 1897,when Council
rejectedthe request for south Wales representation, it instead
appointed E. Edmonds in place of W. Edmonds of Portsmouth.
Personal correspondence,dated November29, 1925 fromJ. B.
Woodthorpeto Sir William Henry Peat, a London councilor,
concerningthe deathof JohnWilliamWoodthorpe,also demon-
stratesthisversionof apostolic succession: "I believe thereare
severalprecedentsof a son succeedinghis fatheron the Council,
and, if this should happen in the presentcase, I should esteem
it was a verygreat honour" [Ms.28435/16].More oftenthere
would be no familyconnection,witha prominentexamplefrom
this genreoccurringwhen Samuel Lowell Price was succeeded
by his founderpartnerEdwin Waterhousein 1887. Overall,we
can thereforeconclude that in 1942 and beyond,the Council
retained,substantively,thecharacterofa self-elected body.
A finalfeatureof the non-representativecompositionof the
Councilconcernsthe completeexclusionthroughout the first60
or so yearsoftheICAEWs historyofanyrepresentation whatso-
everofbusinessmembers.It is to thisissue thatwe now turn.
BusinessMembers:At the 1919 AGM, MarkWebsterJenkinson,

a London practitioner,arguedthat"thereis a verystrongfeeling
among the members, amongthe youngermembers,
particularly
that some more progressivepolicy on the part of the Institute
itselfis necessary"[Accountant,May 10, 1919, pp. 398-399].15
As the resultof his workas controllerof factoryaudit and costs
at the Ministryof MunitionsduringWorld War I, Jenkinson
had reached the conclusion that cost accountingwas an area
of growingimportance,that charteredaccountantsknew less
than theyshould about it and that,if theyfailedto "deliverthe
goods," a new professionwould springup to fillthe vacuum
[Accountant, January18, 1919,p. 46]. Jenkinson s wide-ranging
i5TheAccountant [January 25, 1919,p. 54] reportedon Jenkinson's

proposals
as follows:"therecan...be verylittledoubtthattheywill meetwithverywide-
spreadsupportamongthemembersoftheInstitute, theyounger
and particularly
members,especiallywhen put forwardby so undoubtablea championof the
youngergeneration'srightsas Mr.WebsterJenkinson."

proposals forreformincluded a systemof proportionalrepre-

sentationto ensurefairtreatmentof each geographicaldistrict
and, significantly, in lightof his deep-seatedconcernabout the
appropriatefuturedirectionof the Institute,three councilors
drawnfromthe non-practicing membership[Accountant, Janu-
ary25, 1919,p. 54; Ms.28448].
FrederickJohnYoung,president1917-1919,respondedby
creatinga committeeto considerthe subject consistingof ten
membersof the Council,nine representatives fromeach of the
provincialsocieties,and two otherLondon membersof the In-
stitute[Accountant, May 10, 1919,p. 398]. A confidential letter,
dated April3, 1919, fromR.H. March, a Cardiffcouncilor,to
George Colville,secretaryof the ICAEW, reveals that the Spe-
cial Committeewas formedprincipallyto pacifydissatisfaction
amongmembers[Ms.28448]:
the Councilshould not oppose any wisheswhichmight
be put forwardby the generalbodyof membersforthe
considerationof this subject,and should be willingto
listento any suggestionswhichmaybe put forwardfor
the welfareof the profession... if a littletact is shown
now it may have the effectof preventingany show of
irritationor temperat theAnnualMeeting.
Giventhese sentimentsand Council'sdominationof the inves-
tigatingcommittee,it is unsurprisingthat its reportmade no
provisionfornon-practitioner representation on the Council. It
did put forwardcertainrecommendations, one of which might
have provedsignificant in addressingJenkinson s concerns[Ac-
countant,February7, 1920,p. 152; Ms.28448]:
(E) That the presentprocedureof the Council under

which the ProvincialSocieties are consultedwith re-
gardto thefillingof casual vacancies ofthe Councilun-
der Bye-law10 be continuedwhen such vacancyarises,
and thatas faras maybe the representation of the Pro-
vincialSocietieson theCouncilshouldbe proportionate
to thetotalmembershipin Englandand Wales.
The Council endorsedthe otherrecommendationswithout
qualification,but specificallyemphasizedthat"Thepresentpro-
cedureas definedby the Committeeunder'E' will be continued
by the Council"[Accountant, February7, 1920,p. 152,emphasis
added)Ms.28448].
The issue of business members'representationresurfaced
as the numbersemployedin industryand commercebecame

Accounting
moresubstantial.Table 1 revealsthataroundthetimeofJenkin-
sons intervention on behalfof businessmembers,just 5% (191
of 3,797) of the traceablemembershipworkedin business.The
position then changed dramatically.The number of business
membersroughlytrebledin both the 1920s and 1930s and ac-
countedfor17.2% (1,612 of 9,349) of the traceablemembership
in Englandand Wales in 1939.
TABLE 1
Categorized Membership of the ICAEW in
England and Wales in Selected Years
Members 01/09/192931/10/1939
31/08/1920 01/12/1956
09/11/1946
Publicaccountants 3,606 5,755 7,737 6,840 9,161
Businessaccountants 191 518 1,612 2,493 4,337
Totaltraceable 3,797 6,273 9,349 9,333 13,498
Nottraceable16 995 1,444 2,838 2,854 3,409
Retired - : : : 415
Total 4,792 7,717 12,187 12,187 17,322
Source:MembershipListsfor1921,1930,1940,1947,1957.
E.M. Taylorwho, like Jenkinson, had stressedthe growing

importance of cost accounting in the aftermath of WorldWar I
[Accountant, June 19, 1920,p. 712], presented the 1941 AGM
to
the following resolution designed to address the absence of
representation of the risingnumberof business members[Ms.
28432/19,emphasisadded]:
In the interestsof the whole membershipof the Insti-
tute,it is desirable that the Council shall include not
less thanfiveAssociates,whether practisingmembersor
not,and thatthe membersof the Councilbe invitedto
lay beforethenextAnnualGeneralMeetingoftheInsti-
tuteproposalsto giveeffectto thispolicy.
The Council instead introducedreformsthat failed to ad-
dress directlythe matterat issue. C.J.G. Palmour,president
1938-1944,informedthe 1942 AGM that non-practicing mem-
bers could "best servethe interestsof those by whom theyare
16Membersforwhomthe listingscontain,at best,privateaddressesare in-

cludedinthe"Nottraceable"category. Thenumbersof"Retired" membersare not
separatelyidentifiedbetween1920 and 1946 and, accordingly, are also included
in "Nottraceable"category. The proportionof "Nottraceable,"whencompared
withtheothercategories,is stableat around21.7%. Thus,thetrendrevealedby
is consideredto be a reasonablyreliableindicationoftheincreasein
thestatistics
numberofbusinessmembers.

Noguchiand Edwards,I CAEWLeadership 19
employedand the countrygenerallyin takingan active part

in those [technical]spheresratherthan in attemptingto apply
theirmindsto mattersaffecting theadministration ofthe affairs
of practisingaccountants"[Accountant,May 30, 1942, p. 303].
The outcomewas the formationof the path-breaking Taxation
and Financial RelationsCommittee[Zeff,1972,p. 8] to investi-
gate technicalmattersand, throughits mixedmembership,"es-
tablishan activeand effective liaison betweenthepractisingand
non-practising sides oftheprofession"[Ms.28432/1 9].
The Council'ssuccess in again sideliningthe representation
issue, as occurredwiththe formationof the London Members'
Committeein 1920,was short-lived this time.The Councils at-
titudetowardsthe representation of business memberswas at
last softening,possiblybecause of the rapidlyrisingproportion
of business members,and perhaps in recognitionof business
members'valuable contributionsto the work of the Taxation
and FinancialRelationsCommittee.Between1943 and 1948,the
London and Manchesterdistrictsocietiessuccessfullynominat-
ed fourbusinessmembersforpositionson theCouncil.The situ-
ation was extendedand formalizedat the 1950 AGM when the
president,RussellKettleof Deloittes,announcedthe creationof
a pool of up to fiveCouncil seats17exclusivelyavailable to non-
practicingmembers.But he also reaffirmed "theprinciple"that
"havingregard to the objects for which the Royal Charterwas
granted,membership of the Council should as a generalrule be
confinedto practisingmembers"[Accountant, May 13, 1950,pp.
541-542].
Continuedpressurefora greatervoice forbusiness mem-
bers bore furtherfruitthroughthe formationof a GPC Sub-
Committee(Non-Practising Members)in 1951 and the Consulta-
tiveCommitteeof Membersin Commerceand Industryin 1957
to considermattersrelatingto the interestsof business mem-
bers [GPC MinutesBook J,p. 180] and to convey"broad and
exclusivelynon-practising opinionheld by personsof eminence
in industryand commerce"[GPC MinutesBook M, p. 175]. In
the view of business memberssuch as J. Clayton,however,the
formation ofsuch a committeewas notthemosteffective means
for improvingthe representationof the interestof business
members.He argued[File 5-8-14]that:
what was needed was proper integrationof the two
[practisingand non-practising] sides of the profession
18As a consequence,thequota allocatedto provincialsocietieswas reduced
from21 to 19 and Londonfrom24 to 2 1.

Accounting
and this could only be done by opening the Council

to more non-practisingmembers. Industrial opinion
would thenbe properlyassimilatedat all levels and in
all Committees.
The ConsultativeCommitteeof Membersin Commerceand
Industryresolvedin October1962 thatthe GPC shouldbe asked
to supportan increase in the size of the Council from45 to
60, with 15 seats to be allocated to membersin commerceand
industry[GPC MinutesBook R, p. 137]. Also, to help achieve
"therightbalance of soundjudgmentand experienceon the one
hand and special skillsnecessaryto conductthe wide range of
its workon the other"[GPC MinutesBook R, pp. 135-136],GPC
recommendedthe introduction of a systemof co-optionofup to
six additionalmembersas "a reserveto be filledat the absolute
discretionof the Council" [GPC MinutesBook S, p. 60]. These
proposals were approved by a special general meetingof the
ICAEW membershipheld on September23, 1965 [CouncilMin-
utes Book W, p. 154]. As a resultof seat re-allocations,the bal-
ance betweenpractitioners in London and theprovincesfavored
the latterforthe firsttimein the historyof the ICAEW,24 seats
comparedwith2 1.
The above four inter-relatedcriticisms,sustained over
the period 1880-1970and directedat the Councils lack of fair
representationof the membership,raise serious doubts over
whetherthe democratic leadership arrangementscontained
in the ICAEWs internalregulationswere effectivein practice.
Certainly,manymembersthoughtthe Councilwas notrepresen-
tativeof the diverseinterestsof the membership, but were their
criticismsjustified?The nextsub-sectionaddressesthisissue in
threeways;namely,by examiningthe geographicalallocationof
council seats in relationto membershiplevels,the distribution
ofcouncilseats in relationto thesize and locationofaccounting
firms,and the divisionof seats betweenaccountantsworkingin
publicpracticeand in business.
Analysisof Distributionof CouncilSeats: Over the period 1880-

1970, 308 individuals,includingthe foundercouncilors,were
appointed to the Council [Ms.2841 1/1-14;Council Minutes
Books O-AB],of whom 29 were membersin industryand ten,
including two furtherbusiness accountants, were recruited
whenthe SocietyofIncorporatedAccountantsand Auditorswas
absorbedintothethreecharteredinstitutes in 1957.The remain-
ing269 werepracticingmembers.

Numericalinformation concerningthe membershipof each

of the main districtsocietiesand the numberof Council seats
allocatedto the geographicalareas thattheycoveredat fivedif-
ferentdatesbetween1907 and 1956 is givenin Table 2. It reveals
thatLondon memberswereconsistently over-represented on the
Council,based on theirshare of totalU.K. membershipin com-
parisonwithmost provincialsocietiesat most dates. The over-
representation was greatestin 1907, but still materialin 1956
when each of the otheridentifiedgeographicalareas continued
to be under-represented. As noted above, the numberof seats
allocated to the provincialdistrictsexceeded those forLondon
forthefirsttimein 1965,withtheresultthatLondon'sshare fell
from52.5% to 46.7%. Even then,London membersremained
heavilyover-represented as theircontributiontowardsthe total
U.K. membershiphad declinedto 37.5% by 1972 [Council Min-
utesBook AF,p. 231].18
To studyallegationsthat Council membershipwas domi-
natedby a limitednumberoflarge,long-standing London firms,
we have identified thosewhicheitherhad a memberon the first
Council of the ICAEW or were formed15 years or more prior
to 1880 [Boys, 1994, pp. 17-18, 56-58; see also, Parker,1980,
pp. 36, 39-42;Matthewset al., 1998,pp. 283-322].This exercise
produceda list of 30 London "founder"firms.The numbersof
Council seats occupied by partnersin these firmsand quali-
fiedaccountantsemployedat these firmsat fivedates between
1920 and 1956 are givenin Table 3.19Corresponding figuresalso
appear in Table 3 for "other London firms" and "non-London
firms"in England and Wales. We have applied the chi-square
testto examinethe statisticalsignificance, if any,of the differ-
ence in levelsof Councilrepresentation at each of the fivedates
betweenLondon founderfirmsand the othertwo groups.Atthe
firsttwo studydates (1920 and 1929), the resultswere signifi-
cant at the 5% level,giventhereis onlyone degreeof freedom.
For 1939, the testprovedsignificant at the 10% level. For 1946
and 1956,theresultswere significant at neitherthe 5% nor 10%
18The officially recordedjustification forLondon'spreferment in termsof

Councilseatswas thedistancebetweenmanyprovincialareas and Londonwhere
themeetingsoftheCounciland itscommittees wereheld[CouncilMinutesBook
O, p. 227; File 1487].
19FromtheCompaniesAct 1862 to the
CompaniesAct 1967,thereexisteda
provisionprohibiting, in principle,partnershipsof morethan20 members.The
numberofqualifiedaccountantsemployedin accountancyfirms, ratherthanthe
numberofpartners, is thereforeconsideredto be a betterindicationofthesize of
theaccountancyfirm.

Accounting
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levels. Given these significancelevels, it seems reasonable to

concludethat,beforeWorldWar II, London founderfirmswere
continuouslyover-represented on Councilthoughthiseffectwas
diminishing, but thatthiswas no longerthe case afterthewar.20
TABLE 3
ICAEW Membership and Council Seats by Type of Firm
LondonfounderOtherLondon Non-London _ ,
cfirms cfirms c Total
firms
1920 no. % no. % no. % no.
Councilseats 16 35.6% 10 22.2% 19 42.2% 45 100%
ICAEWmembers 148 20.6% 210 29.2% 362 50.3% 720 100%
1929
Councilseats 15 33.3% 11 24.4% 19 42.2% 45 100%
ICAEWmembers 334 18.4% 540 29.8% 937 51.7% 1,811 100%
1939
Councilseats 16 35.6% 8 17.8% 21 46.7% 45 100%
ICAEWmembers 601 23.8% 723 28.6% 1,203 47.6% 2,527 100%
1946
Councilseats 16 35.6% 8 17.8% 21 46.7% 45 100%
ICAEWmembers 406 27.8% 338 23.1% 717 49.1% 1,461 100%
1956
Councilseats 15 37.5% 6 15.0% 19 47.5% 40 100%
ICAEWmembers 681 32.4% 445 21.2% 976 46.4% 2,102 100%
Source:MembershipListsfor1921,1930,1940,1947,1957
To examine furtherthe extentto which councilors were

recruitedby "a sortof 'apostolic succession'"[Accountant, May
21, 1904,p. 669], 60 long-standing provincialfirmswere identi-
fiedthroughthe same procedureused to detectthe 30 London
founderfirms.From the combinedlist of 90 founderfirms,we
were able to calculatethat 157 (58.4%) of the 269 councilorsin
public practiceover the period 1880-1970stemmedfromthose
origins.Even ifwe excludetheoriginal45 members,we findthat
112 (50.0%) of the 224 memberssubsequentlyappointedto the
Council had the founder-firm root. Despite the rule established
in 1883,restrictingto a maximumoftwothenumberofpartners
in the same firmand workingfromthe same principalplace
of business servingon the Council at the same time [Council
MinutesBook Y, p. 4; File 1490], 64 of 112 (57.1%), councilors
20One reason forthis change was that,duringWorldWar II, the London

founder-firm membership fellby only32.5%,whereasthatof otherfirmsfellby
45.2%. Hencetheimbalanceofthepre-warera was resolved,notbya proportion-
ate reductionin the numberof Councilseats forLondon founderfirms,but a
largerfallin membershipamongotherfirms.

Accounting
were recruitedfromjust 19 large London firms.21 Moreover,36

ofthe 112 members(32.1%) and 30 ofthe 64 London councilors
(46.9%) were thereas the resultof "apostolicsuccession,"i.e., a
partnerfromthesame firmwas appointedto replacea councilor
who had resigned.
Turningto businessmembers'representation, we have seen
thattheyhad no representation whatsoever on the Counciluntil
1943, and that theyreceivedtheirfirstquota allocation of five
out of45 seats or 11.1% in 1950.We have also seen thatbusiness
membersaccountedfor17.2% oftraceablemembershipas early
as 1939,and we are able to interpolatefromTable 1 a business
membershipof about 30% between 1946 and 1956. Later,in
1964, accordingto an estimatemade by a GPC sub-committee,
"10,000or moremembersof the Institute... are engagedin com-
merce and industry"[GPC Minute Book R, pp. 135-136] at a
timewhen the totalU.K. membershipwas 23,285 [Membership
evenwhen the quota was increasedto 15
List, 1964]. Therefore,
out of 60 in 1965,business memberswere stillseriouslyunder-
represented on theCouncil.
The evidencepresentedin this sectionrevealsthat,consis-
tentwithcriticismsdirectedat the compositionof the Council
by the ICAEWs membersand the press,its non-representative
characterpersistedthroughoutthe period 1880-1970,despitea
seriesofinitiativesdesignedto improvethesituation.
A Self-PerpetuatingOligarchy- theHistoricalDimension:In this

sectionso far,we have studiedchangesmade by the ICAEW in
responseto continuousand vehementcriticismof the self-elect-
ed characteristic of
of the Council and the under-representation
a varietyof sectionalinterests.We have also seen thattwoworld
wars providedimportantopportunitiesto reviewcriticallythe
oligarchicnatureof the Council. WorldWar I made influential
charteredaccountantsaware ofthegrowingimportanceofbusi-
ness accountingwithinthe portfolioof work that constituted
contemporaryprofessionalpractice and encouraged progres-
sive practitioners,such as Mark WebsterJenkinson,to sup-
port claims frombusiness membersforrepresentationon the
Council.WorldWar II, againstthe backgroundof a substantial
21TheseincludedPrice,Waterhouse& Co. (9 councilors);CooperBrothers&
& Co. (6);
Co. (7); Peat,Marwick,Mitchell& Co. (6); Deloitte,Plender,Griffiths
Turquand,Youngs& Co. (5); Whinney, Smith& Whinney(4); Kemp,Chatteris,
Nichols,Sendell& Co. (4); Binder,Hamlyn& Co. (4); Barton,Mayhew& Co. (4);
James& Edwards(3); Josolyne, Miles,Page & Co. (2); HarmoodBanner& Co. (2);
and Cash,Stone& Co. (2).

increase in business membershipwithinthe ICAEW, encour-

aged people such as E.M. Tayloragain to highlightthe issue of
businessmembers'representation.22 These findingssupportthe
argumentthat"democratization tendsto followwar" [Mitchell,
1999,p. 771].
We have seen that a numberof changes were made that
caused the Councilto become more representative of the mem-
bershipin 1970 than at foundationdate. Despite such changes,
however,we mustconclude thatthe fundamentalnatureof the
Council,as a self-elected
oligarchy,remainedsubstantiallyintact,
with the mechanismsemployedto defend that characteristic
including(1) the quota systemused to allocate Council seats to
London and provincialsocieties; (2) the re-electionof retiring
members;(3) the Councils power to filla vacancy arisingbe-
tweenAGMs;(4) theCouncilspowerto choose betweennomina-
tions put forwardby the provincialsocieties;(5) the Councils
controlovertheconsultationprocesswiththeLondon & District
Society;(6) the creationof "pools" of non-practicingmembers
withCouncilretainingthepowerto choose betweennominations
put forward;and (7) the co-optionof additional"suitable"mem-
bersat theabsolutediscretionoftheCouncil.These mechanisms
compriseoverwhelming evidenceof "weak proceduralguaran-
tees in competitiveelections"highlighted as importantfeatures
ofan oligarchicleadershipbyJenkins[1977,p. 570].
The Councilof the ICAEW also exploitedits commandover
organizationalresources[Lipset et al, 1956; Jenkins,1977, p.
569] in otherways to maintainits traditionalcharacterand to
silence,sideline,or pacifydissatisfactionamong membersover
theirinterestrepresentationon Council. Tactics employedin-
cluded the formationof variousadvisoryand consultativecom-
mitteessuch as theSpecial Committee(1919), theLondon Mem-
bers' Committee(1920), the Taxationand Financial Relations
Committee(1942), the GPC Sub-Committee(Non-Practising
Members)(1951), and the ConsultativeCommitteeof Members
in Commerceand Industry(1957). These placating measures
each playeda role to help to moderatemembers'dissatisfaction
withtheCouncil.
22Taylor,
at the1941AGM,statedthat"I havecome to theconclusionthatre-
formsmusttakeplace in thestructure oftheCouncil...Thereare manyproblems
facingus to-day...
whenthewar is overand hundreds,possiblythousands,ofour
memberscomebackto civillife,and possibly1,500articleclerkswithlittle,ifany,
professionalexperiencecome to takeup businesslife...a broaderrepresentation
on theCouncilis goingto be beneficialto theInstituteas a whole"[Accountant,
May 17, 1941,pp. 376-377].

26 HistoñansJournal,December2008
Accounting
The oligarchiccharacterof the Councilof theICAEWex-

istedfromtheoutsetandwas mostintensively attacked immedi-
atelyfollowing organizational formation in 1880. Michels [1962,
p. 167] observesthat"Withtheinstitution of leadershipthere
simultaneously begins...thetransformation intoa closedcircle."
Osterman [2006,p. 623],on thissameissue,comments that:
The questionof timing... becomesthepracticalone of
the lengthof timeit takesto createa self-sustaining
bureaucratic apparatusand internalpoliticalsystem.
Putthisway,itis apparent thatthereis no universal an-
swerto thetimingquestion.It dependson thecharac-
teristics oftheorganization in question,suchas size of
membership, geographic scope,history,andso forth.
The historical dimensionis highlysignificant forthiscase
study.We have seen that theICAEW was formed from themerg-
er offiveexisting institutions. Among these,the elitebodywas
theInstitute ofAccountants whichdominated themerger nego-
tiations[Walker, 2004]and also thecomposition oftheICAEW's
initialCouncil[Edwardset al., 2005].TheInstitute ofAccount-
antshad,in 1876,beenaccusedbyitsmembers ofarbitrary and
selective for
procedures appointing councilors which, as in the
case ofKemps justification foran ICAEWCouncilconsisting of
the"greatand thegood"in 1883,was explainedbytheneedfor
a strongpublicprofile [Walker, 2004,p. 142].Thislattertheme
was givenparticular emphasisbyErnestCooperwho,we have
seen, also staunchly defended thecomposition of theICAEWs
Councilwhenpresident in 1901.As a highlyactivememberof
theInstitute ofAccountants in the1870s,Cooperadvocatedre-
formsdirectedtowardsachieving improved recognition forthe
profession in
[cited Walker, 2004,p. 291]:
Can it be doubtedthatiftheInstitute aftertheScotch
Systemwas introduced herehad beenactively engaged
duringthe past sevenyearsin ascertaining who are
therespectable Accountants and inducingthemtojoin
theInstitute thattheprofession wouldhave assumed
a muchhigherpositionin relationto thecontemplated
Bankruptcy reform?
ForCooper,toincreasethenumberof"respectable" accountants
withinthesmallmembership of theeliteInstitute of Account-
antsand to have"thebestpossible men" on the Council ofthe
ICAEWwereprobablyconsistent objectivesin the sense that
bothenhancedtheinfluence in
oftheorganization makingrep-
resentation to thegovernment overthecontent oflegislationre-

latingto theaccountants'business.We mighttherefore conclude

[see also, Walker,2004, p. 139] that the Council of the Institute
in
of Accountants London institutionalizedits characteras a
self-perpetuating eliteduringthe 1870s,an historicalcharacter-
isticinheritedbytheICAEW.
The mostimportantdifference betweenthe real case of the
Council of the ICAEW and oligarchytypicallyenvisagedin the
politicaltheoryof organizationis in motive.In theory, oligarchy
emergesbecause thepositionsoccupiedbyleadersoftheorgani-
zation "providethemwitheconomicrewardsand social status"
[Osterman,2006, p. 623]. However,in the process wherebythe
ICAEW Council initiallyformedand subsequentlymaintained
an oligarchiccharacteristic, evidenceof the councilorsenjoying
directpersonalgains fromtheirpositionsremainsunidentified,
although,as Smallpeice [1944, p. 46] recognized,achievingthe
positionof counciloritselfrepresented"a highhonourforprac-
tisingmembersand is much prized...as a markof esteem and
a rewardforoutstandingservicein the profession/'Aside from
personalmotives,the dominantconcernwhen constructing the
composition of the Council was to maintain and enhance, as
indicatedby Kemp's 1883 comment,the political influenceof
the ICAEW in makingrepresentations to the governmentover,
forexample,the contentof legislationrelatingto its business.
From its experiencewhen acquiringthe Royal Charterin 1880,
the Councilof the ICAEW appears to have assumed thatthe in-
fluenceof councilorsfromthe London foundingfirmswould be
ofcrucialimportanceforthepurposeofmaintainingitspolitical
standing.
Reflectingits oligarchiccharacter,the biased composition
of Council provedhighlysignificant in a negativesense at the
time of the 1970 scheme forintegrating the six senior profes-
sional accountancybodies in Britain.It was memberswho were
eithernot representedor under-represented on the Councilthat
featuredprominently in rejectingtheleadershipsplans. The po-
liticalcrisisis nextexamined.
THE 1970 INTEGRATIONSCHEME

The 1970 mergerplan had been approved by fiveof the
six senior professionalbodies involvedwhen, "virtuallyat the
last moment,a campaign was launched by two membersof
the EnglishInstitute"[Tricker,1983,p. 40]. H.T. Nicholsonand
B.W. Sutherlandcriticizedthe integrationscheme as involving
"an unacceptable dilution of the high professionalstandards

Accounting
of the Institute"[Accountant,July16, 1970, p. 73]. It is widely

acknowledgedthat,principallyas the resultof latentopposition
mobilizedby theirintervention, the integrationschemewas re-
jectedby 16,845 votes against13,700with64.1% oftheICAEWs
membershiptakingpartin thepoll.
For Nicholson and Sutherland,the scheme had been pro-
jected by '"menin a hurry',who refusedto recognizethatsound
developmentcould onlycome by a process of steadyevolution,
and were obsessed with the idea of creatingthe biggestbody
of accountantsin the world"[Accountant, July16, 1970,p. 73].
As faras businessmemberswere concerned,integrationwould
result in "people [becoming] called chartered accountants
who have neverworkedin a professionaloffice"[Accountancy,
September1970, p. 635; see also, File 1477: 17 (34)]. For pro-
vincialpractitioners,integrationwas consideredto produce "an
unacceptabledilution"of status [Accountant,July16, 1970, p.
73; see also, Accountancy,September1970, pp. 635, 637]. And
foryoungermemberswho had recentlysufferedthe traumaof
qualifyingexaminations,integrationwas seen as a retrograde
step thatwould lessen the value of the charteredcredential[Ac-
countancy,June1966,p. 443].
The outcome was described in the ICAEWs mouthpiece,
Accountancy[September1970,p. 637], as "a disasterforthe ac-
countancyprofessionas a whole,and forthe Instituteespecial-
ly,"while The Accountant[August20, 1970, pp. 229-230] made
thefollowingassessmentofevents:
it mighthave been temptingto accuse a fewindividuals,
whose oppositionhas been particularly determinedand
perhapsmore articulatethan most,of havingwrecked
the scheme; but it seems plain that these gentlemen
have done nothingmore than to provide,at the most,
a focusforthe considerablemeasure of dissatisfaction
and dissentwhichalreadyexisted.
Withinthe confinesof MoorgatePlace, similarsentiments
were expressedin a less graciousmannerby the then-president
of the ICAEW,C. Croxton-Smith [Council MinutesBook AC, p.
383]:
Over the past ten years...some 20,000 new members
had been admitted.Manyof thesewere in small indus-
trialcompanies and feltthattheyderivedlittlebenefit
frommembershipother than the qualificationwhich
theywished to retainat a minimumcost. The integra-
tion scheme had producedan unholyalliance between

thesemembersand some smallpractitioners whose mo-

tivesforrejectionoftheproposalswerequitedifferent.
The people leadingoppositionto thescheme,Nicholsonand
Sutherland,partlyattributedfailureof the integrationinitiative
to thefact[Accountancy, September1970,p. 636] that:
the Council [of the ICAEW] is not reallyin touch with
the body of the members.They are all verybusy men,
and we are certainlynot attackingthempersonally.It
is morea faultof the system.Thereshouldbe farfewer
papers to read, and more chances to talk to the 'con-
If theyare not carefultheylose touch with
stituents'...
grass-rootsopinion,and this is what happened in this
case.
An in-depthstudy of the integrationepisode conducted by
Shackletonand Walker[2001, pp. 277-278]locates the "detach-
mentof officebearers[theCouncil]fromtheirconstituents[the
members]"as "perhapsthe most notable featureof the unifi-
cation attemptof the 1960s." They continue [Shackletonand
Walker,2001, pp. 277, 280; see also, Willmott,1986,p. 571]: "As
was starklyrevealedin August1970,it is ultimately themember-
shipsoftheprofessionalbodies who have thepowerto accept or
rejectconstitutional
change,"and conclude: "The price of a dis-
dainfuland non-consultative approachtowardsthe membership
was revealedwhentheresultoftheICAEW ballotwas declared."
Evidence of "Detachment" and "Disdain": The under-represen-

tationof business membersand provincialpractitioners on the
Council was not, therefore,simplya matterof principle;the
biased compositionhad implicationsfor how the rulingbody
behaved. It meant that theyfailed to comprehendthe conflict
betweenthe prioritiesof business,provincial,and also younger
memberscomparedwiththose of the leadershipdominatedby
the big London firms.But it went even furtherthan that and,
in this sub-section,buildingon Shackletonand Walkers[2001]
findings,we presentspecificevidence of a lack of respecton
the partof the Councilforlegitimateconcernsexpressedby the
membership.
Statementsof Auditing:A series of Statementsof Auditingwas
launched by the ICAEW in 1958 to help auditors fulfilltheir
obligationunderthe CompaniesAct 1948 to expressan opinion
on whethera company'spublished accounts "give a true and
fairview"[T&R CommitteeMinutesBook B, p. 259]. The series

Accounting
was soon the subject of severecriticismfromregionaldistrict

societies.For example,the Statementdealingwiththe auditors
duty in relationto stock-in-trade (1961) was opposed by five
provincial societies (Manchester,Northern,Nottingham,South
Eastern,and South Wales) on the groundsthatit was "in some
respectsin advance of currentpracticeand mightprejudicethe
positionof auditorsin law by appearingto renderattendance
at stocktakingmandatory"[T&R CommitteeMinutesBook C,
p. 164]. The ManchesterSocietywas particularly worriedabout
the workloadof the small practitioner[Council MinutesBook
T, p. 235], while the London & DistrictSocietydrew attention
to the apprehensionexpressedby a "substantialminority" of its
membershipto an officialdocumentthatamountedto a "volun-
taryextensionoftheauditorsresponsibility" [London & District
SocietyMinutesBook D, p. 98].
The ChairmanoftheICAEWs Parliamentary and Law Com-
mittee,H.A. Benson of Cooper Brothers,neverthelessinformed
the January1962 meetingof Council [Council MinutesBook T,
p. 212] that:
it was in the interestsof the professionthatthe docu-
ment [on stock] should be issued as soon as possible
particularlyhavingregardto the [Ninth]International
Congress[of Accountants]to be held in New York in
September1962 when it was importantthatthe Insti-
tuteshouldbe able to demonstratethatit is a leader in
auditingstandards.
It appearsthatpoliticalconsiderationsarisingfromtheU.S.
case of McKesson & Robbins (1939)23were drivingthe leader-
ships actions. The Council attemptedto make "attendanceto
observestocktaking" obligationforsmall as well as
an effective
largepublicpracticespartly, least,to enable the ICAEW to be
at
seen as leading the developmentof U.K. auditingstandardsat
theupcomingevent.24
23WhenacceptingtheauditofMcKesson& RobbinsLtd.in 1924,Price,Wa-

terhouse& Co. agreednot to make a physicalexaminationof inventories. One
consequencewas an auditfailureto detect$10,100,000offictitious stockand the
introductionof U.S. regulationsrequiringthisto be done [Baxter,1999,pp. 157,
162;Previtsand Merino,1979,p. 259].
24Anotherexampleof a disregardforviewsexpressedby provincialpracti-
tionersoccurredin 1966 when"a majorityoftheregions"opposedtheissue ofa
statementon "auditingproceduresin connectionwiththeverification of invest-
ments"[VariousSub-Committees MinutesBook D, p. 102].

FellowshipRules: The ICAEWs Royal Charterdividedmember-

ship into two categories,fellows and associates, with senior
fellowshipstatusconfinedto those who had been continuously
in practiceas public accountantsforfiveyears. Withbusiness
membersoftenleavingpublicpracticesoon afterqualification, it
was therefore unusual forthemto achieve fellowshipstatus.As
earlyas 1922,severalissues of TheAccountant[March 11, 1922,
p. 331; March 18, 1922,p. 384; April15, 1922,p. 507] published
lettersfrombusiness membersrequestingan extensionof the
fellowshiparrangements.
We have seen that,as the numberof businessmembersin-
creasedsignificantly (Table 1), pressureforrepresentation
on the
Councilgrew.The same was the case withthe fellowshipissue,
withH.F. Bowser and J. SandfordSmithtacklingthe secretary
oftheICAEW,R.W.Bankes,on the issue in 1944. Because ofthe
two-tierschemeof credentials,in Bowsers estimation,"theview
is fairlygenerallyheldthatAssociateMembersoftheInstitutein
England are a kind of inferiorbrand of CharteredAccountant"
[Ms.28435/2;File 0436]. SandfordSmith also focused on the
implicationsof the fellowshiprules withinthe public domain
[Ms.28435/2;File 0436]:
While all accountantsknow that 5 years in practiceis
the onlyqualificationat presentcalled forto obtainthe
fellowship,the businessworldgenerallyis not aware of
thisfactand attachesa notabledegreeof importanceto
thedifference betweenan A.C.A.and a F.C.A.
The requestforaccess to fellowshipstatuswas referredto
the Charterand Bye-lawsSub-Committeein 1946,whereit was
resistedby such luminariesas Sir Harold Howittof Peat, Mar-
wick, Mitchell& Co. [Ms.28435/2;File 0436]. Councils nega-
tive decision drew a criticalresponsefrombusiness members,
elicitinga promiseto reviewthe matterand solicitthe views of
districtsocieties[Accountant, May 1, 1948, p. 345]. Despite the
discovery that seven district
societies eitherfavoredor had no
objection to reform,compared with fiveagainst,theGPC report-
ed that"thereis no real demandforfellowshipfromthe general
body of associates not in practice"and that "fellowshipshould
continueto mark responsibility of the accountantin practice"
[File 0436]. The Council in January1950 confirmedthe GPCs
conclusionthat "it is undesirablethat a new bye-lawbe intro-
duced to provideforthe electionto fellowshipof membersnot
in practice"[CouncilMinutesBook O, p. 47].
Dispute over the extensionof fellowshipstatusto business

Accounting
membersrumbledon and was notsettleduntiltheproposalthat

"associates [automatically]become fellowson the firstday of
Januarywhichfollowsthe completionof tenyears'membership
of the Institute"[Council MinutesBook S, pp. 2-3] was carried
at the 1959 AGM and confirmedoverwhelmingly by a vote of
14,231 in favorcompared with3,825against.
The detachedand disdainfulattitudeofthe Counciltowards
the widermembershipis furtherreflectedin a reportprepared
by a GPC sub-committee(1964) at around the time that the
move forintegrationwas about to surface.It containedthe fol-
lowingsomewhatarrogantassertionin relationto governance
[GPC MinutesBook S, p. 58]:
Whilst constitutionallymembers of the Council are
electedby themembershipas a whole,the Councilcan-
not absolve itselffromthe responsibilityfor ensuring
that only men of rightcalibre and who betweenthem
coverthe wide rangeof knowledgewhichis needed on
standingcommittees[oftheCouncil]are selected.
The reportadded [GPC MinutesBook R, pp. 135-136]:
whilstit is rightthatdue regardbe paid to servicesren-
deredto a districtsociety,the emphasiswhen consider-
ing the electionof new members[of the Council] must
be designedto secure the servicesof the best men in
theprofessioncompatiblewiththe currentneeds of the
Council.
ELECTORALREFORMSPOST 1970
Rejectionof the integrationscheme spectacularlyrevealed
the willingnessand abilityof the rank-and-file to challengethe
authority of the Council. Moreover, it provided "a dramatic
shock to traditionalideas about [the ICAEW's formof] gover-
nance" [Tricker, 1983,pp. 40-41],and, as an immediateresponse
to the "disaster"[Accountancy,September 1970, p. 637], the
Councilappointeda Committeechairedby Douglas Morpethof
ToucheRoss withbroad termsof reference, "to considerthe ob-
jectivesof the and
Institute the policiesit should pursue"[Coun-
cil MinutesBook AC, p. 275]. The accountingpress welcomed
the appointmentof a young committeewith "an average age
of 44" [Accountant, October 15, 1970,p. 502] whichcomprised
"membersfromall sides of the profession,includingthose in
practicesboth large and small, those employedin a range of
capacitiesby industrialcompaniesofvarioussizes, and thosein
education"[Accountancy, November1970,p. 756].

The MorpethCommitteereiteratedconcernsthat appoint-

mentsto the Councilwere not made on a "fullydemocraticba-
sis" [Accountant, February24, 1972,p. 237]. Recommendations
fordistrictsociety-basedelectionsby postal ballot werejudged
to have threeadvantages- electionswould be democratic;there
would be a greaterlikelihoodof membersknowingthe candi-
dates; and it mightalso stimulatethe interestof membersin
theirlocal society'sactivities.Accountancy[June 1971, p. 293]
welcomed the proposals on the groundsthat "Many members
look upon the Councilas some formof self-perpetuating oligar-
chy"whereas"a postalballotwillappear moredemocraticto the
averagemember."
The Council presentedthe proposals to a special meeting
on September27, 1972, where theywere approvedwith 6,792
(97.5%) votesin favorand just 173 against[Accountant, October
5, 1972, p. 416]. Accountancy[April1983, p. 25] later assessed
theunderlying philosophyof the reformsin a broadlyfavorable
manner:
a systemof regularCouncil electionsby DistrictSoci-
etyareas was introduced[in 1972], givingmembersa
decisiverole in the selectionand controlof Council...
In particular,the Council considers it both 'entirely
properand in accordancewithmodernpractice'thata
democratically-elected Council should have the power
to managetheInstitutesaffairs.
We can concludethatthe MorpethCommittee s centralrec-
ommendations, directelectionat district
societylevel by postal
ballotwas an importantbreakfromthe past systemforelecting
councilors.
SubsequentDevelopments: At the timeof the 1972 reforms,The

Accountant[July6, 1972,p. 3] conjecturedthatthenew arrange-
mentsmight"place upon themembershipa heavierburdenthan
some have hithertoshownthemselvespreparedto bear...apathy
and inanition,unless checked,could rapidlypreventthe new
measuresfromaccomplishinganythingbetter."These concerns
provedwell-founded withannual electionsconductedunderthe
new schemebetween1973 and 199425attractingturnoutsrang-
ingfrom15.2% to 24.1% [File 1490].In Trickers[1983,p. 30] es-
25In 1995, furtherimportantamendmentsto the systemof electionwere
made as thetermofelectionwas shortenedfromsixto fouryears;thenumberof
electedmembersenlargedfrom60 to 70; and theintroduction
of"assured"seats,
withone seatperconstituencyreservedfora businessmember[File 1489].

Accounting
timation, "theInstitute is remotefromtheimmediate concerns

of mostmembersand its governance is a matterof singularly
littleimportance to them."Thisloss ofcommitment and energy
on thepartofthemembership, a typicalsymptom ofoligarchic
leadership, is called"becalming" byZald andAsh[1966,p. 334]
anddescribed as follows by Michels [1962,pp. 60-61]:
Theindifference whichin normaltimesthemassis ac-
customedto displayin ordinary politicallifebecomes,
in certaincases of particular importance, an obstacle
to theextension ofthepartyinfluence. The crowdmay
abandonthe leadersat theverymomentwhenthese
are preparing forenergetic action...
Accustomed to be
ruled,the rankand fileneed a considerable workof
preparation beforetheycanbe setinmotion.
Asa consequence oftheoligarchic leadership structurethat
datedfromthecreationof theICAEW,themembership seems
to have eventually lost interest in the electionof councilors,26
but when major strategicdecisionsneed to be made, as in
1970,theyare galvanizedintoaction.For example,plans for
theintroduction of radical,newcurrent costaccounting-based
financial reporting modelswerethesubjectofrevolts, led byD.
Keymer andM. Haslam,thatproducedturnouts of46% (28,696)
of the membership to rejectExposureDraft18 in 1977 and
41.4%(30,557)to voteon callsforthe"immediate withdrawal"
ofStatement of Standard Accounting Practice16 two yearslater
[Tweedieand Whittington, 1984,pp. 135-136,147-148].Merger
initiativesinvolving CIPFAin 1990and2005also generated sub-
stantialturnouts, 36% and 44% respectively. Indeed,theissues
thatmotivated members intoactionincludednotonlythosedi-
rectly affectingtheir immediate interests,butalso thosethatdid
26In thisconnection,Leach [2005,p. 331] suggeststhat"It could be thatthe
majority was happyto leavetheworkofgovernanceto a minority, as longas that
minority remainedaccountableand did notjeopardizethe majority's interests.
Butas ortenhappenswithlong-term incumbency, thisabdicationofresponsibility,
howeverconsensualitmightbe,can easilylead toa situationofdependencewhere
people do not feelentitledor qualifiedto intervene- even when theysuspect
theirinterestsare beingthreatened - because theyhave notbeen involvedin the
process."If theminority thenindeedmakesillegitimate decisionsexceedingthe
rangeconsignedby,and threatening the interestsof,the majority,the situation
a case in whichdirectionalflowofcausationbetweenoligarchic
clearlyillustrates
leadershipand members'loss of commitment is reversed.However,in the case
of the ICAEW duringthe period from1880 to 1970, the reverseddirectional
flowof causationis inapplicablebecause theoligarchiccharacteroftheCouncil
existedfromtheoutsetin 1880,and a seriesofmembers'requestsforreform then
followedat leastup until1965.

not,such as theCouncil'splan to introduceoptionsintothefinal

examination.Moreover,the membershipeven proved capable
of instigatinga radical scheme designedto achieve democratic
electionof the ICAEW's president,an initiativepursuedforthe
purposeofavoidingmaldistribution ofpowerand "to make sure
one sectionof the membership[Council] does not exercisetyr-
anny"[Accountancy, July1996,p. 11].
Whenthe new electoralsystemwas introducedin 1972,Ac-
countancy[August1972,p. 4] drewattentionto the difficulty of
recruitingsuitable candidates fromunder-represented sectors
and specificallysuggestedthat "it will be no easier for senior
employeesof largercompanies to serve on the Council under
the new systemthan under the old." It was anticipatedthatat
least some of these concernscould be effectively addressedby
substantiallyincreasingthe Councils powers to co-opt,from6
to 20 members,but achievementof a properbalance between
job interestsin factprovedelusive.The numberof electedbusi-
ness membersinitiallyincreasedfrom15 (25.0% of a totalof 60
electedcouncilors)in 1972 to 18 (30.0%) in 1981,but thenfellto
10 (16.7%) by 1994. ComparedwiththeirtotalU.K. membership
(37.8% in 1983, 40.2% in 1990, and 57.3% in 2001), business
membersremainedheavilyunder-represented on a Council still
dominated by practitioners.27 This continued imbalance did
nothingto resolveconcernsabout the availabilityto the Council
of the full range of specialist knowledgeimpingingupon the
activitiesof the ICAEW'smembership.Anothercause of anxiety
was thelack ofcontinuity in theexpertiseavailableto the Coun-
cil, with 137 new members elected as the resultof vacancies
arisingduring the period from 1973 to 1994. To address these
issues, the Council made good use of its extendedpower to co-
opt, withsuch members rising from three(4.8% of a totalof 80
councilors) in 1972 to the fullcomplementof 20 (25%) tenyears
later [Council MinutesBooks AA-AV;File 1490]. This enabled
the Council to bring in business membersand academics to
supplyspecialistknowledgenot otherwiseavailableto it,as well
as past-presidents and formerchairs of Council committeesto
supply "executive talents" [Tricker,1983,p. 27], experience,and
continuity in the governanceofInstituteaffairs.
Nevertheless,continuingconcernwith the lack of interest
and involvement of the membersin the electionsof councilors
and, therefore, lack of Council's own legitimacy,led to a
the
27File 0433; File 7-8-5;Accountancy,

August1990,p. 162; http://www.icaew.
co.uk/institute/statistics/document.asp.

Accounting
seriesofcommitteesbeingappointed(Worsley1983-1985,Green
1990-1991,Woodley1993,Gerrard1996) whose reportsresulted
in a plethoraofadministrative changesto thecompositionofthe
Council (e.g.; increase in elected membershipto 70, extension
of powers of co-optionto include large-firm partners,younger
members,and chairs of Boards and Faculties) and the system
of governance(e.g.; creationof the officeof chiefexecutive,the
ExecutiveCommittee, and theofficeofsecretary-general).
The Councilalso stroveto reachout to different segmentsof
the membershipand, thereby,directlystimulateinterestin In-
stituteaffairsby establishing"Boards,""Faculties,"and "Focus
Groups" [Accountancy, November1985, p. 181; June 2000, p.
10]. These initiativessucceeded as judged by the numbersjoin-
ing [Accountancy, January1991,p. 15; July2000, p. 24; August
2000, p. 24], but failedto connectthe members'interestswith
the electionof councilorswhich continuedto be based on the
geographicalareas representedby the districtsocietieswithout
givinganyelectoratestatusto thesejob-interest groups.
We can therefore see that,in theperiodfollowingthepoliti-
cal crisisof 1970,the Council made seriousefforts to overcome
symptomsof oligarchicleadershipand revitalizethe member-
ship [Voss and Sharman, 2000, pp. 304-305]. In the Council's
own words, since 1970, it has searched for "the methodsby
which we could ensure that Council is representativeof the
membership;the steps to be takento involvemembersfullyin
policydevelopment;the [better]relationshipof districtsocieties
with MoorgatePlace; and the way in which we look afterthe
interestsof our members"[Accountancy, June1991,p. 8]. How-
ever,the factthatmembersstillremaineddisconnectedin 1991,
and thereis no evidencethatthesituationhas sinceimproved,is
indicatedin thefollowingcommentmade in thatyear[Account-
ancy,December1991,p. 20]:
a growingnumberofmembershave been askingwheth-
er the servicesthe Instituteprovidesrepresentvalue for
money.From theirpoint of view,the increasingfinan-
cial burden of maintainingthe charteredaccountancy
title,at a time when resources are under pressure,
involvesa substantialoutflowof those resources for
whichtheysay thattheysee littlein returnin termsof
protecting and representing theirinterests.
CONCLUDING COMMENTS
Between1880 and 1970,theCounciloftheICAEW respond-
ed to membershiprequestsforbetterrepresentation
by making

changesto the constitution of the Council.These changesfailed

to alterthe fundamentalnatureof the Council as a self-elective
oligarchysubstantially biased in favorof large London founder
firms.This historicallycontingentbut deep-seatedcharacteristic
of the Council was protectedmainly through(1) continuous
re-electionof retiringmembers;(2) Councils controlover the
processof fillingvacancies; and (3) arrangements forthe Coun-
cil to co-opt "suitable" members.The Council also silenced,
sidelined,or pacifieddissatisfactionamong membersconcern-
ing lack of representationon the Council by creatingvarious
advisoryand consultativecommittees.Consistentwith the lit-
eratureof politicaltheory[Lipset et al., 1956; Jenkins,1977, p.
569], theseare thetacticsthatthe leadershipof an organization
typicallywields to maintainits oligarchiccharacter.However,
the Council wished to maintain its traditionalcharacter,not
principallyforthe purpose of directpersonalgain as normally
envisagedby the politicaltheoryof organization,but mainlyto
maintainpolitical influence[Richardson,1989; Walker,2004,
p.142] when making representationsto the governmentover
the contentof legislationrelatingto the practicingaccountants'
business.
This historicalstudyhas revealedthat the oligarchicchar-
acter of Council,as theoretically prescribed,caused the leader-
ship to become complacent,possiblydisdainful,and certainly
detachedfromtheinterestsofthemembership, as demonstrated
when issuing Statementsof Auditingand, for many years,re-
sistingchanges to the fellowshiprules. These kinds of actions,
combined with the continuing dissatisfactionwith lack of
representation on the Council,resultedin the disregardedsec-
tions- businessmembers,provincialpractitioners, and younger
members- beingmainlyresponsibleforrejectingtheintegration
schemein 1970.
Between1970 andl972, the electoralsystemof Councilwas
reformed,with an internalreviewacknowledgingthe factthat
underthe new arrangements, therecould "be no restrictionon
thewaytheelectoratenominatesor votesand no attemptby the
Councilto 'rig'electionsby insistingon a specifiedtypeof can-
didateor preventing certaincandidatesfromstanding.It was for
theelectorateitselfto determinesuch matters"[File 1490].
The reformsintroduceddistrictsociety-basedelectionsby
postal ballot and have been hailed as "An attempt... to involve
members in the governanceprocess, to emphasize the geo-
graphicalconstituenciesand to highlightthe representation of
memberson Council"[Tricker, In
1983,p. 41]. practice, the new

Accounting
systemfailedto arouse membersfromtheir"becalmed"attitude

[Zald and Ash, 1966] towardsICAEW affairs.Nor have numer-
ous subsequentinitiativesproved successfulin increasingthe
generallevel of membershipinvolvementin Council elections.
When,however,theleadershiphas attemptedto taketheICAEW
in some radical new direction,the level of interestbecomes
relativelysubstantialand oppositionto the Councils plans often
unambiguous.
In brief,actionstakenby the rank-and-file have persistently
shown that Councils authorityremains seriouslydiminished.
Althoughthe Council installeda more democraticsystemfor
electingnew leaders,it failedto stimulatethe members'interest
so thattheymightconnectbetterwiththe leadership.Whilewe
do notclaim thatthe 1970 debacle irretrievably damagedtheau-
thorityof the leadership,it is certainlythe case thatthe "disas-
ter"fundamentally problematizedthe governancearrangements
and heraldedthe startof a periodof continuousreformthathas
notbornefruit.
Withinthe U.K., the ICAEW is not alone in grapplingwith
problemsof governance.A recent academic study [Friedman
and Phillips,2004] of models of controlwithinprofessionalas-
sociationsreportsthe conclusionsof a seminarheld at Birkbeck
College, Universityof London (November28, 2000), entitled
"GovernanceforProfessionalAssociationsin the 21st Century."
The seminar,arrangedby the ProfessionalAssociationResearch
Network(PARN),was attendedby representatives of 35 profes-
sional bodies, includingthe ICAEW.28These delegates shared
a concernthat theirgovernancestructureswere inadequate to
meetthe demandsplaced on them.In particular,theyidentified
"compositionof councilsand electoralprocess"as a major issue
in conductingpolicy formulationand in
leading to difficulties
at
arriving strategic decisions [Friedmanand Phillips,2004, pp.
194-195].Friedmanand Phillips [2004, p. 188] conclude that
"Even the associations of professionalsfromwhich many top
business executivesare drawn,such as accountancyand law,
have suffered fromcrisisand failuresin governance."
The PARN seminaris significant in highlighting the prob-
lem of leadershiplegitimacyfacedby professionalbodies today.
When consideringhow best to reformthe constitutionof the
28The seminarled to thePARNundertaking a researchprojectco-sponsored

by ICAEW.Theresearchfindings
the werepresentedat a seminar,entitled"Gover-
nance:themanagementofchangeand themanagementofrisk,"heldat Woburn
House,TavistockSquare,London,on January8, 2003.

Council, the ICAEW had in fact researched and sometimes

imitatedelectionarrangementsput in place by the governing
bodies of otherprofessionalassociations.Such bodies included
not onlyotheraccountancyassociationsbut also otherprofes-
sional organizationssuch as the Law Society,Royal College of
Surgeons,Royal Instituteof BritishArchitects,and the Char-
teredSurveyors'Institution[Ms.28432/19;Ms.28448]. Through
the PARN,or alternativeforums,the ICAEW mightgain further
insightsinto the measures taken by otherbodies to deal with
the legitimacyissue. To promotethe mutual learningprocess,
further researchinto otherorganizationsmighthelp clarifythe
natureoftheissue ofgovernanceofprofessionalassociationsby,
forexample,comparisonwiththecase oftheICAEW.29
For the present,this studyenables us to predictthat the
ICAEW'squest fora scheme to address betterthe need forrep-
resentativeand effective governanceof a professionalbody will
continueintothe futureand, untilthatproblemis resolved,the
crisisofauthoritythattheCouncilhas repeatedlyexperiencedin
itsrecenthistoryis likelyto recur.
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PROFESSIONAL LEADERSHIP AND OLIGARCHY: THE CASE OF THE ICAEW

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PROFESSIONAL LEADERSHIP AND

Acknowledgments:We expressour gratitudeand appreciationto Stephen

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liticai,and organizationalresourcesin pursuitof a professional

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and distinguishtypesof criticismsdirectedin practiceat the

2Murphy[1984,p. 548] definesclosureas "theprocessofmobilizingpowerin

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transferred theirallegiance to the AustralasianCorporationof

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and Gendron,2005]. Withinthe Britishcontext,Shackletonand

POLITICAL THEORY OF ORGANIZATION

Emergenceof Oligarchy.Following Cassinelli [1953], Jenkins

3Leach [2005,p. 316] statedthat"oligarchy

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[Osterman,2006, p. 623]. Once leaders are appointed,theyuse

Subsequent Developmentof Political Theory:Empirical and

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The argumentof Zald and Ash [1966] encouragedsubse-

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legitimacyto make change that facilitatedthe process

CONSTRUCTINGA DEMOCRATICALLYELECTED COUNCIL

4Voss and Sherman[2000, p. 345] added that"theelementsof crisis,new

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andforregularly scheduledelections." Mertonadds:"Thedemo-

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Over-Representation ofLeadingFirms:The ICAEWs firstCouncil

GeographicalRepresentation:The ICAEW was originallyformed

6E. Guthrieand C.H. WadefromThomas,Wade,Guthrie& Co.; R.P.Harding

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Re-electionArrangements: There were a numberof featuresof

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privedthe membershipfromhavingits say at the nextAGM: "If

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societyretired,the societyhad the rightto put forwardnomina-

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by a sortof 'apostolicsuccession'fromthe origi-

BusinessMembers:At the 1919 AGM, MarkWebsterJenkinson,

i5TheAccountant [January 25, 1919,p. 54] reportedon Jenkinson's

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proposals forreformincluded a systemof proportionalrepre-

(E) That the presentprocedureof the Council under

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E.M. Taylorwho, like Jenkinson, had stressedthe growing

16Membersforwhomthe listingscontain,at best,privateaddressesare in-

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employedand the countrygenerallyin takingan active part

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and this could only be done by opening the Council

Analysisof Distributionof CouncilSeats: Over the period 1880-

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Numericalinformation concerningthe membershipof each

18The officially recordedjustification forLondon'spreferment in termsof

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