Could Accounting Have Saved itself from the Antitrust Laws? Revisiting the Antitrust Investigations into the U.S. Accounting Profession 1966-1990.

By Michael Doron (California State University)

While the role of lobbying in the U.S. public accounting profession has been the subject of several studies, what has not been addressed is the profession’s historic reluctance to lobby and the impact this may have had on the profession. This paper provides a case study of public accounting’s interaction with government and the need for the profession to articulate the impact of government policies on the practice of accounting. It reviews and assesses the antitrust investigations by the U.S. Justice Department and Federal Trade Commission that led to the repeal of the profession’s anticompetitive ethics rules, rules that had governed American public accounting for most of the twentieth century. These investigations are often blamed for an increased competitive atmosphere in public accounting that prioritized growth and profitability over quality in attest services. Using records obtained from Freedom of Information Act requests and archival sources, the paper attempts to reconstruct the government’s motivations and the efforts of the American Institute of CPAs. I find a troubling lack of understanding of the audit profession by executive branch regulators and Congress and a reticence by the AICPA to advocate for the profession that led to what many observers see as a profound misapplication of the antitrust laws. While this study deals only with the United States, similar regulatory changes took place in Canada, the UK, Australia and New Zealand.

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