Saturday, 13 September 2014

BBC remember me? Letter to BBC complaining about Robinson / Salmond editing

Heyyy.

Please note, I have of course seen the existing BBC response to different complaints relating to this report, which has recently appeared online [...] I don't know the substance of those complaints, so I can't form an opinion on whether this statement responds adequately to them, but of course I'll assume it does. However it does not address my complaint, and I therefore kindly ask that you give my complaint separate attention.

I must also apologise that my complaint is rather meticulous; however, this level of clarity is necessary to precisely state the way in which the report was in breach.

The part of the segment which I am interested in ran as follows:

VOICE OVER: [Alex Salmond] needs to reassure the voters at home.
NICK ROBINSON: Why should a Scottish voter believe you, a politician, against men who are responsible for billions of pounds of profits?
VOICE OVER: He didn't answer. But he did attack the reporting of those in what he called "the Metropolitan media."

My complaint is best broken down into two parts.

1) The report is highly misleading about the question which was put to Mr Salmond. The claim that "he didn't answer" is therefore correspondingly highly misleading.

In the unedited footage, it can be seen that what is shown in the report is actually the second part of a second question, which is itself a follow-on, closely related to the first. It is reasonable to assume these two questions are closely connected, in the absence of any wording along the lines of, "and on a separate topic," and in view of the similar subject matter. I will refer to the two halves of Mr Robinson's questioning as "the first question" and "the second question" for convenience, but it is clear that the second question does not stand alone, and that its meaning changes significantly when it is isolated and edited down as in the broadcast footage.

When we watch the unedited footage, we find that the first question is, "Are you suggesting that the decision of RBS has no consequence, or do you accept that by moving their base to London, tax revenues would move to London, in other words, Scottish taxpayers would have to make up the money they would lose from RBS moving to London?" The follow-on is, "And on a more general point: John Lewis's boss says prices could go up, Standard Life's boss says money will move out of Scotland, BP's boss says oil will run out; why should a Scottish voter believe you, a politician, against men who are responsible for billions of pounds of profits?"

It is conceivable that Mr Robinson believed himself to be creating a distinction with the phrase "and on a more general point," but if so he was mistaken, and the BBC should bear that in mind in formulating its response: the reasonable interpretation of the phrase "and on a more general point" is that it maintains a strong linkage between the two halves of Mr Robinson's questioning.

Of course, no one can have any problem with the paring down of journalists' questions in principle. In most circumstances, we are not obliged to hear every word which went into prompting a politician to making some statement. A balance must be struck: meticulous, sometimes lengthy questioning for the politicians, and a snappy but not misleading version for the viewers back home. What was unusual in this case was the claim that the edited question was not answered.

What did Mr Robinson actually ask as his "more general point"? Mr Robinson recognised that Mr Salmond was highly unlikely to accept that owing to RBS's relocation "tax revenues would move to London, and Scottish taxpayers would have to make up the difference," at least certainly not in such stark language. Mr Robinson's follow-up therefore asked Mr Salmond to make a case for the credibility of a politician's perspective, measured against the perspective of business leaders who warn of the economic consequences of independence. (Casting doubt on the credibility of those business leaders is thus certainly one of the strategies Mr Salmond was fairly explicitly invited to adopt). The main context in which Mr Salmond was being asked to establish his credibility was that of tax revenues from RBS, although it would certainly have been legitimate for him to pick up on the statements from John Lewis, Standard Life, and BP as well. Whether or not this is what Mr Robinson intended to ask, I believe it is the most reasonable interpretation of what he did ask. At the very, very least it must be construed as one reasonable interpretation.

Mr Robinson was exercising his instinct for forceful, rhetorically effective questioning, and a laudable desire to go behind the comparatively predictable position-taking of political and constitutional debate and explore how such positions build and sustain credibility. In many circumstances such questioning can be very heartening to watch. However, we were not asked to watch it.

In the edited report, the voice-over begins, "He needs to reassure the voters at home." This is the context in which we then hear the fragment of a question, "Why should a Scottish voter believe you, a politician, against men who are responsible for billions of pounds of profits?" Watching the report, the viewer is asked to believe that Mr Salmond was asked, in quite general terms, why he should be trusted over business leaders, and perhaps in particular asked to defend the legitimacy of politicians in offering reassurance to Scottish voters. Some might see this as quite a soft line of questioning, at least insofar as its generality would have permitted Mr Salmond a very wide scope in his response.

The implications of not answering such a general question would be completely different, compared to those of not answering the specific questions which were actually put to Mr Salmond. Furthermore, the implications of using such a general question as an occasion to attack "what he referred to as 'the Metropolitan media'" would have been completely different, compared to the context in which Mr Salmond's comments actually arose.

Above all, the question which appeared in the report is sufficiently different from what Mr Salmond was actually asked that the statement "he didn't answer" is necessarily incorrect. No one who watches only the unedited footage can be in any doubt that the second question is still very closely related to the question of RBS and corporation tax; and no one who watches the edited footage could have guessed that it does. In view of this difference, there can be no shared valid basis for making the judgment "he didn't answer."

2) But I'd also like to consider whether the statement "he didn't answer" would have been correct, even if viewers had been shown the full two questions. It is clear that, in view of any reasonable interpretation of the questions which were actually put to Mr Salmond, and of what reasonably constitutes an answer, Mr Salmond did answer these questions.

First, there has been no question mark over whether Mr Salmond addresses the first question (and as a side note, it seems quite right that he should devote the bulk of his response time there).

Mr Salmond also speaks very directly to the second question, which shifts the focus to trust in politicians and/or businessmen, on a number of occasions: particularly in sentences such as, “[...] there is clear evidence that while the Prime Minister was busy telling us what a wonderful nation we were, his business adviser was busy desperately trying to get any business he possibly could to say something negative about independence.” Whether or not one agrees with Mr Salmond on this point, it is a quite straightforward answer to the point which Mr Robinson raised. Mr Robinson draws a distinction between the credibility of politicians, in particular Mr Salmond, and that of business leaders, in particular those associated with the RBS, John Lewis, Standard Life and BP. Mr Salmond criticises Mr Robinson's distinction, pointing out the involvement of politicians in public statements made by business leaders. This is answering.

As well as several such moments of exceptionally direct response, it is clear that Mr Salmond is tacitly tackling Mr Robinson's second question throughout, primarily in the context of RBS tax revenues. This is also answering. Identifying a false dilemma -- such as the supposedly exhaustive choice between categorically trusting business leaders or politicians -- certainly constitutes a valid answer. But Mr Salmond goes further than simply identifying a false dilemma. He discusses at some length how such a false dilemma is produced in the first place. This is where his discussion of the press comes in. As the perspectives of business leaders and of politicians are brought to the public through the press, the credibility of different aspects of the media is certainly centrally at issue in this question, and Mr Salmond is not at all off-topic to bring it up explicitly. I am aiming to be meticulous in my description here, but I think even on a relatively casual viewing, anyone will sense its relevance. Mr Robinson's second question is therefore also answered by the tacit argument that the Scottish voter's trust should not be apportioned fully either to politicians or to business leaders, and that the Scottish voter should consider (and do consider) the media context in which the views of politicians and/or business leaders appear. This may not yet constitute a comprehensive and satisfying answer for everyone, but it is certainly enough to falsify any claim that "he didn't answer."

Mr Salmond furthermore answers the second part of Mr Robinson's question in a complementary way, which speaks to the question of trust in him specifically. The gist of this part of Salmond's response -- again, whether or not one agrees with it -- is fairly straightforward. He contrasts "scaremongering" and "evidence," and suggests that the Scottish voters can tell the difference well enough to move beyond the scaremongering and look at the evidence. The consolidation of recycled quotations, Mr Salmond argues, is suggestive of scaremongering: the time when these quotations really were news has long passed. By contrast, the RBS statement to staff released the same morning constitutes relevant evidence, which can help Scottish voters to form a judgment. The argument given is that this hypothetical Scottish voter should trust Mr Salmond for reassurance only insofar as Mr Salmond is able to provide clear evidence.

Mr Robinson may have felt that Mr Salmond did not answer his question because he did not specifically bring up John Lewis, Standard Life, or BP. I don't feel this interpretation would be correct. Furthermore, the broadcast segment did not include Mr Robinson's mention of John Lewis, Standard Life, and BP.

It is also not clear from any of the footage what Mr Robinson was saying during his later informal questioning; perhaps here he may have clarified, reformulated or stressed some aspect of his earlier question, which Mr Salmond did not answer. This may have formed Mr Robinson's impression that he had been stonewalled by Mr Salmond. Again, even if that is the case, it has no bearing on the inaccuracy of the report which actually went out.

In summary:
(a) The edited footage gives a misleading idea of the question which Mr Salmond was asked, and then goes on to claim that he did not answer it. Given that Mr Salmond was asked a somewhat similar but ultimately crucially different question, it is inevitable that confusion should arise. Whatever Mr Salmond said -- that is, whether or not he answered the question which was actually put to him -- he can hardly be expected to give a precise answer to a question which he was never asked. An apology and/or correction is therefore in order!
(b) As it happens, the full footage shows Mr Salmond answering both of Mr Robinson's questions, under any reasonable interpretation, which takes into account the connected fashion in which these questions were presented, and the mention not only of RBS, but also BP, John Lewis and Standard Life. An apology and/or correction is therefore again in order!

Three final notes.
(a) It is perhaps worth establishing a general principle of extra diligence, when the claim is made that a question has not been answered, that this question is very accurately portrayed. A somewhat greater margin of error is perhaps appropriate if a question is edited down as a lead-in to the response.
(b) Just as an informal litmus test, it is perhaps worth imagining whether anyone who was presented with the edited footage, and asked to speculatively and uncynically reconstruct the situation which gave rise to it, would be likely to come up with anything resembling what took place. I think that highly unlikely.
(c) I am ambivalent about Scottish independence, but not about the BBC's independence. While I can see that such a report could go out with the best of intentions, it is not right that you should fail to apologise for it once you've been called out. We all make mistakes, but yours are more important than most.

Yrs,
xxx

Sunday, 16 February 2014

Corporate Responsibility Reporting (5)

Okay, this completes the groundwork for our analysis of the concept of independence, as it applies to the independent checking of corporate responsibility reporting.

There is a close link, within liberal political theory, between independence and autonomy, and so between independence and various debates around the ability of individuals to rule themselves, and the conditions under which self-imposed law can be considered authentic. Independence is also an important idea within constitutionalism, especially as pertaining to the separation of powers. There the focus is the insulation of government functions, especially the judiciary, from untoward influence. Appropriate constitutional form is seen by some constitutional thinkers as an important prerequisite of state neutrality. The problematiques of autonomy and constitutionalism are coextensive, inasmuch as questions about the sources of authentic self-imposed law resemble those about the legitimacy of judicial decisions which have regard to private interests.

That very same preoccupation with a mode of non-compromising influence is shared by the literature around assurance. Independence is defined as “freedom from those pressures and other factors that compromise, or can reasonably be expected to compromise, an auditor’s ability to make unbiased audit decisions” (ISB, 2000); it is also described variously as “the conditional probability of reporting a discovered breach” (DeAngelo, 1981:186), “an attitude/state of mind” (Moizer 1994:19; Schuetze 1994:69); “the ability to resist client pressure” (Knapp, 1985).

In this literature, and in the system of overlapping laws, standards, guidelines and compliance mechanisms I’ve alluded to in a previous post, independence is given a concrete discursive form. (Independence is also discursively entangled with a concept of professionalism. I’ll get into that in the next blog post). In this post I want to think about how elements of that concrete discursive form are geared towards the audit of financial statements. In other words, I want to think about how this independence is not really geared towards checking on corporate responsibility reporting, except insofar as there are one or two serendipitous overlaps between financial audit and CRR assurance. So I’m hopefully getting started unpicking some of the complex ways in which the Big Four sometimes have/use/want the wrong kind of independence for what it is they’re doing. Again, some of this isn’t exactly up-to-the-minute, so I’d be very, very interested in any updates from scholars, industry, assuror fandom, etc.

The AA1000AS (2008) and the G3 (which are specific to the CR context and have no applicability to financial audit) had surprisingly little to say on independence. The G3 required that assurance be “conducted by groups or individuals external to the organization who are demonstrably competent in both the subject matter and assurance practices” and “who are not unduly limited by their relationship with the organization or its stakeholders to reach and publish an independent and impartial conclusion on the report.” The AA1000AS (2008) contained the same wording (AccountAbility 2008:14), and required disclosure of mechanisms which ensure independence, and of “any relationships (including financial, commercial, preparation of the report, governance and ownership positions) that could be perceived to affect the assurance providers ability to provide an independent and impartial statement” (ibid.).

Big Four alignment with the AA1000AS (2008) requirement typically comprised just a succinct paragraph, noting that the firm complied with the Code and with internal independence mechanisms which exceed the Code’s requirements, but providing no further detail. (The ISAE3000 referred to the concept of independence elaborated in the Code of Ethics for Professional Accountants (IESBA 2005, referred to hereafter as “the Code”). Two other key guidance documents for the Big Four in connection with independence, the IAASB’s ISA 200 (IAASB 2009), and the ICAEW Members’ Handbook, Section 3, were also aligned with the Code).

The Code applies to financial audit as well as assurance. It divides independence into two necessary conditions: independence of mind, and independence of appearance. Independence of appearance exists if and only if a reasonable and informed third party would judge that independence of mind exists. Independence of mind is considered to consist in a lack of prejudicial relationships. In particular, a professional accountant “should not allow bias, conflict of interest or undue influence of others to override professional or business judgments” (IESBA 2005:100.4). “Relationships that bias or unduly influence the professional judgment of the professional accountant should be avoided” (IESBA 2005:120.2). Independence of mind is characterised as the state of mind “that permits the expression of a conclusion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional skepticism” (IESBA 2005:290.8). ICAEW (2009:283) follows this wording (save for a typo!). The Code characterises objectivity, as it does independence of mind, by what it is not: “The principle of objectivity imposes an obligation on all professional accountants not to compromise their professional or business judgment because of bias, conflict of interest or the undue influence of others.” (IESBA 2005:120.1). There are however a few touches of positive definition here. Professionalism is one, which I’ll be looking at in a later post. The Code expands a bit on “integrity” by insisting on the professional accountant’s “honesty and straightforwardness.” (IESBA 2005:100.4).

Straightforwardness is undefined, honesty is only briefly mentioned again at 150, in the context of professional dignity in self-promotion. See ICAEW 2009:165 for the Members’ Handbook’s limited elaboration of these terms.

We can try some scholarship here. Everett (2005), writing about the Canadian context, trace a shift in accountancy ethics from a Christian idiom based around the concept of a calling, to a scientistic idiom based around objectivity. They note that the chance was gradual and involved many intermediate “mixed” idioms. The unglossed appearance of “honesty and straightforwardness” could be a kind of vestige of this earlier idiom.

The ICAEW Members’ Handbook also provides two definitions of “objectivity,” one using the same wording as the Code (ICAEW 2009:160), and the other that objectivity “is the state of mind which has regard to all considerations relevant to the task in hand but no other” (ICAEW 2009:165). Objectivity here strongly resembles aspects of Max Weber’s ideal type of bureaucratic rationality, in its “exclusion of love, hatred, and every purely personal, especially irrational and incalculable, feeling from the execution of official tasks” (Weber 1960:421). The Code identifies five non-exhaustive categories of threats to independence: self-interest; self-review; advocacy; familiarity; intimidation (IESBA 2005:100.10). The Code attempts ostensive definition because it is “impossible to define every situation that creates such threats and specify the appropriate mitigating action.” (IESBA 2005:100.5). Assurors are expected to use inductive reasoning to recognise threats to independence which are not among the examples, and those which don’t fall neatly into any of the categories. The examples given of self-interest threats are: a financial interest in a client; jointly holding a financial interest with a client; “undue” dependence on total fees from a client; concern about the possibility of losing a client; potential employment with a client; and contingent fees relating to an assurance engagement; a debt arrangement with a client (IESBA 2005:200.4). Self-review threats include: the discovery of a significant error during a re-evaluation; reporting on the operation of systems after being involved in their design or implementation; preparing data used to generate records which become the subject matter of the engagement; and having recently worked for the client (200.5). Advocacy threats include: promoting a client’s shares; and acting on the client’s behalf in litigation, or in informal disputes (200.6). Familiarity threats include: family relationships; gifts and hospitality; other threats (e.g. self-interest threats) pertaining to a family member (200.7). Finally, intimidation threats include: fear of dismissal or replacement; fear of litigation; pressure to inappropriately reduce fees or timetables (200.8). So there we go.

Threats to independence of mind are not decisive, however, since many can be neutralised by appropriate safeguards. Examples of safeguards at the assuror level are “Chinese walls” arrangements, which isolate sensitive information through internal rules and controls, software, and physically secured working and storage spaces. PwC’s code of conduct states, “[w]e aim to avoid conflicts of interest. Where potential conflicts are identified and we believe that the respective parties’ interests can be properly safeguarded by the implementation of appropriate procedures, we will implement such procedures” (PwC 2008:8). Moreover, the threat categories are non-exhaustive. 

Okay, I think we are now in a position to trace the orientation of this concept of independence to the audit of financial statements. In a way, this part of the argument is a fortiori, since we have already established that those sources with substantial things to say about independence are expressly interested in audit rather than assurance!

However it could still be useful to develop a more detailed analysis, particularly for when I come to look at the entanglement of independence with professionalism. The first thing to note is that in the Code, as in the GRI and Accountability formulations, independence of mind is considered essentially a privative quality, not a positive one. It is about something that is not there. And the thing that can’t be there is, roughly speaking, a relationship of interiority, or what you might call being “all up in” the client. Independence of mind is a relationship of duly-influenced exteriority with respect to the client (compare GRI definition q.v.).

Various factors can be decisive in creating a relationship of interiority or undue influence. One type of factor, however, dominates. That is, independence of mind is threatened if the practitioner’s action is steered by money or power which either originates in the client or steers her client.

This factor is exemplified by the first two threats to independence mentioned by the Code, the existence of a financial interest in the client or a financial interest held jointly with the client. Financial auditing constitutes organizations as economic entities and economically specifies their continuity over time. Thus, the orientation to financial audit is expressed in the priority given to threats enacted in steering media. Complete causal isolation would obviously be an absurd construal of independence; there must exist some causal stream between auditor and audited organization! But so long as no economic forms supervene on the causal microfoundations of audit, they are likely to be considered insignificant.

We can expand on this point by returning to the term materiality, which I think I previously treated as a loose synonym for significance. The International Accounting Standards Board (“IASB”) defines materiality, in the audit context, as follows: “Information is material if its omission or misstatement could influence the economic decision of users taken on the basis of the financial statements. Materiality depends on the size of the item or error judged in the particular circumstances of its omission or misstatement. Thus, materiality provides a threshold or cut-off point rather than being a primary qualitative characteristic which information must have if it is to be useful.”

In this definition, judgments about materiality are to be founded on the rationality characteristic of the economic sphere. (What a surprise). One might anticipate that for assurance of CR report, judgments about materiality should be steered by consideration of rational decisions characteristic of the spheres of social and environmental governance, reflecting Elkington (1994)’s triple bottom line. The idea of independence upon which assurance depends would correspondingly be construed according to threats exceeding this materiality threshold. Indeed, the G3 defines the Reporting Principle of materiality as follows: “The information in a report should cover topics and Indicators that reflect the organization’s significant economic, environmental, and social impacts, or that would substantively influence the assessments and decisions of stakeholders” (GRI 2006:8). The G3 definition contains both elements – the triple bottom line, and the appeal to the decisions of users – but it stops short of combining them. This is unsurprising, since it is difficult to imagine models of “socially rational” or “environmentally rational” decision-makers which would not be torn apart by the de facto plurality of norms, dispositions and interests constitutive of the former, and by the ideological conflict for the custody of the latter.

Economic rationality, by contrast, can suppose a comparatively harmonious orientation towards the highest profits at the lowest risks. Even those who do not share this orientation will promptly recognize it as the basis on which they are addressed as economic agents. The G3’s vague and inclusive definition is an indication of how difficult it is to reorient the materiality concept for settings which are not highly systemically-integrated; roughly speaking, for places that aren’t completely saturated with economic incentives and/or administrative power.

However, certain of the exemplary threat categories, which I’ve just mentioned, suggest that independence of mind may also be sensitive to social integration factors. It’s not all about stacking paper and ticking boxes! For example, gifts and hospitality, and acting on a client’s behalf in informal disputes, imply some level of communicative action involving the assuror and client.

But before we allow this to argue that the orientation to audit is not complete, we should see it in light of the relationship between independence of mind and independence of appearance. An important corollary of “independence of mind” is that organisations do not have minds. The subject of the Code, and the basic unit of independence, is the practitioner. A threat to independence is thus first affectively disclosed. The practitioner is the first to know about it, and is responsible for escalating it into the regulatory architecture. For example, if a Big Four practitioner has any doubts about her independence, she can speak to one of the partners in charge of her project or her regional service line, to a national risk partner, to dedicated in-house legal teams, to the anonymous ethics helpline which each Big Four firm maintains, to the ICAEW, to the professional body of which she is personally a member (for accountants whose training is Big Four-sponsored, usually the ICAEW or ICAS), or even to the AADB. Such appeals are practical approximations of the Code’s appeal to the “informed, reasonable third party.” The regard of this regulatory architecture cannot be principally to affective status of the practitioner, so it is again to homo economicus, the rational economic subject. Some of these mechanisms are punitively specialised, but the run-of-the-mill independence threat will not be met with investigative and disciplinary procedures. It will be resolved by the institution of safeguards, a change or clarification of engagement scope, the transfer of the practitioner to other duties out of the zone of risk, or in an extreme case the withdrawal of the organization providing assurance. Independence of mind is characterised through a labyrinthine system of recursively-defined terminology including integrity, objectivity, professional, honest, straightforward, fair, bias, undue influence and conflict of interests. The most substantive elements of this system are its several exemplary threat categories. But these cannot straightforwardly determine whether or not independence of mind exists, since a safeguard may potentially neutralise each threat, and the Code does not contain criteria to arbitrate the skirmish of threat and safeguard. However, the Code assumes that margins of safety are cheap, and so the practitioner is directed to draw them generously. If the practitioner receives any hint that her independence of mind is jeopardised, there are abundant candidates, unambiguously economically disinterested, to fill her position. The Code gives an overall impression of great fungibility of practitioners. The assumption of easy disengagement is emphasized by the fact that “concern about the possibility of losing a client” (q.v.) is itself identified as a threat to independence. Because there is so much room to manoeuvre, so much opportunity to switch practitioner for another, it is appropriate to situate the mechanism for invoking regulatory oversight in the affective state of the very person whose judgment is potentially impaired.

The orientation of this idea of independence to audit can be made clear by a comparison with the CR context. For the assurance of CR reports, by contrast, a far more claustrophobic topology of interests obtains. The typical assurance engagement is one in which nobody is disinterested. Social and environmental independence cannot be privatively formulated as feasibly as economic disinterest can.
Were the Code’s concept of independence were oriented to assurance, rather than audit, it would probably have to relinquish the ideal of a materially disinterested assuror, and acknowledge that material threats to independence are ineradicable.

It would have to accept doubt as a constant accompaniment of independence. It would have to address in far greater detail how threats to independence are exacerbated and mitigated in their interactions with one another and with various safeguards.

Okay, it’s worth emphasizing that I’ve only been examining the discursive construal of independence in the Code. I don’t mean to suggest that assurors really walk about in a reverie of internal monitoring, frequently deferring to regulatory oversight as their independence of mind undergoes some questionable shift! Indeed, most evidence is to the contrary. The Big Four have enthusiastically taken to the principle of safeguards, and employ sophisticated computerized conflict check systems to automate the allocation of practitioners to projects. PwC’s code of conduct states, “[w]e aim to avoid conflicts of interest. Where potential conflicts are identified and we believe that the respective parties’ interests can be properly safeguarded by the implementation of appropriate procedures, we will implement such procedures” (PwC 2008:8).

This may demonstrate professionalised preoccupation with independence of appearance over independence of mind. Independence of appearance exists if and only if a reasonable and informed third party would judge that independence of mind exists. This stipulation may at first appear redundant. The factors which, to a hypothetical third party, could argue a lack of independence, are coterminous with the factors for which the subject of the Code is supposed to take responsibility. As the subject of the Code has responsibility for hypothesising the reasonable and informed third party, it is at first unclear what constraint the provision adds. But the provision is not redundant. I think there are three reasons I can give for this. First, the term “informed” implicitly includes practical limitations to evidentiary completeness. The subject of the Code may have spent the day in a room with a snazzy pink folder containing sensitive information, and not have opened it; the subject knows that her independence of mind is not compromised, but fact that the subject definitely did not open the snazzy pink folder must be excluded from the information possessed by the hypothetical third party. Next, the hypothetical third party provides any disciplinary interpreter of the Code with a ready-made cast to occupy and to control in response to situational political imperatives. Making the role of a reasonable and informed third party a decisive one gives a very free hand to the concrete institutions invested with authority to decide upon the Code. To a lesser extent, the same can be said of the recursive system of normative terms loosely associated with honesty. These generate an ambience of raised normative expectation without microfoundation in any concrete norm-governed practices. In favouring a “principles based” approach over detailed specifications, the Code concentrates powers in the hands of concrete authorities. Most importantly however, the derivation of independence of appearance from independence of mind is not a one-way process. The categories of threat which the Code lays out are impersonal, public phenomena. They are not a phenomenology of independence. They do not suggest what it might feel like if independence were threatened. They belong, in short, to the sphere of appearance.

The subject of the Code is thus as likely, or more likely, to use independence of appearance as a yardstick for independence of mind, as the other way around. Indeed, inasmuch as the Code requires the practitioner to escalate any doubt about independence, its basic cognitive mode it requires is one of dubitable doubting (in other words, of apparent doubts, which can be studied to determine if they “actually are” doubts), a mode difficult or even impossible to inhabit except via an imagined intersubjectivity.

The assertion that independence of mind is foundational for independence of appearance is thus contradicted throughout the Code.

The appeal to the reasonable and informed third party pervades the Code; in its pervasiveness, independence of mind, ostensibly a definiendum from which independence of appearance is derivative, actually emerges coevally with it. I see two main ways of understanding this pervasive appeal to a reasonable and informed third party. Both of these confirm independence’s the orientation to audit, rather than assurance. First, it could be considered the Code’s positivist moment. “Reason,” in this interpretation, is regarded as unproblematically homogenous and accessible, and to be “informed” is merely to possess all the “facts.”

While parts of the Code pay lip service to consensual, rather than objectively-given reality, their significance can be traced to this conviction that there is what you might call a transcendental givenness which conforms itself both to thought (“reason”) and to the world (“information”). This understanding is plausible, and is roughly the position taken by Power and Laughlin (1992:116): “the image of accounting as a simple mapping of an independent reality is naïve […] a more radical critique of the representationalist credentials of accounting would see it as a practice that was “creative” in a much deeper sense, i.e. not as a deviation form an objective standard but as a practice without objectivity.”

The second understanding, which I prefer and will further develop, is that the appeal to the reasonable and informed third party is actually one of the places in which the Code most explicitly acknowledges its basis in consensus. “Reasonable” and “informed,” on this interpretation, must be understood as outcomes of socialisation, not positivist indexicals. The independent practitioner is the professionally reasonable and informed practitioner. As Power (1997:80) notes, “Auditability is a function not of things themselves but of agreement within a specialist community which learns to observe and verify in a certain way.” The consensual basis of independence is reproduced through professional practice, which will be the subject of the next installment!