Accounting professionalization and the state: The case of Saudi Arabia

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Abstract

This study examines the professional project of the Saudi Organization of Certified Public Accountants (SOCPA). It seeks to explain how SOCPA secured legislated authority to control standard setting and entry to professional practice before the organization developed technical and financial capacity as a professional body. The state corporatist system of Saudi Arabia provided fertile ground for SOCPA’s promoters to invoke the need for an accounting body to advance Saudi Arabia’s socio-cultural values. The promoters advocated the role of such a body in setting suitable accounting standards for the Sharia law context of Saudi Arabia, and developing an indigenous system of professional accountancy training. The project made a detour from its initial plan for an autonomous professional association, and instead organized SOCPA as a hybrid entity that blends some characteristics of a state agency and a professional body. Further, the project exhibited hybridity in accommodating incumbent practitioners into SOCPA membership, and in setting accounting standards using a mix of American accounting standards and Saudi Arabia’s Sharia law. Through these strategies, SOCPA succeeded in securing the authority to restrict the entry of foreign nationals and candidates affiliated with overseas accountancy bodies into the Saudi market.

Introduction

Although accounting professionalization has received considerable research attention in a range of research streams over the past four decades (Napier, 2006), there is a continuing need to examine the social role of accounting and the ensuing link to professionalization (Walker, 2016). The literature on professionalization has widely adopted the neo-Weberian approach, analyzing occupational group competition aimed at exclusionary closure (Abbott, 2014, Larson, 1977, Waring, 2014, Willmott, 1986). This approach explains how occupational groups operationalize closure by institutionalizing exclusion criteria based on credentials (Coronella, Sargiacomo, & Walker, 2015; Abbott, 2014, Larson, 1977, Willmott, 1986) and sometimes other subtle criteria, such as race and citizenship (Annisette, 2003; Hammond, Clayton, & Arnold, 2009; Sian, 2011). Convincing the state to provide legislative support is crucial in occupational groups’ efforts to operationalize closure (Macdonald, 1995). From the neo-Weberian perspective, the state is often viewed as a neutral adjudicator of occupational group competition. This emphasis on the neutrality of the state has generated interest in alternative frameworks that could capture ways in which the state shapes professionalization more directly. In this regard, prior studies have highlighted the need for a dynamic analytical framework (Burrage, Jarausch, & Siegrist, 1990; Chua & Poullaos, 1993) to enable understanding of accounting professionalization in a broader social and historical context. Nevertheless, the literature on the accounting–state dynamic has remained sparse (Ezzamel & Xiao, 2015), and further studies are needed to understand accounting professionalization, particularly in relation to the advancement of broad societal goals (Walker, 2016).

Some studies have drawn upon the concept of state corporatism to investigate the direct role of the state in shaping accounting, including aspects of accounting professionalization (Cooper and Robson, 2006, Panitch, 1980; Puxty, Willmott, Cooper, & Lowe, 1987; Richardson, 1989). In this approach, professional associations are conceptualized as corporate bodies involved in national policy-making in societies characterized by a concentration of power in the state (Hertog, 2004, Hertog, 2006a, Puxty et al., 1987, Schmitter, 1974). Corporatist bodies are assumed to operate under state control, serving as an intermediary between their members and the state. Such bodies monitor and regulate their members, thus serving as a mechanism of hierarchical societal control, which is broadly consistent with the notion of social controls (Walker, 2016) that solidify social structures (Brigham & Hayes, 2013). Nevertheless, the corporatist view presumes structural determination (Puxty et al., 1987), and therefore neglects the dynamic interaction of multiple actors in the professionalization process. Actor-based approaches—which are increasingly being adopted in the study of the profession–state dynamic (Burrage et al., 1990, Macdonald, 1995)—can supplement state corporatism to enable an understanding of professionalization in its social and historical context. Concepts of actor-network theory (ANT) that have been employed to investigate some aspects of accounting professionalization (e.g., Gendron & Barrett, 2004) and regulation (Ezzamel and Xiao, 2015, Gendron and Barrett, 2004) hold promise in this respect.

Using an analytical framework that combines state corporatism and ANT, this study examines the professional project of the Saudi Organization of Certified Public Accountants (SOCPA) (1979–1992) to explain how an occupational group can secure legislated authority to control standard setting and entry to professional practice before developing the technical and financial capacity as a professional body. The study demonstrates how hybridization enabled the reconciliation of contradicting goals of actors (see Couldry, 2008; Miller, Kurunmäki, & O’Leary, 2008) in the process of translation, which transformed the SOCPA proposal into a reality in the state corporatist setting of Saudi Arabia. First, SOCPA emerged as a hybrid body blending some characteristics of a state organ and a professional body. The organization is subsumed within the state structures while it controls entry to the professional accountancy market. This successful alliance between SOCPA and the state is traced to SOCPA’s promoters’ articulation of a mission in line with the national policy priorities of the 1970s to 1990s, which focused on safeguarding Islamic values and indigenizing the Saudi labor force. Despite detracting from the professional project’s initial ambition to establish an autonomous body, hybridization with the state enabled the diffusion of the underlying tension between the project’s underpinning closure goals and the Saudi state’s governance model, which attempts to restrict groups’ self-serving behaviors. Saudi Arabia’s political culture is interpreted as a state corporatist system (Hertog, 2006b) guided by Islamic principles.1 The Saudi governance system advocates the role of the state in maintaining a harmonious society in which conflict and advancement of parochial interests are minimized.

Second, SOCPA employed hybridization in the development of accounting standards as a mix of United States (US) standards and the Zakat concept of Sharia law.2 This strategy was crucial because although the project promoters advocated the need for a vanguard professional body to set accounting standards suitable for the practice of Zakat, the project lacked the capacity to accomplish this task.

Third, SOCPA accommodated incumbent practitioners into membership. This approach helped address the challenge arising from SOCPA’s promoters’ emphasis on the need to redress expatriate labor dominance and the potential lack of qualified professionals to service the market if expatriate accounting practitioners were excluded from the Kingdom of Saudi Arabia’s (KSA) market. Hybridization with incumbent expatriate practitioners implies that the project’s exclusionary move was only a future-oriented strategy, consistent with the state’s policy priority of Saudization of the labor force (Madhi and Barrientos, 2003, Rice, 2004, Wynbrandt, 2010), aimed at restricting expatriate entrants into the Saudi accountancy market.

This study contributes to understanding of accounting professionalization processes and outcomes by demonstrating how hybridity enabled SOCPA to gain legislative authority before the organization developed the capacity as a professional body. Akin to environments in which race has been employed as an exclusion criterion (Annisette, 2003, Hammond et al., 2009, Sian, 2011), the SOCPA project introduced citizenship as a primary means of exclusion. This outcome contrasts with experiences in which occupational groups engaged in activities such as establishing certification mechanisms for potential entrants to the profession, and developing membership bases before aspiring for market control (see Carnegie & Edwards, 2001). As professionalization issues have continued to evolve along with globalization (Carter, Spence, & Muzio, 2015), which has inter alia induced the movement of professionals around the world (Annisette & Trivedi, 2013), understanding professional issues associated with citizenship is of interest. The study also responds to Walker’s (2016) call to examine accounting professionalization in the context of advancing societal goals. That is, the study shows that the SOCPA project succeeded because its goals were defined in close conformity with the national policy of safeguarding Islamic values and indigenization of professional training, which broadly fall within the concept of social control.

The remainder of this paper is structured as follows. Section 2 develops the study’s conceptual framework. Section 3 outlines the research methods. Section 4 analyzes SOCPA’s historical account, followed by a discussion in Section 5 and conclusion in Section 6.

Section snippets

State corporatism

Our analytical framework combines state corporatism and ANT. Previous studies have employed the state corporatist framework to analyze relationships between interest groups and the state, including the accounting–state dynamic (Cooper and Robson, 2006, Panitch, 1980, Puxty et al., 1987, Richardson, 1989, Yee, 2012). State corporatism explains how associations, representing their members’ interests, participate in policy-making and/or implementation (Martin, 1983). Schmitter (1974) broadly

Research methods

The historical research method is employed in this study, tracing the development of the Saudi professional project (1979–1992) that established SOCPA as an authoritative accounting professional body. This study period was chosen because focal actors commenced articulating the problematization in 1979, and 1992 marked the formation of SOCPA. We analyzed interview and documentary evidence using conceptual tools drawn from state corporatism and ANT. Semi-structured interviews were conducted to

Political-economic antecedents of the SOCPA project

Saudi Arabia established a modern state system in 1902 (Cappelen and Choudhury, 2000, Library of Congress, 2006) and formed its current governance system of Islamic monarchy in 1932 (Al-Twaijry, Brierley, & Gwilliam, 2003; Library of Congress, 2006). This system operates according to Islamic principles of governance (Al-Rehaily, 1992) under Sharia law, using the Quran as its constitution (Al-Eissa, 2009). These principles require the state to maintain social order and ensure equitable treatment

Discussion of findings

This study has examined how SOCPA’s professionalization project (1979–1992) produced legislative backing for SOCPA’s control of professional certification and standard setting before it developed the capacity to produce qualified professionals and set accounting standards. Framing a mission consistent with the state’s policy priorities enabled the professional project’s promoters to convince the state to support the project. Lack of accounting regulation in the KSA’s national policy sphere, and

Conclusion

Professional closure in accounting takes multiple forms, and is contingent upon the socio-historical context in which it occurs. This study has illustrated that hybridization enables an occupational group to form alliances with the state, and other potentially competing groups to secure entry controls, despite lacking demonstrated capacity as a professional body. Hybridity facilitates the making of compromises to reconcile the potentially competing or contradictory goals of actors in the

Acknowledgements

We are grateful to the interview participants for generously sharing their experiences, and the co-editor in chief of Critical Perspectives on Accounting, Professor Yves Gendron, and two anonymous reviewers for their helpful comments on earlier versions of the paper. We also gratefully acknowledge valuable comments and suggestions received from Associate Professor Joanne Locke, Deakin University; Professor Alan Lowe, RMIT University; and Accounting Research Seminar participants of Deakin

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