The Code of Ethics and The Development of The Auditing Profession in Greece, The Period 1992 2002 2006 Accounting Forum

Accounting Forum 30 (2006) 155178
The Code of Ethics and the development of

the auditing profession in Greece,
the period 19922002
Emmanouil Dedoulis
Athens University of Economics and Business, 13, Nikomidias St., 161 22 Athens, Greece
Abstract
Various forms of Codes of Ethics have played major roles in the advancement of the accountancy profession in the Anglo-American context. Responding to various legitimation challenges, accountants have
drawn upon their ethical arrangements to reinforce claims to credibility and independence from clients.
By doing so, they have sought to persuade social institutions of their professionalism and secure the
privileges of self-governance and the monopoly of auditing practice. Though the literature has illuminated
the role of ethical pronouncements in the ascendancy of the Anglo-American profession, little effort has
been made to explore their impact upon the profession in emerging contexts. The case of Greece in the
period 19922002, for instance, provides an interesting setting of an emerging economy in which to study
professional ethics, as the local institute of auditing was restructured according to the Anglo-American
professional paradigm following which it faced certain legitimation challenges. This paper investigates the
broader background of threats to the Greek auditing profession in the period 19922002 and explores
whether local auditors relied upon their Code of Ethics and compliance processes to re-establish the
image of their institute as a credible body. It draws upon the imperialism of influence framework to
demonstrate that, within increasingly internationalised contexts, the local accountancy profession tends to
resort to professional ethics to confer legitimacy upon its activities and to safeguard its self-governing
status.
2006 Elsevier Ltd. All rights reserved.
Keywords: Audit profession; Legitimation challenge; Code of Ethics; Emerging economy; Imperialism of influence;
Westernisation
Tel.: +30 210 7238 897; fax: +30 693 7364 299.
E-mail address: ededoulis@aueb.gr.
0155-9982/$ see front matter 2006 Elsevier Ltd. All rights reserved.
doi:10.1016/j.accfor.2006.02.004
156
E. Dedoulis / Accounting Forum 30 (2006) 155178
1. Introduction
In recent decades, a well-established body of literature dealing with Anglo-American
accountancy1 has drawn attention to the political role of the profession showing that it primarily seeks to advance the sectional interests of the membership (Mitchell & Sikka, 1993;
Mitchell, Puxty, Sikka, & Willmott, 1994; Preston, Cooper, Scarbrough, & Chilton, 1995; Sikka
& Willmott, 1995). It has been maintained that the profession ceaselessly strives to legitimise its
practices in order to attain and retain social privileges such as the monopoly of auditing practice
and self-governance which confer wealth and power upon the individual professional . . . and
autonomy . . . upon the professional body (Preston et al., 1995, p. 508). The success of its legitimation efforts depends upon the acceptance of claims to credibility and ethos by powerful
institutional bodies perhaps most importantly the state and its agencies . . . (Preston et al., 1995,
p. 510). To reinforce such claims and facilitate trust and confidence in its practices, the profession had introduced, refined and appealed to the efficiency of the disciplinary processes relating
to the Code of Ethics seeking to build the image of a credible and trustworthy organisation.
Thus, the Code is viewed as a legitimation device which plays a major role in assisting the AngloAmerican profession in sustaining its privileged position within the economic context (Mitchell
& Sikka, 1993; Sikka & Willmott, 1995).
Though the literature has provided insights into the role of the Code and ethical arrangements
in the advancement of the Anglo-American profession, little is known about their role in emerging
contexts.2 Greece, for instance, is an interesting case to examine as, in the period 19922002,
the self-governing auditing profession3 faced a difficulty in controlling the conduct of its membership and an increasing erosion of public confidence in its practices which was echoed in the
press. Moreover, the professions jurisdiction was challenged by the intention of the state to set
up an independent organ to supervise its practices and operation. Against this background, this
paper examines how local professionals responded and whether they used their Code of Ethics
and disciplinary processes to refine their image as a credible organisation. To achieve this,
the paper draws upon the imperialism of influence framework to illustrate the political and economic influences that shaped the local settings within which the local profession operated. The
paper is based on primary and secondary archival sources of the auditing profession, ministerial decisions and relevant Laws, academic publications, papers presented at conferences and
the media. Furthermore, interviews were conducted with professionals who played an important
role in the formulation and application of the 1997 Code of Ethics (see Appendix A for more
details).
In this paper, the term Anglo-American accountancy model is used to refer to accounting concepts and practices
influenced by the British and American tradition as well as to the mode of organisation and operation of the AngloAmerican profession (for details see Hanlon, 1994). However, it is acknowledged that there are differences between the
British and the US accountancy practices.
2 The term emerging economies refers to transitional economies which direct their efforts towards developing a social,
political and economic institutional framework conducive to capitalism, placing emphasis upon the construction of capital
markets (Saudagaran & Diga, 1997). Though the importance of emerging economies, like Greece, has recently grown, as
a result of their participation in supranational institutions and organisations, their role in the context of global capitalism
is far less influential in comparison to that of the dominant advanced capitalist countries (such as the US, UK, Japan,
Germany and France).
3 The profession was established in 1955 as a state regulated institute. It remained under state supervision until the
early 1990s, when it was transformed into a self-governing organisation (see Section 3 for its organisational features, for
details see Caramanis, 1996, 1999, 2002).
157
The remainder of this paper is organised into the following sections. The second section
constructs the framework for understanding the role of ethical pronouncements in the development
of the profession in an emerging economy. The third section provides a brief account of the
political and economic context of Greece in the period 19922002, sketching the broader backdrop
against which the profession was restructured according to the Anglo-American model. The fourth
section draws attention to the challenges facing the profession and the strategies employed to
respond to these difficulties. Moreover, it focuses upon the impact of the Enron episode upon the
image of the local profession and the defensive tactics it adopted to re-establish its credibility.
It is shown that the Greek Code of Ethics and disciplinary processes were employed by the
profession to respond to public concerns and criticisms of its role and operation. The last section
discusses certain aspects of the process of the Codes formulation and sheds light upon its role
as a legitimation device used by the local profession to maintain its position within the Greek
context.
2. Understanding the role of the Code of Ethics in the advancement of the local
accountancy profession
To understand the role of the Code of Ethics one has to be acquainted with views and notions
found in the literature on the Anglo-American accountancy profession. The relevant literature
could be divided into two broad branches. The first comprises conventional approaches which
mostly rely upon professional proclamations and views regarding the professionalisation of
accountants. The second is the critical branch which draws upon Weberian and Marxist theories to situate the analysis of the emergence and ascendancy of occupational groups in the broader
social, political and economic context (for an analysis see Robson and Cooper, 1990; Saks, 1983;
Willmott, 1986).
Insights into the conventional approaches can be found in journals such as The Accountant
and the Journal of Accountancy.4 Mostly written by professionals, articles published in The
Accountant defined the Code of Ethics as a set of rules and principles designed to rule out
undesirable activities (House, 1956, p. 367). These rules were aimed at prohibiting members
from allowing commissions or brokerage, engaging in incompatible activities, certifying accounts
not verified by them and soliciting clients or encroaching upon the work of other members. Other
rules made explicit references to the public interest, integrity, objectivity and independence of the
membership. Such rules outlined the broader context within which accountants had to exercise
their activities (Cooper, 1907; Montgomery, 1907; Price, 1900b; Richardson, 1936; Sterrett, 1907).
Accountants argued that these sets of rules were distinctive elements of professionalism, which
distinguished professions from other occupations (see also Carey, 1956; Cooper, 1907). It was also
maintained that accountants associations comprised a professional body and as every profession
worthy of the name evolved with its growth a kind of moral code (Dicksee, 1909, p. 380; Price,
1900a, p. 922).
Accountants argued that the Code of Ethics was a basic means of advancing the ethos and
innate sensibilities of the membership. It was suggested that it imbued professionals with the
spirit of righteousness and the ideals of a gentleman (Higgins & Olson, 1972, p. 33; Richardson,
Although other journals could also be drawn upon to illuminate conventional approaches, this paper has focused on
The Accountant and the Journal of Accountancy as they offer accessible historical records incorporating discussions on
professional ethics in the UK and the US dating back to the second half of the 19th century.
158
1936, p. 313). Thus, although most accountants were of lofty instincts and knew the rules of
professionalism prescribed in the Code (Cooper, 1997; Montgomery, 1907; Sterrett, 1907), the
conduct of some members was capable of improvement:
The truth of the matter is, however, that all the professions have attracted men and women
who, for lack of background or suitable environment or proper moral fiber, have been
slow to grasp the true significance of professional life . . . accountants who have entered
the profession without a conception of its real character have been so impressed by the
importance of observing the Code of Ethics that they have gradually acquired a conception
of the profession totally different from that which they possessed at the time of their entering
it. (Price, 1900b; Richardson, 1936, pp. 313314).
Interestingly, todays professional proclamations regarding the Code of Ethics exhibit significant similarities to those published in The Accountant and the Journal of Accountancy. For
instance, the UK accountancy bodies have released a booklet stating that the accountancy bodies
seek to maintain the ethical values of the profession by producing codes of practice embracing a
variety of fundamental ethical principles (The Accountancy Foundation, 2002, p. 8). In a similar
vein, Jack Maurice, the then Head of Professional Ethics of the Institute of Chartered Accountants
in England and Wales, reveals that little has changed:
This is a book about the ethics of the accountancy profession. The UK accountancy profession is around 200,000 strong. All its members regard their ethical values as the binding
force which unites them and separates them from the non-qualified . . . The profession has
always taken the ethical ground . . . It is a vast influence for good (Maurice, 1996, p. X).
Conventional academic literature has relied upon professional claims embracing accountants
views. For instance, Arens and Loebbecke (2000, p. 81) argued that:
[o]ur society has attached a special meaning to the term professional. A professional is
expected to conduct himself or herself as at a higher level than most other members of society
. . . the underlying reason for a higher level of professional conduct by any profession is
the need for public condence in the quality of service by the profession regardless of the
individual providing it.
Meigs and Whittington (1989, p. 46) argued that the Code is a main element of professionalism which provides the members with the guidelines for maintaining a professional
attitude and conducting themselves in a manner that will enhance the professional stature of
their discipline. Similarly, Flint (1988, p. 91) argued that the Code of Ethics is a set of
rules which are basic principles of correct action for members of a profession . . . designed to
protect the institutional reputation of professionalism, i.e. to promote adherence to the kind
of conduct that the public requires. Reproducing professional proclamations, conventional
academic writings have taken little notice of the Code of Ethics social, political and economic character and therefore have provided a narrow way of understanding its role in the
advancement of the profession (Mitchell et al., 1994; Preston et al., 1995, p. 510; Willmott,
1986).
Useful insights into the role of the Code have been provided by the critical tradition which
located its examination in the broader social, political and economic context (Johnson, 1972;
Larson, 1977; Mitchell et al., 1994; Preston et al., 1995, p. 510; Willmott, 1986). By doing so,
critical studies have shown that the employment of the Code of Ethics is an integral part of the
strategy which has enabled accountants to protect their sectional interests and secure their social
159
privileges. It has been underlined that, to understand these strategies, particular attention should
be paid to the actions of the practitioners who participate in the supervisory, administrative and
disciplinary institutions of the profession as these are the major players who formulate the policies,
articulate the interests of the profession and seek to ensure a consistency of behaviour within it
(Cooper, Puxty, Lowe, & Willmott, 1989; Sikka & Willmott, 1995).
Critical studies have illuminated how members of the institutions of the accountancy profession relied upon the Code of Ethics to create the image of a homogenous, credible,
and ethical body. It has been argued that the introduction of the Code of Ethics assisted
the organisation in persuading social and economic organisations about its capacity to provide indispensable social services and, thereby, to attain privileges such as the monopoly of
auditing practice and self-governance. This branch of literature has also underscored that the
Code of Ethics has obtained a major importance as it has been employed by professionals to
respond to various legitimation challenges (Mitchell & Sikka, 1993; Mitchell et al., 1994; Preston
et al., 1995). In particular, as economic crises and corporate collapses attributed to audit failures have often occurred (Sikka & Willmott, 1995), accountants claims to professionalism,
ethos and integrity have been challenged by various groups. Politicians, the media and academics have advanced competing discourses and criticisms which have inflamed public concerns
about the role and operation of the accountancy profession (Sikka & Willmott, 1995, p. 547;
see also Canning & ODwyer, 2001, 2003; Citron, 2003). Such views undermine broader confidence in the role and operation of the accountancy body, paving the way for organisational
changes.
Various strategies have been employed by the institutions of the profession to respond to
and neutralise such challenges. Firstly, they have instituted Codes of Ethics in order to control
the behaviour of accountants (Preston et al., 1995, p. 516). For instance, Preston et al. (1995,
pp. 515516) have argued that, in the first years of the American professions operation, the
rivalry between accountants was intense and as a result the body had difficulty in ensuring the
memberships professional conduct. To govern the behaviour of the membership, the institutions
of the profession introduced a Code of Ethics. This comprised lists of specific rules, which were
aimed at facilitating adherence to it. Thus, through introducing and applying a Code of Ethics,
the body sought to normalise professional conduct and, thereby, to build the image of an ethical
and credible institute.
Secondly, when broader criticisms of the role of the profession emerge, the institutions of
the body resort to public appeals demonstrating the effectiveness of the Code of Ethics and the
efficiency of the disciplinary processes to show their responsiveness to public concerns (Mitchell
and Sikka, 1993; Sikka & Willmott, 1995). Through such appeals, they also aim at individualising
errant conduct and demonstrating that members involved in unprofessional activities are punished
and excluded from the body (Sikka, 2001). In this manner, attention is distracted from the inadequacies of the organisation of the profession (and in particular self-governance) and directed at
the discredited activities of individual practitioners (Sikka, 2001).
More recently, in the aftermath of recent corporate collapses, such as the Enron and WorldCom
episodes which had significant effects upon the legitimacy of accountancy (Guthrie & Parker,
2003; OConnell, 2004; Parker, 2005), the Code of Ethics remained central to the defensive
tactics of the profession. For instance, acknowledging that major collapses turned the spotlight of
the worlds attention onto the profession, Druckman, Vice President of the ICAEW, maintained
that the code could help to ensure the independence of the auditor (Druckman, 2003). Similarly, in
a speech about auditing after Enron, Wyman, President of the Institute of Chartered Accountants
in England and Wales (ICAEW) argued that: an ethical code is established requiring standards of
160
behaviour above those required by the general law (Wyman, 2003). Moreover, seeking to indicate
its responsiveness to social concerns, the American Institute of Certified Public Accountants
(AICPA) stated:
The AICPA is actively engaged in investigating the conduct of members who were involved
in the collapse of Enron . . . The AICPA takes ethics violations very seriously, and will
discipline those who violate the rules. (AICPA, 2003).
Thus, critical interpretations see the Code of Ethics as a device employed by the accountancy
profession to legitimise its practices5 and, thereby, defend its pivotal position within the broader
social and economic context.
Looking at the Code of Ethics as a legitimation device may be a useful theoretical basis for
examining its role in the development of accountancy institutes in emerging economies, like
Greece, which have emulated the Western model (Kalamotousakis, 1980; Mouzelis, 1978;
Nikolinakos, 1976; Tridimas, 1996; Tsoukalis, 1981). As a result, strong political and economic
ties have developed between advanced capitalist countries and emerging economies. The developed economies have been able to find new markets for raw materials and labour and profitable
investment opportunities necessary for their economic development and expansion at the global
level (Holton, 1998; Hirst & Thompson, 1996; Sklair, 1995, p. 33; Stiglitz, 2002). Emerging
states have used deeper political and economic relationships with the West to attract foreign
investment activity as they are usually deprived of adequate internal capital necessary for financing developmental works and achieving progress and prosperity (Bailey, 1995, p. 605). However,
the financial assistance provided by the West is also accompanied by pressures on emerging
economies to adopt compatible institutional frameworks which are based on the free market model
of organisation in order to allocate resources profitably (Hirst & Thompson, 1996; Holton, 1998,
p. 71; Stiglitz, 2002). This activity of the West and its impact upon emerging economies has
been referred to as imperialism of influence, which:
is conceived of as constituting both an economic and a political aspect. With respect to the
economic, it does not relate merely to market relationships between countries of different
economic strengths. Indeed it relates to circumstances in which the economy of a weaker
country is so integrated into that of an industrial power, that the strategic decisions governing
both the direction and rate of growth of the former are made by, and governed by the interests
of the latter . . . Secondly, with respect to the political, imperialism is considered as distinct
from mere expansionism as a matter of state policy. Indeed, it is viewed as the logic of
capitalist expansion, which nonetheless requires the support of an imperial state-that is
one which is global rather than national, and which exercises its authority formally and
informally across national boundaries in the service of the internationalisation of capital
(Anisette, 2000, p. 636).
With its emphasis on competition, profit accumulation and efficiency, imperialism of influence
presupposes the existence of institutions which contribute to the realisation, appropriation and
effective allocation of capital (Johnson, 1977). The Anglo-American profession has undertaken
the role of servicing the information demands of international investors, shareholders, credit
Similar tactics have been employed by the CPA Australia (see for instance the Speech by David Baulch at the CPA
Lawyers Association of the Philippines Conference, held in Manila in February 2004; for the responses of the profession
in New Zealand in the aftermath of the Enron collapse see Parker, 2005, pp. 385386).
161
institutions and other organisations, making possible transnational economic transactions. This
has made it an indispensable element and a dominant institution within the globalised economic
context (Aggeston & Loft, 2003; Arnold & Sikka, 2001). Hanlon (1994, p. 56) goes so far
as to suggest that: members of the Anglo-American profession control the vast majority of
international audit appointments.
The Anglo-American profession has made every effort to establish branches in emerging
economies, in order to benefit from supporting the operation of multinational clients (transnational
corporations) and organisations world wide (Perera, 1989; Samuels & Oliga, 1982; Wallace,
1990). This effort has been significantly supported by Western and most local governments and
supranational institutions6 which aim at standardising such practices across the globe in order
to facilitate the internationalisation of capital (Samuels & Oliga, 1982; Wallace, 1990; Walter,
1993). Under these influences, the organisation and operation of local institutions of accountancy
would be expected to be based on the dominant Anglo-American accountancy model (Daniel,
Suranova, & Beelde, 2001; Demirag, 1993; King, Beattie, Cristescu, & Weetman, 2001; Lakis,
1996; Simga-Mugan, 1995). Furthermore, it would not be unreasonable to expect that, operating
against internationalised backdrops, local professionals may encounter challenges, similar to those
facing the Anglo-American profession, and thereby, might resort to similar tactics to legitimise
their practices.
3. The politicoeconomic context of Greece in the period 19922002 and the
restructuring of the profession
Greeces political economy of this period was increasingly influenced by the European Union.7
In particular, its participation in the 1992 Maastricht Treaty entailed Greeces active involvement in
the common decision-making processes, through representation in the European Unions administrative and legislative institutions, such as the European Parliament and the Commission. This
further meant that Greece had to come into line with EU legislation by implementing EU Decisions, Directives and Regulations issued. In this context, it had to apply certain economic policies
in order to meet the convergence criteria8 for participating in the Economic and Monetary Union
(Euromoney, June 1999). Privatisation, deregulation, and price liberalisation measures were consequently adopted under the guidance of the European Union (Financial Times, 28 November,
1994; 17 September, 1993; 8 July, 1993; 15 June, 1993; 29 May, 1992; 18 December, 1991).
These policies had a catalytic effect on public spending, employment, social welfare provision
and fiscal policy. Of particular importance was the enactment of Presidential Decrees 96 and
104 which provided for, firstly, the unrestricted movement of capital between Greece and the EU
member states, secondly, the repatriation of capital arising from the liquidation of an investment
6
As expressed through its Directives, the policy of the European Union is indicative of its intention to standardise
accountancy.
7 In 1959, Greece asked for negotiations to be opened with the European Economic Community. Greece became an
associate member in 1961. In the late 1970s, Greece intensified the efforts to become a full member of the EEC. The
accession of Greece into the EEC was signed in 1979 and took effect in 1981.
8 After the signing of the Maastricht Treaty in 1992, in order for a member to participate in the third stage of the European
Monetary Union the following criteria had to be accomplished: (a) its inflation and the nominal long-term interest rate
should not exceed by more than 1.5% and 2% the average inflation and interest rate of the three best performing members;
(b) its public debt and deficit should not exceed the reference value of 60% and 3% of GDP, respectively; (c) its exchange
rate should remain within the normal EMS bands for at least 2 years before the examination (Michalopoulos, 1996, p.
73).
162
and thirdly, the export of profits, dividends and interest payments to other states (Kyriacou, 1996).
The measures taken indicated the local states commitment to liberal economic policies and the
operation of the free market leading to the formulation of an institutional framework conducive
to the expansion of capital. This gave a boost to the Athens Stock Exchange which for the first
time in its history started playing its primary financial role: that of providing the growth in enterprise and the economy (ASE, 2001, p. 153161; see also Financial Times, 29 September, 1997;
Bloomberg News, 9 September, 1997; 21 August, 1998; Wall Street Journal, 10 September, 1997;
The European, 6 November, 1997; Euromoney, December, 1997; Euroweek, September, 1998).
Developments in the Greek economy were followed by local and global pressures to modernise the local auditing profession, whose operation had remained under the supervision of the
state until 1992. Since its inception in 1955, the auditing body SOL9 had been incorporated into
the states centralised, hierarchical system of regulation. State officials supervised and monitored
the activities of the auditing profession and governed issues, such as audit fees, appointments
of auditors, disciplinary processes and formulation of bylaws. Furthermore, SOL was subject to
state control in relation to leadership selection, policy formulation and articulation of its interests (Dedoulis & Caramanis, 2005). However, the political and economic changes in the early
1990s led to calls for the restructuring of SOL and its transformation into an internationalised,
self-governing institute which would primarily service the demands of local/global shareholders,
managers, owners and creditors for reliable, comparable and low-cost financial information (for
the politics and processes of the restructuring see Ballas, 1999; Caramanis, 1996, 1997, 1999,
2002; Dedoulis, 2004).
Operating within a context of changing political and economic events, state officials restructured the auditing profession to facilitate the operation of the rapidly internationalised market. In
the preamble to Article 75 of the Law 1969/1991, state officials indicated the importance attributed
to the formation of a body which would meet the market criteria:
There is a need for modernising the institutional framework of the institution of auditing on
the basis of the market economy and competition principles . . . the modern, competitive and
independent institution will contribute to the production of reliable financial statements and
financial information for the benefit of the shareholders. This will secure the development
of the capital market. (Preamble to Article 75 Law 1969, 1991, pp. 37, 38, trans.)
The Presidential Decree 226, which was enacted in 1992, established the new auditing body,
SOE,10 and prescribed its organisation. Under the new structures, important features of the
profession followed the Anglo-American paradigm. SOE was endowed with the privilege of
self-governance. As evidenced by the legal requirement (Presidential Decree 226/1992, Article
9, paragraph 2), the auditing body was charged by the state with the responsibility to regulate
auditing practice:
SOL stands for the Greek initials :

(Body of Sworn-In Accountants).
SOE stands for the Greek initials of E:

E
(Body of Sworn-in Auditors). SOE was later
renamed into SOEL (

E
),
Body of Sworn-in Auditors Accountants. The purpose

of the auditing profession, as prescribed by the Presidential Decree 226/1992, was to conduct the statutory audits of
public organisations, banks, insurance companies, investment and finance companies, joint stock companies and joint
stock companies listed on the Stock Exchange (Article 3, paragraph 1, Presidential Decree 226/1992). SOE was also
responsible for providing expert opinion on administrative and accountancy issues ordered by state departments or courts
(Article 3, paragraph 2, Presidential Decree 226/1992).
9
10
163
the administrative and disciplinary institutions of the auditing profession formulate rules
of professional ethics . . . (and) exercise supervision and control over the Certified Public
Accountants work in order to ensure that the relevant Laws and rules of professional ethics
are adhered to and that the quality and transparency of the rendered services and credibility
of the profession are safeguarded (Presidential Decree 226/1992, Government Gazette,
A120, Article 9, paragraph 2, trans., parenthesis added).
The members of the administrative, supervisory and disciplinary institutions of SOE were
elected by the General Assembly of auditors (Article 7, paragraph 4, Presidential Decree
226/1992). In particular, the General Assembly elected the Chairman and members of the Board
of Supervisors, the Scientific Council11 as well as a representative in the Disciplinary Council.12
The role of the Board of Supervisors was significant. It dealt with administrative issues, the
appointment of new members and (on advice of the Scientific Council, which was not binding)
the introduction of rules, guidelines, standards and the issuance of rules of professional conduct.
Furthermore, important operations, such as the supervision of auditors work (Articles 8, 9, PD
226/92) and disciplinary processes (Presidential Decree, 226/1992 as amended by the Presidential
Decree 341/1997) were conducted by the Board of Supervisors.
SOE incorporated both members of SOL and members of the multinational audit firms, who
had been practicing in Greece and had established a local association known as SELE.13 Audits
were conducted within a competitive context as auditors appointments and fees, which had
been previously regulated by state officials, were left to be negotiated between auditors and
clients. Thus, the local auditing profession was transformed into an institute whose operation
bore significant resemblance to the Anglo-American professional bodies, one consequence of
which was that SOE started encountering difficulties which paved the way for the formulation of
a Code of Ethics.
4. Legitimation challenges and the strategies employed by the auditing profession
4.1. Inter-professional rivalries and the formulation of the Code of Ethics
In the 1990s, one of the difficulties facing the institutions of the auditing profession was the
rivalry between its members, a consequence of the significant increase in the membership of the
auditing profession. This was due to the incorporation of members of both local and multinational
audit firms in the newly instituted SOE. However, the market for statutory audits had exhibited
11 The Scientific Council consisted of five members of SOE or academics in the field of accounting or auditing (Article
6, PD 226/92, Government Gazette, 120, Article 6, paragraph 4). The Scientific Council dealt with the issuance of
guidelines, standards and codes of professional ethics which, however, had to be approved by the Board of Supervisors
(Article 6, paragraph 4, PD 226/92).
12 The Disciplinary Council comprised a judge, a member of the Board of Supervisors and a member of the General
Assembly (Article 20, PD 226/92). The Council dealt with cases of professional negligence, unprofessional conduct,
deviation from the Law and other regulatory provisions (Article 20, paragraph 2, , , PD 226/92).
13 SELE are the initials for the Greek acronym EE (v E

E)
Association
of Certified Accountants and Auditors of Greece. SELE had been instituted by and comprised members of multinational
audit firms which had practised in Greece since the late 1970s. Members of SELE conducted 90% of the non-obligatory
audits carried out in Greece. Most of the audits conducted by members of SELE concerned subsidiaries and were performed
at the request of the parent company, foreign investors or credit institutions (SELE, 1982a; Ethnos, 20/5/1982). One of
the primary aims of SELE had been to get access to the market for statutory audits which had been monopolised by SOL
before 1992. It mobilised political support and finally succeeded in the early 1990s.
164
little change, creating a much more highly competitive arena for practitioners (Citron & Manalis,
2001; Dedoulis, 2004). To secure their interests, auditors organised themselves into firms of
various sizes:
Following the liberalisation of the auditing profession in 1992, the membership of SOL
split in two parts. The majority of them remained together and established SOL SA, a private
audit company. A number of members, however, broke away from SOL SA and established
a few small independent practices . . . Thus, three professional groups of statutory auditors
may be discerned in the post liberalisation period: SOL SA, EX-SOL and SELE . . . SELE
(made up of) partners in international accounting firms operating in Greece . . . (Caramanis,
1996, pp. 2, 4, parenthesis added).
The audit firms mobilised political support to monopolise niches within the Greek economy:
. . . SOL SA . . .(sought) to reverse the liberalisation measures in the market for statutory
audits that had been introduced in 1992 . . . (as a result of SOL SAs lobbying) . . . the socialist
government initially passed legislation that provided for the reversal of liberalisation and
seriously inhibited the operation of international accounting firms, but these measures were
eventually withdrawn . . . SELE and its ad hoc ally EX-SOL, supported by the Big-Five
international accounting firms, successfully defended the two major achievements of liberalisation in 1992: professional recognition for members of SELE and uninhibited access
to the market for statutory audits. (Caramanis, 2002, pp. 380, 401, parenthesis added).
The intense competition led to pressures on some auditors to comply with the demands of
the management of their clients (Caramanis, 1997, pp. 586587; Citron & Manalis, 2001, p.
441). These practices started attracting some media attention and reports questioning auditors
independence from clients began to appear in the press:
An unprofessional competition has developed between auditors. As a result of the competition audit fees have plunged dragging along the time devoted to each audit. There are
rumors that unethical means are employed by auditors for securing their appointments.
It is also believed that auditors do not qualify their opinions in order to be reelected . . .
Within the structures of the auditing profession there is no control on auditors work . . .
(Economicos Tachydromos, 7 July 1994, p. 7, trans.).
Criticisms of auditors activities and the reliability of audited financial information were also
expressed in other articles:
The Anglo-Americanization of the auditing profession will lead to the emergence of largescale scandals like bank scandals in the US and the BCCI, Maxwell and Polly Peck in the UK
. . . under the current structures professional auditors, firstly, cover up instead of exposing
irregularities to the detriment of the state and stockholders, secondly, they can neither act in
the interest of the public nor inform state departments about embezzlements, thirdly, they are
dependent upon the management and if they do not cooperate they will not be reappointed
(Economicos Tachydromos, 24 June, 1993, pp. 4, 6, trans.; see also p. 6, 100 of the same
issue and articles in the issues published on 13 January, 1994 and 16 February, 1995)
In 1996, the institutions of the profession appeared to be concerned about the possibility of
unprofessional activities becoming the epicentre of media attention:
the members of the auditing profession could be categorised into four groups:
165
Auditors who conduct audits according to the auditing standards and relevant regulation
and who are, unfortunately, very few,
Auditors who do not conduct complete audits, who are many,
Auditors who find irregularities but do not qualify their opinions,
Auditors who conduct no audits but instead use creative accounting in order to fix balance
sheets and income statements distorting the accurate picture of financial information . . .
. . . such activities could involve the press discrediting the institution of auditing (Sakellis,
Chairman of the Scientific Council, quoted in the Scientific Councils Official Minutes 26
January, 1996, pp. 3, 4, 5, trans.)
It was perceived that the auditing profession was entering a period of crisis (stated in a letter
addressed to J. Papantoniou, Minister of National Economy, A.P. 162, 10 January, 1996, by
L. Thalassinos, Chairman of the Board of Supervisors). In response to the emerging criticisms,
members of the institutions of the profession argued that the credibility of the institution of auditing
could be best safeguarded if a Code of Ethics was introduced (Official Minutes, Scientific Council,
15 December, 1994, p. 2; 26 January, 1996, pp. 4, 5). Thus, the formulation of a professional ethics
framework which would enable the institutions of the profession to govern the memberships
conduct became a priority (see Dedoulis, 2004).
Interestingly, it took 4 years from the inception of SOE before the organs of the profession
started discussing the possibility of formulating a Code. An eminent member14 of SOE explained:
It was a period during which the institutions of the auditing body let auditors build
() their firms ()
(an eminent auditor of SOE, interview, 2003, trans.).
A member15 of the Scientific Council (interview, 2003, trans.) illuminated another aspect for
the professions reluctance:
expelling members and imposing punishments would be damaging for the newly established body, as it would signal that something is wrong with auditors and this would have
an impact upon the professions image and reputation right in the beginning.
However, by the mid 1990s, the possibility of unprofessional activities turning the medias
attention onto the profession constituted a threat to the profession which led the members of the
Scientific Council to set out to prepare a draft Code. The first draft drew upon the Professional
Ethics of the International Federation of Accountants (Scientific Council, Official Minutes, 26
January, 1996, p. 2):
. . . We (the members of the Scientific Council) looked at the Code of Ethics of the
International Federation of Accountants (IFAC), because other international professionals (referring to the members of IFAC) had worked on the issue and had produced particular
conclusions . . . We just used these conclusions for our own benefit . . . (Protopsaltis, interview, 2002, trans.; similar views were expressed by Petridis, interview, 2003; Lorenziadis,
interview, 2003; Sofianos, interview 1999, parenthesis added).
14
15
The member asked to remain anonymous.

The member asked to remain anonymous.
166
The draft Code shows that it was a literal translation of the IFACs Code16 (Table 1).
However, this draft had to be adjusted to the structure and peculiarities of the Greek profession
(Official Minutes, Scientific Council, 26 January, 1996). The Scientific Council assigned two of
its members N. Sofianos and N. Protopsaltis to adjust the draft to meet the conditions of the local
institute. Sofianos and Protopsaltis constructed a second draft relevant to the duties of accountants
in public practice, as the profession was exclusively aimed at conducting audits (according to the
Presidential Decree 226/1992; see also Official Minutes, Scientific Council, 26 January, 1996).
This mainly drew upon Section B of the Code of Ethics of the IFAC and incorporated principles
such as independence, confidentiality, relations with colleagues and advertising and compliance
processes (Scientific Council, 1996b, pp. 514).
Members of the Scientific Council argued that they focused on these principles as they were
of fundamental importance for the operation of the auditing profession:
The international experience had shown that these issues were of extreme importance for
safeguarding the credibility of the profession. However, particular attention was drawn to
the issue of independence because, in my opinion, it is the foundation of audit professional
practice. You cannot do your job well unless you are independent . . . (Petridis, interview,
2003, trans.)
Especially the principles of independence and objectivity are the foundations of the profession and therefore the largest section of the Code was devoted to these. The institution
of auditing relies upon these principles. The main duty of the auditor is to certify the
financial statements of companies, which investors depend upon, in order to allocate their
investments. Thus, independence and objectivity become the most important issues for an
auditor. (Lorengiadis interview, 2003, trans.)
The draft Code comprised lists of rules which specified the exact nature and scope of the
principles. This seemed to indicate the intention of the institutions of the profession to formulate
an enforceable framework in order to ensure the memberships adherence to it. The draft was sent
to the Board of Supervisors who approved it on 17 April, 1997 (as required by the Presidential
Decree 226/1992). The Code of Ethics was headed Professional Ethics Regulation.
An interesting feature of the process of the formulation of the Code of Ethics was that it
remained a closed activity, which discouraged broader participation. Interested groups (auditees,
investors, state officials, representatives of the Stock Exchange, etc.) were not invited to present
their views, as the whole process was considered as an internal matter of SOE and third parties
advice as of limited contribution:
The persons responsible to determine the rules of the game should be us (auditors). Third
parties do not have the experience and knowledge required to participate in the formulation
and application of a Code of Ethics (Member of the Scientific Council of SOE, Patsis,
interview, 2003, trans.)
16 Although the draft was a literal translation, Professional Competency from section A and the contents of section C of the
IFAC code were omitted. According to two members of the Scientific Council Sofianos (interview, 1999) and Protopsaltis
(interview, 2002), the Scientific Council did not incorporate rules and issues relating to professional competence into the
Code of Ethics as this had been dealt with in the Presidential Decree 226/1992 article 20 paragraph 2. They also explained
that section C which referred to Employed Professional Accountants was not applicable as SOE exclusively comprised
auditors.
167
Table 1
A comparison between the Code of Ethics of IFAC and the first draft professional ethics of SOE
Source: IFAC, 1996, Code of Ethics for professional accountants; (Scientific Council, 1996a) First Draft Professional
Ethics Regulation.
a The asterisk indicates the principles of the IFAC code which were incorporated in the final form of the Greek Code.
In self-governing professional organisations, participation of other groups in shaping and

enforcing the Code of Ethics is not necessary as the matters are very specialised and require
in-depth knowledge of the issues involved. (Member of the Board of Supervisors of SOE,
Paraskevopoulos, interview, 2003, trans.)
The Code of Ethics and disciplinary processes are internal issues which had to be
formulated and exercised by the Board of Supervisors, on the Scientific Councils
advice. (Chairman of the Board of Supervisors of SOE, Alamanos, interview, 2003,
trans.)
168
However, another member17 of the Board of Supervisors provided interesting insights into the
main reason for which other groups were excluded:
in this way we could pay attention to issues we wanted and we could set aside issues that
created difficulties to the operation of the profession (interview, 2003, trans.).
The exclusion of third parties enabled the profession to draw attention to certain issues
and marginalise others. It is indicative that professionals omitted any reference to the public
interest18 which constituted a significant aspect of the IFAC Code. A member19 of the Board of
Supervisors shed some light on this tactic to exclude such a reference:
the fact that we did not refer to the public interest was an attempt to limit the public
responsibility of the auditor. We did not want to face situations like those in the US, where
auditors faced lawsuits for minor issues (interview, 2003, trans.).
Thus, the formulation of the Code of Ethics was a process controlled by the institutions of
the profession who decided the writing style and language as well as which issues would be
included/excluded with a view to producing an interpretable framework which would have a
minimum impact upon practitioners.
Members of the Supervisory Board argued that the Code of Ethics provided a framework
to govern the conduct of the membership.20 Alamanos, Chairman of the Board of Supervisors,
argued that:
We were interested in making sure that auditors do their job appropriately. Our (members
of the institutions of auditing) main duty was to supervise their work. In order for auditors
to conduct appropriate audits, we had to do two things. Firstly, to tell them how to do it and,
secondly, to supervise them, in order to see whether they adhere to what we told them to do.
The Code of Ethics introduced both the framework and the compliance process necessary
for achieving this. (Alamanos, interview, 2003, trans., parenthesis added).
Soon after the introduction of the Code of Ethics in 1997, five cases of unprofessional behaviour
were reported to the Board of Supervisors. On the request of the Board of Supervisors, the Disciplinary Council started investigating them. According to the Book of Disciplinary Decisions
of the Disciplinary Council the examinations of the first five cases took almost 2 years and were
completed in 1999. Dritsas, a member of the Scientific Council (interview, 2000), argued that these
cases were complex and therefore the investigations took so long because we thoroughly examined each case. In the following period 20002002, disciplinary investigations were exercised
17
This member of the Board of Supervisors asked to remain anonymous.

It is interesting that pronouncements such as there is a public interest responsibility on the accountancy profession
. . . the public interest is defined as the collective well being of the community of people and institutions the professional
accountant serves (IFAC, 1996, p. 457), are fundamental in the Code of the IFAC. However, such references were not
included in the 1997 Code of Ethics.
19 This member of the Board of Supervisors asked to remain anonymous.
20 Although, the Presidential Decree 226 enacted in 1992 prescribed that: disciplinary action can be exercised when
the Board of Supervisors judges that a Chartered Accountant has committed a disciplinary offence (Presidential Decree
226/1992, Disciplinary Process, pp. 89), the Code expanded this by obliging auditors and third parties to report any
violation to the Board of Supervisors. Non-adherence to and violations of the 1997 Professional Ethics Regulation would
be investigated and dealt with by the Board of Supervisors. This organ would screen the cases and decide whether referral
to the Disciplinary Council would be necessary (SOE, 1999, Article 10, p. 220; Legal Adviser, Kalogeras, interview,
2003; member of the Disciplinary Council, Aggelidis, interview, 2003, trans.).
18
169
against seven members reported to have practiced in breach of the Professional Ethics Regulation degrading the prestige of the professional Body (Disciplinary Council, Official Minutes)
(Table 2).
Some members of the institutions of SOE argued that the strict application of the enforcement
processes of the 1997 Code of Ethics enabled them to govern the conduct of the membership:
We (the members of the institutions of the profession) wanted auditors to adhere to and
respect the 1997 Code of Ethics . . . The establishment of compliance processes enabled
the Board of Supervisors to exercise control over auditors conduct whenever a report was
lodged . . . (Petridis, member of the Scientific Council, interview, 2003, trans., parenthesis
added).
the enforcement processes have been very effective. In several cases strict punishments were imposed. Such punishments included expulsions from the profession, reprimands, fines and suspensions for certain periods. This has enabled the profession to
control the membership. (Damilakos, member of the Board of Supervisors, interview,
2003, trans).
4.2. The impact of the Enron episode and the responses of the Greek profession
The use of the Greek Code as a device intended to confer legitimacy upon existing professional
practice was again seen following the collapse of Enron. Although the Enron episode took place
in the US, it had an impact upon the legitimacy of the local profession. The possibility of a similar
event occurring in Greece led to questions about the role and credibility of SOE: Auditors out of
control (Economicos Tachydromos, 6 July, 2002, p. 31), Audit firms credibility in red (KnowHow, June 2002, p. 76), Fears for cases of Enron in Greece (Economia, 4 August, 2002), Who
supervises auditors? (Imerisia, 17 May, 2002; Apogevmatini, 27 May, 2002), The scandal of
Enron reaches audit firms in Greece (Kathimerini, 16 January, 2002), Enronitis may infect
Europe too (Naftemboriki, 24 July, 2002). The ability of auditors to detect fraud, uncover illegal
contributions and predict bankruptcy was called into question. These concerns were accompanied
by statements which raised questions about the reliability of auditors and relatedly the adequacy
of self-regulation and argued for the creation of an independent organ to supervise auditors
work: market agents argue that the recent scandals in the US necessitate the creation of a new
framework for the institution of auditing (Imerisia, 22 July, 2002, p. 6, trans.). A senior state
official at the Ministry of Economy stated in Imerisia (89 June, 2002, trans.) that: institutional
reforms should be introduced in order to protect investors in the Greek capital market. The official
journal of the Athens Stock Exchange, Chrimatistirio (3 January, 2002, trans.), also mentioned
that:
The establishment of an independent supervisory organ is now necessary . . . The auditing
profession has been tied to economic interests . . . This commercialisation of audits in Greece
will inevitably lead to phenomena like Enron. The Greek government must intervene in order
to ensure that audits certify the real economic state of the company and, thus, to decrease
the lack of trust in the audited financial statements.
Doubts cast upon the principal issues of the professions independence from clients, reliability of audits and adequacy of self-governance led state officials to start elaborating a bill which
provided for a tighter institutional context for auditors:
170
Table 2
Reports for violations of the professional ethics and disciplinary punishments imposed until 2002
Disciplinary
councils meeting
to decidenumber/date
Initials
of the
member
Audit firm
Decision of the
disciplinary
council
Justification
6/12 February
1999
Auditor
L., D.
Independent practitioner
Withdrawal of
practicing
certificate
10/2 April 1999
Auditor
Ch.,
Ch.
Grant Thornton AE
(Orkotoi Elegktes
Logistes-Symbouloi
Epixeiriseon)
Withdrawal of
practicing
certificate
17/21 July 1999
Auditor
C., C.
SOL AE (Orkotoi
Elegktes
Logistes-Symbouloi
Epixeiriseon)
Withdrawal of
practicing
certificate
22/21 October
1999
Auditor
S., L.
Case set aside
26/30 November
1999
Auditor
P., S.
Case set aside
37/22 February
2000
Auditor
N., C.
Alexander Young
(Orkotoi Elegktes
Logistes-Symbouloi
Epixeiriseon)
Euroelegtiki (Orkotoi
Elegktes
Logistes-Symbouloi
Epixeiriseon)
BKR-International
(Orkotoi Elegktes
Logistes-Symbouloi
Epixeiriseon)
Breach of Incompatibilities
according to Article 15, paragraph 1,
case and Article 20 paragraph 4 of
Presidential Decree 226/1992 (Being
a statutory auditor while being
Director of Finance at Citibank)
Breach of Law and Improper
Behaviour. Punishment imposed
according to Article 16 and 20
paragraph 2 cases and of
Presidential Decree 226/1992.
In Breach of Professional Ethics and
legislation. The violations are
punished according to: (a) Article 75
paragraph 4 and 5, as amended by
Article 32 of Law 2076/1992; (b)
Article 18 paragraph 16 of Law
2231/1994 and (c) Article 20
paragraph 2 cases and of
Presidential Decree 226/1992
Fine DR.
1000000
46/17 May 2000
Auditor
G., F.
Deloitte and Touche
Withdrawal of
practicing
certificate
In breach of Professional Ethics.

Violation of rule providing for the
protection of the ethical and
professional prestige of SOE and of
the rules of dignity and decency
towards colleagues and institutional
organs (Article 1, 2 of Code of
Ethics)
In breach of Professional Ethics. The
individual discredited the image of
the Statutory auditor and the
Professional Body because his
conduct was unprofessional, he was
found in breach of incompatibilities.
His performance was also
substandard. Punishment imposed
according to Article 20 paragraph 2
cases and of Presidential
Decree 226/1992.
171
Table 2 (Continued )
Disciplinary
Initials
councils meeting of the
to decidemember
number/date
Audit firm
Decision of the
disciplinary
council
Justification
58/11 October
2000
Auditor
C., C
Price Waterhouse
Coopers
6 month
suspension
63/7 December
2000
Auditor
C., T.
Prime Auditor-Tzavelas
EPE
6-month
suspension
105/22 January
2002
Auditor
V., C.
Grant Thorton AE
(Orkotoi Elegktes
Logistes-Symbouloi
Epixeiriseon)
Withdrawal of
practicing
certificate
113/10 April
2002
Auditor
C., C.
Price Waterhouse
Coopers
Fine D 2500
126/12
December
2002
Auditor
G. T.
SOL AE (Orkotoi
Elegktes
Logistes-Symbouloi
Epixeiriseon)
Withdrawal of
practicing
certificate
Improper behaviour and conduct against

the Scientific Council as well as
comments disputing the independent and
objective judgment of the organ.
Punishment imposed according to
Article 20 paragraph 2 cases and of
Presidential Decree 226/1992
Substandard performance, ambiguous
notes in the audit report without the
necessary clarifications. Punishment
imposed according to Article 20
paragraph 2 of the Presidential Decree
226/1992.
In breach of Article 4 paragraph 3,
Article 1 par 2, Article 7 paragraph 1 and
9 paragraph 4, of Article 3 paragraph 1
of the Code of Ethics and Article 15
paragraph 4, Article 18 paragraph 2 of
Presidential Decree 226/1992 and Article
13 of Presidential Decree 341/1997
Gross negligence in breach of the Code
of Ethics and the Article 20 paragraph 2
of the Presidential Decree 226/1992
Gross negligence according to Article 5
par 3, Article 16 paragraph 1 and 2 and
Article 20 paragraph 2 of the Presidential
Decree 226/1992
Source: Disciplinary Council, Official Minutes, SOE.
The bill aims at restoring the credibility of the auditing profession, which has significantly
been challenged recently . . . due to the fierce competition between the 19 audit firms and
the commercial relationships they develop with audit firms. By creating a new supervisory
organ, the bill attempts to cover gaps regarding the role of the auditors and the quality of the
audits (Kathimerini, 11 May, 2003, p. 3, trans.; similar articles are found in Nautemboriki,
1 January, 2002; Kathimerini, 19 February, 2002; 14 January 2003; Kerdos, 10 April, 2002;
Know-How, June 2002, p. 81; To Vima, 14 January, 2003; Ependitis, 2526 January, 2003;
Express, 14 March, 2002 and 14 January, 2003, p. B6).
The erosion of public confidence in the professions practices and the possibility of an organisational restructuring which would imperil the control of the professions jurisdiction were
developments which called for the professions immediate action.
The institutions of the profession focused on promoting the adequacy of self-supervision
by making public appeals demonstrating the effectiveness of the Code of Ethics and disciplinary
action which had been exercised. In particular, as the press echoed the intentions of the state
to reorganise the profession, the auditing body resorted to an intensive public relations effort to
prevent the imminent state intervention: Our defensive strategy was to promote the view that,
172
since the institution of auditing operated effectively, i.e. disciplinary processes, there was no need
for the state to intervene (Dracos, interview, 2003, trans.). To achieve this, eminent members of the
profession made public statements responding to publications which challenged the effectiveness
of self-governance. For instance, in response to the criticisms found in the periodical Know-How
(June, 2002), Alamanos, Chairman of the Board of Supervisors, wrote an article in which it was
stated:
Based upon the Code of Ethics, the Disciplinary Council of the auditing profession has
imposed several punishments, which according to the severity of each case ranged from
reprimands, fines up to 1,000,000 DR, 6-month suspension to expulsion. Eleven Chartered
Accountants have been referred to the Disciplinary Council which imposed the following punishments: Five have been expelled, two have been fined (1,000,000 DR), two
have been suspended for 6-months and two cases have been cast aside . . . (Know-How,
AugustSeptember, 2002, p. 5, trans.)
A similar response was published in the newspaper Kathimerini (15 January, 2003) and
addressed to the editor of the politicoeconomic journal Economicos Tachydromos (14 May, 2001).
Other members of the Board of Supervisors also took initiatives. For instance, in an article in
Imerisia, Markopoulos, stated:
During the period 19982002, our Disciplinary Council has applied the Code of Ethics
very productively ()
and strictly ().
In eleven cases, it has imposed
punishments: fines, suspensions and expulsions (members were stricken off the registers of
the auditing profession) (interview in Imerisia, 23 July, 2003, trans., last parenthesis in the
original).21
Part of the strategy was also to persuade state officials that self-governance had been effective and adequate. Statistics in relation to the disciplinary processes were submitted to the
Parliament and the Ministers responsible, in order to prove that self-regulation can operate effectively. Letters were addressed to the Minister and the Secretary General of National
Economy:
Our Code of Ethics is safeguarded by disciplinary processes. It is underlined that, since
1998, the Disciplinary Council has dealt with eleven cases and has imposed the following
punishments:
Expulsion to five (5) Chartered Accountants
Six-month suspensions to two (2) Chartered Accountants
Fines (1000,000DR) to two (2) Chartered Accountants
Two cases have been cast aside (Letter addressed to N. Christodoulakis, Minister of
National Economy, signed by the Chairman of the Board of Supervisors, 4 December,
2002, A.P. 1573, pp. 45, trans.; a similar letter had also been addressed to the Minister of
National Economy on 11 November, 2002, A.P. 3992; A similar letter had been addressed
to G. Zania, Secretary General at the Ministry of National Economy, A.P. 3314, 27 August,
2002, p. 5).
21 It seems that Markopoulos statement is characterised by exaggeration in comparison to the information provided by
the Book of Disciplinary Decisions and other commentators.
173
Furthermore, in the Special Parliamentary Committee set up to discuss the organisation of the
auditing profession (Bill 3148), the Chairman of the Board of Supervisors appealed to the same
statistics to reinforce the view that claims to the adequacy of self-governance and independence
of auditors were credible (Special Parliamentary Committee, Official Minutes, Alamanos 15 and
17 April, 2003, p. 2).
5. Discussion
By focusing upon the Code of Ethics of an accountancy body in an emerging economy, a number
of issues which were highlighted in the critical literature on the Anglo-American profession have
been brought into focus. The paper has shown that a Code of Ethics was not formed until 1997
although the auditing profession started operating as a self-governing institute in 1992. This
indicates that the profession showed little interest in introducing professional ethics until the
second half of the 1990s when eminent members considered that unprofessional activities could
attract media attention. Fearing that such developments could lead to the emergence of public
concerns and criticisms about the professions role, the institutions of the profession resorted
to the emulation of tried Western practices and introduced the Code of Ethics, incorporating
compliance processes in it.
Interestingly, the process of formulating the Code remained closed, keeping the public and
other interested parties at arms length. By not engaging in dialogue with third parties (such as
users of financial information, auditees, stakeholders or state officials), professionals decided on
their own which issues would receive attention or be marginalised. Thus, the regulation of auditors
professional conduct, which carries implications of broader social significance, was decided by
the auditing profession. This enabled the institutions of the professional body to construct an
enforceable and easily interpretable Code of Ethics. The scope of this was two-fold. Firstly,
the institutions of the profession attempted to control unprofessional activities and normalise
professional conduct by introducing a context of specific rules by which auditors compliance
or non-compliance could be easily determined. Secondly, they aimed at limiting auditors public
accountability and protecting them from being exposed to broader social claims. The intention
of the institutions of the profession to restrict the Codes impact upon the membership is further
demonstrated by their action to omit references to the public interest, which could make auditors
vulnerable to various accusations. Thus, designed by auditors for auditors, the Code of Ethics was
intended to marginalise issues that cultivated the sense of social responsibility of the membership.
The Code of Ethics was also employed by the profession in the aftermath of the Enron episode.
The loss of public confidence facing the profession led it to resort to a public relations effort
in order to prevent the dilution of its self-governing privilege. Explicit appeals demonstrating
the effectiveness of the Code of Ethics and disciplinary action were made, aimed at showing
the professions commitment to professional conduct and its capacity to safeguard it. Moreover,
central to this tactic were the professional proclamations that audit failures were the outcome
of certain individuals inadequacies. By putting the blame on discredited practitioners, the
institutions intended to neutralise questions about the wider organisation and operation of the
auditing profession.
This paper has attempted to show that critical approaches could be meaningfully employed to
explore the role of the Code of Ethics in the development of the Greek profession. This is because,
as a result of imperialism of inuence, the broader political and economic settings of most emerging
economies have been shaped in a way that has led to the development of local professions similar
to the dominant Anglo-American model. Operating against backgrounds of increasing challenges
174
and difficulties, local bodies may struggle to refine their image as trustworthy institutions,
emulating practices utilised by the influential Anglo-American paradigm. The Code may be
seen as an integral part of the local professions efforts and strategies to establish the image of
independent and adequately governed institutes in order to cement their memberships power
and position within the gradually internationalised local contexts.
Appendix A
The interviews constituted part of the material used for the completion of a Ph.D. thesis
(Dedoulis, 2004). This paper utilises a number of them which clarified issues in relation to the
formulation and application of the 1997 Code of Ethics. The questions were in Greek and were
translated into English:
The members of the institutions of the auditing profession interviewed (in relation to the
1997 Code of Ethics) are presented in the following table (although some interviews may seem
not to have been utilised in the paper, they have assisted the researcher in clarifying important
issues of the process). It should be noted that a number of interviewees asked to remain anonymous.
1
2
3
4
5
Aggelidis
Evaggelos
Alamanos
Charis
Christodoulidis
Damilakos
Panagiotis
Dritsas Ioannis
10 October, 2003
1 October, 2003
7 October, 2003
10 October, 2003
1 January, 2000; 30
September, 2003
Member of the Disciplinary

Council of SOE
Chairman of the Board of
Supervisors of SOE (19972002)
and Member of the Board of
Auditor of SOE
Member of the Board of
Member of the Disciplinary
Council of SOE
SOL AE
SOL AE
Ernst and Young

BKR-International
SOL AE

6
7
8
9
10
11
12
13
14
15
16
17
18
19
Essiopoulos
Konstantinos
Grigorakos
Theodoros
Kalogeras
Andreas
Lorentziadis
Spyros
Markopoulos
Panagiotis
Maroulis
Ioannis
Paraskevopoulos
Dimitrios
Patsis
Panagiotis
Petridis
Charalambos
Protopsaltis
Nicolaos
Sakellis
Emmanouil
Samothrakis
George
Sofianos
Nicolaos
Xenos
Charalambos
September 26th, 2003

12 December, 1999;
February 2001; 8
January, 2003;
September 2003;
2 November, 2003
7 October, 2003
26 September, 2003
8 October, 2003
2 October, 2003
6 October, 2003
25 September, 2003; 7
May, 2003
29 December, 1999;
30 December, 2002
6 May, 2003
9 October, 2003
12 December, 1999
23 September, 2003

Vice President of the Scientific
Council of SOE (19942002)
Legal Adviser to SOE

(20002002)
Member of the Scientific Council
of SOE
of SOE (19972002)
of SOE (19931997)
of SOE (19942002)
Chairman of the Scientific
Council of SOE (19941997)
of SOE (19941997)
of SOE (19972002)
175
Retired
SOL AE
Ernst and Young

SOL AE
SOL AE
SOL AE
Diethnis Elegtiki AE
Retired
SOL AE
Professor at the Pantios
University
PriceWaterhouseCoopers
Deloitte and Touch
SOL AE
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Accounting Forum 30 (2006) 155178

The Code of Ethics and the development of

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

SOL stands for the Greek initials :

Body of Sworn-in Auditors Accountants. The purpose

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

The member asked to remain anonymous.

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

In self-governing professional organisations, participation of other groups in shaping and

E. Dedoulis / Accounting Forum 30 (2006) 155178

This member of the Board of Supervisors asked to remain anonymous.

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

10/2 April 1999

17/21 July 1999

Case set aside

Case set aside

46/17 May 2000

Deloitte and Touche

In breach of Professional Ethics.

E. Dedoulis / Accounting Forum 30 (2006) 155178

Improper behaviour and conduct against

Source: Disciplinary Council, Official Minutes, SOE.

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

Member of the Disciplinary

Ernst and Young

E. Dedoulis / Accounting Forum 30 (2006) 155178

September 26th, 2003

Member of the Board of

Legal Adviser to SOE

Ernst and Young

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

E. Dedoulis / Accounting Forum 30 (2006) 155178

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