Restoring Professional Ethos (Opinion)

In the last decade, two pieces of legislation dramatically changed the landscape of our economy and, in doing so, also changed the nature of an important American profession. 

The passage of the Sarbanes-Oxley Act in 2002 and the subsequent passage of the Dodd-Frank Act in 2010 have both been considered the most sweeping pieces of economic legislation in history. Both were crafted largely in response to widespread leadership failures, excessive greed, disregard for standards, as well as slipshod practices and oversight resulting in crises that continue to reverberate across the global economy.

The cost borne by society for these crises and the ensuing legislation is expected to be in the trillions of dollars, however the financial, emotional and psychological impact on American society will never be truly known. 

Since passage, politicians and business leaders have criticized this legislation for the ways in which it imposes broad regulation and oversight, onerous reporting and compliance requirements, and inhibits the growth and competitiveness of the American accounting, banking and finance industries. 

Their argument is that without freedom from many provisions of the draconian legislation, the American economy will never fully emerge from the recent global economic recession. 

While the inability to freely adapt and innovate in a rapidly shifting economic landscape is a significant drag on the system, the underlying question is not whether there is a regulatory foot on the economic brake pedal, but whose foot is on the brakes (and why?).

For many years, accounting, banking and finance were considered among the most highly respected professions in society because of the essential role they played in the execution and maintenance of the American economy. As members of a profession, they were set apart from others by three things:

Expertise — the unique knowledge and competence used to understand and assess financial and business systems;

Social Purpose — maintaining and guaranteeing the legitimacy, soundness and prosperity of the economic and financial systems; and

While a profession operates freely and independently, it must remain in relationship with the society it serves. Society grants the profession broad authority and freedom to operate as a result of the trust it has in the expertise, social purpose and ethos of its members. 

In return, the profession is rewarded with tangible benefits and important status in society. This model is exemplified in other American professions, like medicine as well as the military. 

Even the actions of a small number can tarnish the reputation of the entire profession. That is why shared ethos and mutual accountability are perhaps the most important characteristics of a profession. 

For it to survive, a profession must hold itself accountable and reinforce the public’s trust. When a profession fails its obligation, consistently over time or in spectacular fashion, the bond of trust is broken and society intervenes to ensure the legitimacy, soundness and prosperity of the economy. 

Unfortunately, the government (as a proxy for society) is generally not the best source of expertise and ability in areas of social and economic need, and so we need professions (like accounting, banking and finance) guided by a strong ethos to support and advance society. 

The only true measure of their professionalism may be the test of time. 

Capt. Steve Trainor (U.S. Navy, retired) holds a Ph.D. in sociology and serves as director of research for The Soderquist Center in Siloam Springs. He contributes to the Business Journal on topics of leadership, ethics and values.