Explaining the Jurisdictional Settlement Between Accountants and Actuaries: Standard Setting, Bureaucratization and Counterpart Units

In the Division of Labour, Durkheim drew on different forms of technical legal practice to describe alternative forms of social structure.  A focus on governance was a key part of his explanation of the nature of cohesion in different societies.  This paper draws on such a focus on governance to address the question of how jurisdictional settlements between professions are determined under conditions bureaucratization (Abbott 1988:150-153, Bechky 2003).  The paper examines two puzzles relating to the division of labour between the actuarial and accounting professions in the mid-twentieth century.  The first is the expansion of the actuarial jurisdiction from a limited jurisdiction (Abbott 1988:71) to a diffuse one.  The second is the concurrently increasing bureaucratization of the accounting profession and the increasing autonomy of the actuarial profession.  Using a multi-method qualitative approach, combining archives, technical texts and interviews, the paper explains the evolving jurisdictional settlement between the two professions as the consequence of the shifting dominance of professional segments (Bucher & Strauss 1961) over the setting of pension fund financial accounting standards and actuarial standards. 

In explaining these two aspects of the relationship between these professions, this paper explains how professional segments share the same governance objectives with respect to outcomes from standard setting through the concept of counterpart units (Simon, Thompson & Smithburg 1950:291 ff).  In Simon et al’s account an overhead unit is in a hierarchical relationship of command relative to a line unit.  In response to the creation of expertise within the overhead unit, for example a personnel department, the line unit creates its own group dealing with personnel.  This new group is a counterpart unit to the personnel department within the overhead unit. 

This paper extends the concept of counterprt unit to standard setting.  Two bureaucratized professional segments support the attainment of consensus regarding governance.  First, autonomously trained professionals working in bureaucratized settings support the autonomous professional segment setting standards.  Second, professionals who are in principle bureaucratized have objectives conflicting with those of the autonomous professional segment setting standards in their profession.  Relationships of subordination entail that one counterpart unit dominates the other.  The introduction of standard setting processes relating to financial market governance changes this subordination relationship.

This paper suggests that, in contrast with the usual exclusive emphasis on standard setting by autonomous professional segments, bureaucratized professional segments play an important role in standard setting.  It argues that the setting of governance standards can contribute to our understanding of the division of labour between accountants and actuaries.  The implications for the role of governance in the expert division of labour need to be investigated further. 

Bibliography:

Abbott, A. 1988. System of Professions: An Essay on the Division of Expert Labour

Bechky, B. 2003.  Object Lessons: Workplace Artifacts as Representations of Occupational Jurisdiction. American Journal of SociologyVol. 109 No. 3:720–52

Bucher, R & Strauss, A. 1961. “Professions in Process” American Journal of Sociology Vol. 66 No. 4:325-334

Durkheim E. [1893] 1933 The Division of Labour in Society

Simon, H., Thompson, V. & Smithberg, D. 1950 Public Administration.