Accounting India
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Transcript of Accounting India
The development of the accounting profession in India post independence
Theoretical perspective
Professionalisation literature
Accounting change post independence focusing on social and political factors influencing the development of the accounting profession
Politics of accounting with accounting change being the outcome of interactions between parties interested in accounting
The development of the Institute of Chartered Accountants (ICAI) of India
pre independence
Established in 1949 under the Chartered Accountants Act 1949
Strong involvement of Government in the process of establishing the ICAI and in its operations in initial years
International influences on process from imperial influence
– Direct imperial influence on antecedents of the ICAI pre-independence in colonial period
– Indirect imperial influence on development of ICAI post independence in 1947
Antecedents to development of ICAI pre-independence
Indian accountancy board (IAB) in 1932 under Co Act 1930
Set up by British Government to advise Governor General on the qualification and conduct of accountants
Membership
The IAB
1930 to 1949
Initially nominated, later IAB’s were partly nominated and partly elected
Main issues
– Membership of the IAB
– Registration and training process
– Setting of examinations for accountants
– Development of institute of accounting to head independent Indian accounting profession
Post independence
Institute of accounting had not developed at independence
Proposal by Indian members of IAB made to Government representative on IAB
Considered by Indian Government
Why Government supported the development of the accounting
profession
Economic growth
Social development – fairer distribution of wealth in country
Curb abuses in private sector
Encourage private sector to act in ways congruent with Government’s aims
National economic planning
Development of ICAI
Independent accounting profession not supported by Ministry of Commerce
Prepared memorandum on accounting profession
Required IAB to set up expert committee to review setting up of institute of accounting under statutory legislation
Findings reviewed / approved by Ministry of commerce
Circulated within Government and amended by Ministry of finance (taxation authorities)
Outcome
ICAI set up under Chartered Accountants Act 1949
Headed by council with representation from accountants, Government, business community
ICAI expected to be able to operate as independently as possible with minimal involvement of government
Key issues during process
Credentialism and the designation “chartered” – Could name be used i.e. did it denote royal
charter
– Important to Indians as signal of quality and high reputation
Mutual recognition and reciprocity– Recognition by British accounting bodies
Review of disciplinary process by Courts due to involvement by taxation authorities
Influences on process
Government– Local concerns, structures and processes
– Two different government dept
Imperial– Acceptance that British based professionalisation
model was best
– Reference to British and other commonwealth accounting professions in reviews and debates
– Mutual relationship with British and other accounting professions
Initial operation
Allowed to operate without undue influence by Government
Exception on issue of mutual recognition and reciprocity
Lead to legislation being amended such that Government specified who was recognised in India
Comparison of professionalisation in India
with other colonies Settler
– Some development of accounting profession pre impendence
– Own training and examination process developed
– Suitable profession for local population
Non settler
– Use of legislation to set up accounting profession
– Development of local accounting institute post independence
Other key changes in accounting in India
Strong legal regulation of accounting
Development of other accounting professions – Institute of Cost and Works Accountants of India
Standard setting in India
International financial reporting standards
Standard setting in India
Developed in 1970’s
response to membership of IASC
Required by accounting profession but not required by law
All Companies follow Companies Acts in India
More flexibility in following accounting standards in practice
International financial reporting standards
Decision taken to implement IFRS’s in 2011
Right to deviated from IFRS’s in response to Indian context
Track transition process and influence of social, political institutions on process
Interview data to be collected