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