Academic journal article Accounting Historians Journal

The Creation of the Institute of Chartered Accountants of India: The First Steps in the Development of an Indigenous Accounting Profession Post-Independence

Academic journal article Accounting Historians Journal

The Creation of the Institute of Chartered Accountants of India: The First Steps in the Development of an Indigenous Accounting Profession Post-Independence

Article excerpt

Abstract: This paper applies the theoretical framework proposed by McKinnon [1986] to the creation of the Institute of Chartered Accountants of India (ICAI) which represented an important change to the accounting system in India post-independence. The development of the ICAI is categorized into three phases: source, diffusion, and reaction. Intra-system activity, trans-system activity, and the socioeconomic and political environments are shown to influence all stages of the change. Within these phases, the paper focuses on the involvement of the state in the development of the ICAI, credentialism and the importance of the title "chartered," the disciplinary powers of the ICAI, and the issue of mutual recognition and reciprocity with foreign professional accounting organizations.

INTRODUCTION

This paper applies the theoretical framework of McKinnon [1986] to the creation of the Institute of Chartered Accountants of India (ICAI) and focuses on the involvement of the state in the development of the ICAI, credentialism and the importance of the title "chartered," the disciplinary powers of the ICAI, and mutual recognition and reciprocity. The paper traces the process of change from the initial proposal to establish the ICAI to its operation in its first years with a focus on the factors influencing the creation of the Institute and its practices. The path of professionalization is then compared with similar processes in other post-colonial states.

The research is informed by the accounting history literature, in particular that related to the sociology of professions. Within this literature, there have been two main approaches to the study of professions, a functionalist-based view and a more critical, conflictual view which predominantly informs this paper. The critical view proposes that professions function as self-interested, occupational groups which act in ways to promote themselves and their members in order to gain rewards associated with professional standing. These include both financial rewards and other more intangible benefits such as prestige, status, and influence [Freidson, 1973; Larson, 1977; Abbot, 1988; Macdonald, 1995].

Within this critical approach to the accountancy profession, key themes have included the study of closure in different socio-economic and political contexts; the understanding of the state-profession relationship, including the importance of senior bureaucrats in the development of accounting professions; and the interface between imperialism and accounting professions. Chua and Poullaos [1993], in particular, have called for historical analyses of specific accounting professionalization projects in different economic, social, and political conditions. Their interests include an analysis of the state-profession axis, a more nuanced tracing of the process of professionalization, and an exploration of unintended consequences within the professionalization process.

Within the accounting history literature, there have been a significant number of studies of accounting professions in the Anglo-Saxon context; for example, studies of accounting professions in the U.K., U.S., and Australia [Lee, 1985, 1997; Kedslie, 1990; Chua and Poullaos, 1993, 1998, 2002; Robson et al., 1994; Shackleton, 1995; Walker and Shackleton, 1995, 1998; Carnegie and Parker, 1999; Carnegie and Edwards, 2001; Walker, 2004]. Only recently have researchers started to study accounting professions in non-Anglo-Saxon states and in post-colonial states [Annisette, 1999, 2000; Dyball and Valcarcel, 1999; Susela, 1999; Yapa, 1999; Uche, 2002; Xu and Xu, 2003; Bakre, 2005a, b; Sian, 2006]. Our study seeks to add to this literature with an exploration of the creation of the ICAI in 1949 and a comparison of the trajectory of professionalization in post-independence India to other British colonies.

In the context of a study of accounting professions in postcolonial states, India is important for several reasons. …

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