Academic journal article Accounting Historians Journal

Nepalese Governmental Accounting Development in the 1950s and Early 1960s: An Attempt to Institutionalize Expenditure Accounting

Academic journal article Accounting Historians Journal

Nepalese Governmental Accounting Development in the 1950s and Early 1960s: An Attempt to Institutionalize Expenditure Accounting

Article excerpt

Abstract: This paper aims at disseminating knowledge about the evolution of expenditure accounting in the government of Nepal. In doing so, the paper examines emerging ideas in the aftermath of the political change of 1951 in Nepal, and traces the processes of development and institutionalization of expenditure accounting during the course of two decades, the 1950s and early 1960s, with particular reference to the institutional forces at work. An interesting feature of Nepalese accounting reforms before and after the political change was the active participation of India, the United Nations, and the U.S. Agency for International Development (USMD). At the outset of the post-Rana period, Indian advisors dominated the reform process and helped Nepal introduce and incorporate a range of modern administrative measures, including a new budgeting structure called line-item budgeting. The external influence on Nepal's reforms and the ways of installing new values in the administration altered in the second half of the 1950s. The United Nations and the USAID became the major agents in the introduction and institutionalization of rules and practices, especially accounting norms and procedures.

INTRODUCTION

This paper aims at disseminating knowledge about the evolution of expenditure accounting in the government of Nepal. In doing so, the paper examines emerging ideas in the aftermath of the political change of 1951 in Nepal and traces the processes of development and institutionalization of expenditure accounting during the course of two decades, the 1950s and early 1960s, with particular reference to the institutional forces at work. The paper draws on institutional mechanisms to describe and analyze how accounting norms and practices evolved and were disseminated in the government of Nepal. In recent years, a significant number of studies have underlined the importance of applying perspectives from institutional theories to provide understanding as to why accounting changes and the ways new accounting ideas are context dependent [Hopwood, 1983, 1987; Miller, 1994; Carmona and Macias, 2001]. This study, focusing on the evolution of expenditure accounting in the government of Nepal, intends a contribution to this literature.

There is little research addressing Nepalese government accounting history. In the context of accounting history, Nepal may be of special interest due to its isolation. The Rana family, who governed Nepal for more than a century under total dictatorship, isolated Nepal from many of the changes taking place throughout the world, even in nearby India. This isolation contributed to the independence of Nepal but, at the same time, pushed the country back to the medieval age in terms of socio-economic development. Consequently, prior to the political change in 1951 that replaced the Rana family with the king, Nepal was a closed, highly illiterate, and very underdeveloped, agricultural-based economy with no industrialization. At the beginning of the 1950s, only 2% of the adult population was literate, less than 1% was engaged in modern industrial occupations, and 85% of employment and income came from agriculture, mostly performed by tenants using archaic methods [Adhikari, 2005].

The decade of the 1950s marked the point of departure as Nepal replaced its policy of isolation with international integration and modernization. As a result, the country appeared on the world's political map as a new nation albeit lagging far behind other open societies both socio-economically and administratively. In the 1950s, substantial efforts were made to introduce new values and techniques in public administration. New state institutions as, for example, the Accountant General's Office (AGO) and the National Planning Commission, were established. According to Joshi [1973], the Rana's policy of disintegrating people from politics and administration had created a dearth of trained personnel who could model and implement the new administrative structures. …

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