on accounting in India?
One of the major economic developments of this decade has been the economic growth of India with growth rates averaging in excess of 8% for the past years.
The British influence on accounting in India is a reality. Mostly due to the history and the political role of Britain in India, the British influenceon accounting appears as an obvious fact. This essay will show you in which way government accounting in India largely follows the British pattern, giving each point which is relevant in this regard.
The United Kingdom of Great Britain and Nothern Ireland is the Union of England, Scotland, Wales, and Northern Ireland. The term Britain is often used for the United Kingdom. “British”is used to describe accounting in the United Kingdom.
India is the second most populated country in the world (1.11 billion). Hindi is the official language of India but English is largely used by government, science business and education. In 1619 until the end of the 17th century the British military posts and trading stations were established all over the India. The British continued toexpend their influence into way to have the political, military and economical power. After the second world war and the intervention of Ghandi and Nehru the disobedience of Indian people increased against the British power. As a consequence, the independence from the British in 1947, India inherited one of the world’s poorest economies, but also one with arguably the best formal financial markets inthe developing world, with four functioning stock exchange and clearly defined rules governing finance and accounting; a well-developed equity culture if only among the urban rich; a banking system with clear lending norms and recovery procedures; and better corporate laws than most other old colonies. After independence, a decades-long turn towards socialism put in place a regime and culture oflicensing, and intellectual protection.
The British law legal system, its parliamentary system and the use of the English language describe how much India is influenced by the British. We can extend this influence to accounting.
The British influence
The British accounting system is considered like a single discipline responding to the needs and practices of business. The United kingdom wasthe first country in the world which has developed an accountancy profession. The influence of the British accounting is important all over the world. The concept of “ true and fair view” which means a fair presentation of financial results and position of a business, comes from United Kingdom.
The two major sources of financial accounting standards in the UK are companies law and accountingprofession.
The Indian accounting system, the recording methods and classifications is largely similar to the British accounting system. Indeed, financial reporting is aimed as fair presentation, and there is an independent profession for the accounting and audit standards in India. And as in United Kingdom, the two major sources of financial accounting standards are companies law and theaccounting profession. In 1857 was legislated the first companies act, and in 1866 the first law relating to the audit and the maintenance of the records was voted. Both of these laws were voted and based on British law. The Indian audit an accounts department, is responsible for maintaining all government accounts, defense and transactions made outside the territorial limits of the country. Accordingto the Accounting system, the government follows the single entry system for the accounts but in certain cases as for loans and borrowings, the double entry system is used (to make sure of the exact balance). The system of double entry book keeping on accrual basis is followed. Moreover, according to the current Companies Act 1956, which provides a framework for keeping so called books of...