REVIEW OF HISTORY OF ACCOUNTING DEVELOPMENT IN INDIA

ROHIT TRIPATHI
(ASSISTANT PROFESSOR SHMVCHURK)

ABSTRACT
Accounting is one of the most important areas of business, so prevalent in our lives today that it
is impossible to imagine modern business and economics without it. Accounting is a well-
designed system that reflects the movement of the various facts of economic life, however
different they may be, and leads them into a common logical system. We can talk a lot about the
features and possibilities of this science, but how often do we think about how this system came
into being, how it developed, and how it became a science in its own right? In studying this
problem, an attempt was made to systematize the different points of view on the origin and
development of accounting. According to the result of the analysis, the authors identified
regularities in the development of accounting and its methodological apparatus, which are
connected with the periodization of history according to technological structures.
Keywords: growth of accounting, sources of accounting, bookkeeping, techno-economic
paradigm.

INTRODUCTION
The history of a science is studied to ensure the continuity of its development, to know the laws
of this development, so as not to make the same discoveries twice. For the same reasons we
study the history of accounting. The study of this science should be approached from the point of
view of how this phenomenon arose in history, what important stages it passed through in its
development, and what has become of this phenomenon in terms of its development today. There
is no definite answer to this question, but in the book "History of Accounting Development" by
Ya. V. Sokolov, one can usually hear three answers:
Six thousand years ago, when people purposefully began to register the facts of economic life,
500 years ago, when the book of L. Pacholi was published ("The sum of arithmetic, geometry
and the doctrine of proportions and the beginning of the understanding of accounting;
100 years ago the first theoretical structures in the field of accounting appeared.
Depending on the level of development of production relations, productive forces, legislation,
tradition, etc., accounting took different forms. With the development of the means of work, the
system of economic relations, the information model reflecting them, as well as the methods and
means of information processing were also improved. From this it can be deduced that at each
stage of development different conditions for the emergence and development of accounting can
be identified. A sufficiently large number of studies of domestic and foreign scientists are
devoted to the history of accounting; various philosophical, evolutionary and other approaches,
which are very different, lead to the discussion of this subject. Accounting as a science, which
has its theory, the law of double-entry bookkeeping of economic transactions, emerged at the end
of the Middle Ages. The homeland of double-entry bookkeeping is considered to be Italy, which
is associated with L. Pacioli.
In his treatise "On accounts and records" Luka Pacioli devoted three chapters to the balance
sheet. All these provisions formed the basis for the works of D. Cardano (1539), I. Manzoni
(1549), B. Katruli (1573), L. Flory (1633) and other authors from Italy, J. Impin (1543) in
Holland, I. Gottlieb (1531) in Switzerland and H. Oldcastle (1543) in England. Characteristic of
this period was the lack of theoretical generalizations elaborated by practice, as well as the
inability of the authors to understand the essence of the phenomena that occur in connection with
the processes in a particular state.
In this period, accounting was interpreted in the legal and economic sense. The legal
interpretation of accounting was first made by Edmond Degrange (1797), who introduced the
concept of economic operation and claimed that for each operation at least two accounts are
required: The one who receives is debited, and an issuer is credited. The principles of legal
direction were most fully formulated by Francesco Villa (1864), who assumed personalization
instead of identification of an account with a person, introduced accounts for individuals, and
interpreted all accounts as open accounts for custodians, whose accounting object was
represented by a contract.
Along with the legal interpretation of accounting appeared the economic interpretation of
accounting. Giuseppe Forney (1790) considered that the subject of accounting is not represented
by natural and legal persons, subjects of rights and obligations, but by objects, things and values.
All values are measured in money, which makes them comparable and qualitatively
homogeneous properties.
Gradually, the forms and scope of economic operations changed and increased, and it was
impossible to record all these operations with the existing primitive means available to
accounting. The end of the 18th century and the first half of the 19th century are characterized by
an intensive development of social productive forces, as well as by the expansion of international
trade. The accountants and scientists of that time began to understand that it was not enough to
limit themselves to the study and presentation of a single form, but that theoretical justifications
of certain practical methods were necessary, the focus of which had to be the factor that was
most important in the activity of an enterprise, and from this point of view began to study a
particular activity of the private household.
The development of capitalism contributed to the further improvement of accounting: Since the
middle of the 19th century, artificial values such as costs, profit and depreciation began to be
included in accounting.
The second half of the 19th century and the beginning of the 20th century are characterized by
the phase of development of accounting as a science. In most countries, accounting law is
developed during this period, the integral part of which is the balance sheet and the profit and
loss account. In this period, the legislation of many countries obliges entrepreneurs to publish
their accounting reports in order to reduce the risk of shareholders, investors and other external
users.
The second half of the 20th century and the beginning of the 21st century are characterized by
the active implementation of international accounting standards and the development of
accounting in conjunction with related sciences. Accounting has become one of the most
important areas of business, which is now widely used in our lives.
Having considered the history of accounting development from different angles, we have come
to the conclusion that it is useful to elaborate the patterns associated with the periodization of
history along the technical-economic paradigms in the development of accounting.

LITERATURE REVIEW

KAUTILYA ARTHSHASTRA
- Kautilya, also known as Chanakya or Vishnugupta, was a well-known statesman, economist,
and spiritual guru who lived in the 4th century.
- Kautilya prescribed accounting theory, which included bookkeeping, financial statement
preparation, auditing, and fraud risk management.
- He considered accounting an integral part of business. Various kingdoms in India used his work
until the 15th century AD i.e. before colonial rule.
Keeping the accounts
The accounting year was set to the period from Julyto June, with a complete procedure for
closing the accounts and auditing the same.
It included the method of consolidating the accounts of different government agencies to
determine the net profit and loss.
The auditors were required to submit the completed financial statements to headquarters by mid-
July. Financial penalties were imposed for lateness or noncompliance.
Separation of the roles of treasurer and auditor
What was fascinating about Kautilya's approach was that he recognized the conflict of interest
between financial and auditing functions.
He stated categorically that the chief financial officer and the chief audit officer should report
independently and separately to the king. He recognized the possibility of a clash between these
two functions.
In India, in the government, the Comptroller General of Audit and the Ministry of Finance are
two separate functions.
Building an ethical culture
Kautilya believed that character reflects an individual's personal values and that learning ethical
values must begin in childhood. Even as an adult, ethical behavior was as important as
professional skills.
He proposed measures to build an ethical climate in the kingdom. However, he was practical and
recognized the potential for corruption.
In the area of accounting, he spoke about misstatements in financial statements due to abuse of
power and fraudulent reporting.
He developed a system of reward and punishment to ensure compliance with rules and
regulations.

1.K. S. Aiyar (the father of accounting in India)

ShriKalyanSubramaniAiyar (1859-1940), better known as K. S. Aiyar, was a pioneer of
commerce and accounting education in India. He founded and established training courses and
institutions dealing with commerce and accounting.
He established his firm in 1900, probably the first accounting firm established by an Indian in
India. He started his practice in Calicut in 1897 and moved to Bombay in 1900. Sir
ByramjeeJeejeebhoy, a nineteenth-century philanthropist and large landowner who founded
several educational institutions in Bombay, invited ShriAiyar to Bombay in the first decade of
the twentieth century and later appointed him director of the ByramjeeJeejeebhoy Parsee
Charitable Institution (B. J. P. C. I.), Bombay. ShriAiyar transformed this institution into the
College of Commerce in 1900 to prepare students for the London Chamber of Commerce
examinations. Within a few months, he also established the first night school of commerce in
Bombay.
Shri Sorab S. Engineer was the first Chartered Accountant to apprentice with Shri Aiyar in his
firm in India from 1905 to 1908 and subsequently worked for the same firm for another five
years. Shri Engineer was appointed a guru by the first President of the Institute of Chartered
Accountants of India, Shri G. P. Kapadia. in 1912, Shri Aiyar introduced the first Bachelor of
Commerce degree at the College of Bombay. The degree required a three-year internship with a
licensed chartered accountant in practice, and holders of the degree were entitled to the award of
an unlimited unrestricted chartered accountant's certificate under the Indian Companies Act of
1913, which entitled the holders to practice throughout British India. In 1890, he wrote a
descriptive textbook on bookkeeping, The Principles and Practices of Bookkeeping.
ShriKapadia, in his highly acclaimed, documented history of the accounting profession in India,
writes: "He is universally recognized as a pioneer of commercial education in India, and his
contribution to his field has been significant." As a dedicated educator, ShriAiyar is undoubtedly
worthy of being called the father of accountancy in India.

Shri S. B. Billimoria (1877-1958)

ShriShapoorjeeBomanjiBillimoria, known to our generation as S. B. Billimoria, was the first and
only one of his time to be accorded unqualified confidence, highly respected by eminent judges
of high courts, and much sought after by those in charge of banking, insurance, industry and
public service, as reported by ShriSorabji Engineer. After passing the London Chamber of
Commerce examination with distinction in 1899, Shri Billimoria soon after founded the
Commercial Training Institute for Accountancy to provide training in accounting and commerce.
In 1902, he established his firm SB Billimoria& Co. His recommendations inspired the
Companies Act of 1913, which provided for the licensing of chartered accountants. Shri
Billimoria was appointed auditor of the Presidency Bank of Bombay in 1911, ignoring the
presence of professionals like A. F. Ferguson; this bank later became known as the Imperial
Bank of India and much later as the State Bank of India. Sir George Rainy, who introduced the
Indian Companies Act Amendment Bill, 1913, in 1930 to centralize the procedures for granting
certificates to Chartered Accountants, noted that the Bombay Government nominated Shri
Billimoria as its obvious choice for the Indian Accountancy Board. He was the only Indian
chartered accountant to be knighted. In 1913-49, the former president of ICAI was CA. Y. H.
Malegam says that there was hardly any aspect of the development of the profession in which he
(Shri Billimoria) was not consulted and in which he was not actively involved. Shri G. P.
Kapadia also records, ...without the mention of Sir Shapoorjee B. Billimoria and his activities,
the history of the accountancy and auditing profession would lack its very soul. ShriAiyar
authored the Government Diploma in Accountancy (GDA) scheme for the Bombay Government
on the recommendation of the Accountancy Diploma Board to enable accountants with an
unqualified certificate to practice accountancy in India, which required a three-year internship
with a licensed accountant in practice. The former president of ICAI CA. Y. H. Malegam says
that between 1913and 1949 there was hardly any aspect of the development of the profession in
which he (Shri Billimoria) was not consulted or in which he was not actively involved. Shri G. P.
Kapadia also records: ...without the mention of Sir Shapoorjee B. Billimoria and his activities,
the history of the accountancy and auditing profession would lack the very soul.
ShriSorabji S. Engineer (1883-1973)
His inherent sincerity and nobility made ShriSorabjiShapurji Engineer a role model for a whole
generation of accountants of his time. The first President of ICAI, Shri G. P. Kapadia,
remembers him as a source of inspiration for a large number of trainee accountants as he shaped
the careers of hundreds of members. Shri Engineer established his firm in March 1914 both in
Bombay and Ahmedabad. In 1910, Shri Engineer along with other prominent Indian Chartered
Accountants of his time, including Shri K. S. Aiyar and Sir S. B. Billimoria, founded the
Association of Auditors and Accountants in India. Shri Engineer was a contemporary of the
accountancy and auditing profession, which enjoyed a high profile, especially in 1913, the year
the Indian Companies Act was passed. He trained hundreds of students, including two former
presidents of ICAI (India), Shri G. P. Kapadia and Shri C. C. Chokshi, as well as many first
partners of major accounting firms in India. Shri Engineer assisted his student Shri G. P. Kapadia
in writing the history of the accountancy profession in India and helped him with many authentic
anecdotes and narratives about prominent and outstanding accountants from the formative era of
the accountancy profession in India.

RaiBahadurShriBalak Ram Pandya (1882-1966)

RaiBahadurShriBalak Ram Pandya, as senior partner, represented the Lahore firm of Basant
Ram & Sons, which, according to the History of Accountancy Profession in India, was the first
and most important firm of Indian Chartered Accountants in North India. ShriBalak Ram
Pandya's name was recommended for appointment to the Indian Accountancy Board from the
Punjab region. Shri Pandya was a member of the Indian Accountancy Board in its first three
Constitutions, i.e., 1932, 1935 and 1939. In their struggle for a (common) designation as
Chartered Accountants, Shri Pandya strongly advocated the struggle of Registered Accountants.
He said that the word Charter was not a monopoly of any society or country. He reminded the
Accountancy Board in 1939 that one of the objectives with which the Board was formed was to
give a charter to the registered accountants. While expressing outrage at the claim that registered
accountants were lower than chartered accountants, he patiently pointed out to the Board that if
this was true, the level of registered accountants would have to be raised. In his last days, Shri
Pandya was the Chairman of the Northern Chamber of Commerce and the oldest chartered
accountant in active service. After 63 long years of service to the profession, Shri Pandya
enjoyed great respect in the Indian Accountancy Board because of his wise words during
meetings. Sir Ernest Burdon, the Auditor General of India, considered Pandya's statements as
exceptionally intelligent and prophetic.
Shri G. P. Kapadia (1905-1983)
ShriGopaldasPadmaseyKapadia, the first President of the Institute of Chartered Accountants of
India, is remembered as the father of the accountancy profession in India. ShriKapadia played a
key role in setting up the expert committee that made a recommendation: that registered
chartered accountants should be called 'chartered accountants" in the future. He informed the
committee that the ban on the use of the designation "Chartered Accountant" by persons from
other dominions should be lifted. According to Commerce Minister Shri C. C. Desai, Shri
Kapadia has rendered great service to the profession and has received the unanimous support of
the members of the Council and no doubt the profession. In recognition of his contribution to the
birth and development of the Institute of Accountancy, two awards, the G. P. Kapadia (First
President) Gold Medal and the G. P. Kapadia (First President) Silver Medal, have been instituted
to be conferred on the best graduates of the Institute's CA final and first examinations,
respectively. Shri Kapadia's authentic History of the Accountancy Profession in India remains a
landmark in the history of accountancy, i.e. it was first published in 1973, in the history of Indian
accountancy. Shri Desai had said: ...it is only through your (ShriKapadia's) personal cooperation,
advice and guidance that we have been able to give the accountancy profession a new personality
and the dignity from which it had suffered in the past.
Research gap
The role of history is to bridge the gap between grandparents and grandchildren and to teach
children that their ancestors were intelligent and artistic. Children should understand and know
the rich culture of their past. Knowledge of history also helps them understand how and why we
are where we are.

OBJECTIVE OF RESEARCH
The following skills are needed to conduct book research:
1: Finding out changes in the accounting system from the past to the present
2: Search for Indian accountants in India
3. Study the thoughts of other accountants.
4: Study many types of accounting systems.

RESEARCH METHODOLOGY
The methodology used in this work consists of the following phases:
1. The problem identified in the research on the historical development of accounting practice
and theory:
2. The elaborated research plan, including the collected literature bibliography to be used;
3. the established structure and sections of the work;
4. The structure of the paper based on the findings obtained from qualitative data, mainly from
books, articles, studies and internet sources.

Analysis of the research

The study draws on various aspects of accounting analysis to provide valuable insights into the
topic.
Six thousand years ago, people purposefully began to record the facts of economic life,
500 years ago, when the book of L. Pacholi ("The Sum of Arithmetic, Geometry and the
Doctrine of Proportions and Relations") was published, the understanding of accounting began.
This period was characterized by the absence of theoretical generalizations elaborated by
practice, as well as the inability of the authors to understand the essence of the phenomena that
occur in connection with the processes in a given state.
The first theoretical structures in the field of accounting appeared 100 years ago.
The first legal interpretation of accounting came from Edmond Degrange (1797), who
introduced the concept of economic operation and claimed that for each operation at least two
accounts are required: the one who receives is debited, and an issuer is credited.

STATEMENT OF RESULTS
In India, various accounting methods are used by entrepreneurs, such as single-entry
bookkeeping, double-entry bookkeeping, Mahajani system, and cash system. The study shows
the importance of accounting in business and real life. It also shows the advantages and
disadvantages of all accounting systems, which may indicate the need for new developments in
accounting.
In this study, we have tried to present the history and origin of accounting. In detail, we have
tried to present and explain the accounting practices from ancient times to the present.
 The study shows that there is a comprehensive procedure to detect fraudulent transactions and
punish accountants for misstatements in financial statements.

Conclusions and suggestions

Accounting as an information system is the eyes and ears of the company, which is necessary for
efficient management. In this study, we have tried to present the history and origin of accounting.
In detail, we have tried to present and explain the accounting practices from ancient times to the
present. In the development stages of accounting in each period, it can be seen that the
development of accounting depends on the economic environment, the development of the
economic environment and technological progress. Despite the progress in the field of
accounting, we can say that the basic principles of two-tier accounting from 523 years ago are
still the same today. In view of this fact, the question arises whether there are no innovative the
concept of continuous monitoring, periodic testing, verification, and vouching existed in ancient
times. The attributes used today to verify revenue and payment records were also used in earlier
times. Interestingly, there were spies in every department who provided information and reported
wrongdoing to superiors. There was a comprehensive procedure for detecting fraudulent
transactions and punishing accountants who had made false statements in the financial
statements.

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