[Opinion] March of Accountancy | Bare Intelligence to Artificial Intelligence

P.N. Kumar – [2024] 163 taxmann.com 534 (Article)

1. Introduction

1. Accountancy is the business language because it communicates the financial information of an entity. It enables one to understand the financial performance and achievements of a business entity. It is a tool to know what a person has earned, what he has spent and what he saved. All these measures are in numbers. Therefore, it is said that the accounts took birth from the skill of counting numbers, sometimes in Mesopotamia in 350 BC. In this context, it is rightly said that mathematics is the seed of accounts. Archimedes, father of mathematics, born in 287 BC was responsible to generate the knowledge of Accounting. A person who could do the Act of Counting was nick named as Accountant.
2. In 1494, Mr. Luca Pacioli, introduced a new way to write books. This began the double entry system – a pillar of modern accountancy. The new book was called Ledger, in which entries were made Head Wise. Ledger, therefore, is called the King of Books. The importance of Accountants as a profession came to light, particularly after the enactment of the Joint Stock Companies Act of 1857. An accountant was considered a guard of the interest of the business. Books of accounts became the source of information on the profit and growth of a business. When the Companies Act was amended in 1913, some provisions were made about maintaining at least some books and the manner in which these were to be kept. The contents of the study material had already been developed as subjects of Commerce and accounts, and those who passed the course were qualified to work as accountants.
3. What heights a person of an ordinary family can achieve by following the occupation of an ordinary bookkeeper can be learnt from the life of John D Rock-feller, who died as the richest person in the USA (1839-1937). He is credited for encouraging vocationalism in education. He believed that the best education for poor youth was to prepare them so that they would be able to follow a well respectable occupation when they were adult.
   Turning our attention to India, we take pride in mentioning Sh. K.S. Aiyar (1859-1910), a pioneer of commerce and accountancy, who became the first practicing professional in India. His significant contributions to the field earned him the title of ‘Father of Accountancy in India ‘. He began his practice in Calicut in 1897, later shifting his office to Bombay. His work laid the foundation for the growth and development of accountancy in India.
4. In Independent India, a major milestone was achieved with the establishment of the Institute of Chartered Accountants under the Act of Parliament in 1949. It is recorded that Sh. G.P. Kapadia, who passed out in 1950, was the first member of ICAI, later becoming its first President. This marked a significant step in the professionalisation of accountancy in India. The institute has since produced many renowned professionals, including S/Shri Kumar Mangalam Birla, Deepak Parikh, Rakesh Jhunjhunwala, Motilal Oswal, and Naini Lal Kidwai, who are recognized as the luminaries and icons of the profession.

2. Financial Auditor

1. Any person having basic knowledge of accountancy and fundamentals of mathematics could do the job of an accountant. Later, any person who qualified as a B.Com or M.Com could join as an accountant. There was no stipulation on the qualification for keeping the accounts book and preparing the financial statements. An accountant’s responsibility was to prepare the accounts and present them to the management and later on to the Registrar of Companies.
2. Later, when the stock market developed, true and correct information was to be given to all public investors, as per the requirement of the listing agreement. Therefore, it became essential to get the accounts prepared by a qualified accountant and get the same audited by a Chartered Accountant or firm of CA, in full compliance with the accounts and audit standards, in the prescribed format, in terms of section 44AB of Income Tax Act and section 226–229 of Companies Act of 1956 (now section 139 of Act 2013).
3. With the expansion of demand, the number of qualified accountants increased rapidly. Today, there are 4 lakh registered members, including 1 lakh women members, and approximately 10 lakh students. The demand continues to grow, especially with the requirement under section 138 of the Companies Act 2013 for specified companies to employ Internal Auditors. This expansion of roles and responsibilities signifies a promising future for accountants, who can now work as accountants, statutory auditors, internal Auditors, or even in other business and financial enterprises. These professionals are considered as epitome of creativity, innovativeness, knowledge, integrity, trust, stability, and dependability, as reflected in the logo of the institute.
4. Now is the time for them to introspect on what type of future they envisage for the professionals of Accountancy in India in any of the capacities of an accountant or auditor and as drivers of the business world. The Chartered Accountants of India have the potential to become Vishav Guru in the realm of Business Management.
5. With the growth of business, there was more work, and so there arose the need to evolve or invent some mechanical devices that could help the accountant do his work of bookkeeping and presentation of data in a neat and accurate way. Hand-operating devices for doing multiplication and division, etc., were created by the human brains. IBM machines came into existence to do a large volume of work. Calculators were in vogue with every accountant instead of applying mind/tables. Typewriters were used to type out the narration accompanying the financial data. The ledgers were now machine-made instead of handwritten. At this stage, the concept of verification of data entered by one person by another person was added to the accounting process. This process later on was called Audit.

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