Accounting Education and Research as Infrastructure for a Modernizing Economy Shyam Sunder James L. Frank Professor of Accounting, Economics and Finance, Yale School of Management New Haven, CT, USA 29 th All India Accounting Conference University of Delhi, December 22-23, 2006
Importance of infrastructure for modernization of Indian economy
Service infrastructure just as important as the physical
Accounting is a critical element of service infrastructure for organizations and economy
Development, modernization and innovation of all parts:
Financial reporting, management accounting, internal controls, government and not-for-profit accounting, governance, financial analysis, forensic and investigative, internal and external auditing, government financial management, program evaluation
In academia, special and immediate attention to curriculum, research, and doctoral education
Indian accounting can become the envy of others (just as the software did) if this community is so determined
Better Infrastructure of Modernizing India’s Economy
The awareness of the critical need to develop the physical infrastructure in India to support a modern economy is a recent and welcome development.
No economy can survive, much less thrive, without provision of efficient transportation, communication, and utilities.
All these are physical constructions—tangible—things you can see and touch
Was it Alexander’s physical strength and skill that made him so great? Or was it his skills of management?
The tangible and visible nature of physical infrastructure obscures the role and criticality of equality important institutional, human skills, soft, and services infrastructure of society which is no less important
With large capital needs, no single individual can own the enterprise, and capital must be gathered from a large number of shareholders
To meet the needs of such enterprises, bookkeeping and managerial accounting expanded into financial reporting—the most comprehensive form of accounting developed to serve the needs of organizations with publicly traded ownership shares
Financial reporting has come to be dominated by written standards (e.g., FASB and IASB)
Standards alone are not sufficient to ensure good financial reporting
Developing social norms of “true and fair” financial reporting in accounting and business community—role of professors
Developing an open process for creating competitive standards to ensure efficiency in financial reporting
Development of alternative methods of accounting, field testing, and research on link to security markets
Interaction between instruction, practice and research
Engagement of research and professional communities (CA, CWA, investment and commercial banks, mutual funds, financial service intermediaries, government and auditor general of India, etc.)
Refereed research journals with rigorous standards
Innovation and international leadership in accounting
Danger Signs: Quality and Quantity of Scholarship
As an expatriate Indian who has retained his Indian citizenship after 36 years abroad, please forgive me for sharing one concern I have about a critical weakness in India’s development
This concerns research and scholarship, as reflected in high quality PHD programs, not only in accounting and management, but in virtually all aspects of academia (with the fortunate exception of chemistry).
PhD programs, like high quality seed needed for agriculture, are expensive in time and money.
Yet, unless we have the foresight to find ways of attracting at least 5 percent of the brightest students in each year’s class to scholarly careers, India would have no hope of being able to compete in the world awash in talent and better educational systems.
Since there is no time today, I shall expand on this analysis in my address at the India Habitat Center at 6:30 PM on January 9.