Kautilya Aspect: Ethics of Accounting

The history of accounting is as old as it is in economics. Many scholars have said that the emergence of accounting was done by Paceoli in 1494 but in Kautilya's book Arthashastra a few years ago, the principles of accounting, rules, bookkeeping, internal inspection, independent audit, and moral values are discussed in detail, no boundaries can be drawn between accounting and economics. Economics performs the task of maximizing production by efficient allocation of resources of the country; the same accountancy makes monetary measurements of these means of production and measures economic growth. Kautilya has a significant contribution to the development of economics as well as in the growth and development of accounting. Kautilya says that economics is an indicator of money flow and resources of the entire country and accounting is an indicator of Individual business money flow. Therefore, if the money flows of Individual businesses in the proper direction, then the balance of money flow can be established throughout the country. Economic development depends on the success of private and public industries and its measurement depends on accounting. Kautilya believes that if the principles of accounting and rules are implemented with complete ethics, it is possible to measure accurately the private and public industries. This will also present a true portrayal of the country's economic development, there will be a decrease of fraud and corruption in the country and true information will be communicated for economic planning. To make this process of accounting more compelling, Kautilya linked it to ethics. He has also discussed important subjects like internal inspection, independent audit.5 Accounting is an integral part of economics. Kautilya does not consider that accounting is different from Economics. He believes that there is no boundary between these two; both are equal to two daughters of one mother. Accounting's role is important in the formulation of economic policies. The Accounting methodology is scientific. It explains the cause and the result. Kautilya also follows the explanation and prediction for scientific investigation. Accounting recognizes and predicts economic events, which makes a significant contribution to economic planning and forecasting. The area of Accounting is very wide which is being named "Fortune follows human effort. Prosperity depends on the intellect. Intellect depends on education." Additionally, he shows awareness that a proficient allocation of resources depends on suitable dimensions of profits, which are serious in enhancing money-making growth. He links production-pattern and trade-pattern to expected profitability. He realizes that in the absence of identical standards and correct measurement of economic performance, resources cannot be allocated efficiently.Kautilya attaches importance to the scale of economic performance and economic development. The economic performance addresses accounting and economic development addresses economics. Kautilya has classified accounting into four parts. (i) The extension of the guideline of accounting, (ii) the arrangement of the range and approach of accounting (iii) codification of the monetary Rule and Regulation and lessen the chance of impact of administrative organization (iv) role of ethics to prevent fraud and corruption, also to follow law and order and allocate resources and adding happiness to life"6. Kautilya has experienced that Treasury health depends on developing fiscal policies as much as increasing the tax capacity of the economy through the economic development of the country depends on honesty and proficient monetary administration. He was generally stressed over the chance of fake bookkeeping by government workers. Kautilya believes that moral values help in obeying and maintaining orders is a prerequisite for ethics and economic development and also helpful in presenting the path to heaven. Kautilya says the principle of accounting is important and not only the accountant but his ethics also kept practicing it again and again.7 Kautilya has written in his book Arthashastra, that economic development of both private and public sectors is possible only through wealth creation, for this, he has considered economic policies as well. Private sectors give more importance to their development and management than the public sector because they work to maximize the profits of the enterprise and also violate the moral values in these enterprises. Public enterprises provide support to the public in building basic facilities and infrastructure. Their management and operation depend on government policies, fiscal policies, and revenue.8 Kautilya says that they should reduce administrative and government expenses. Every enterprise should be private or public. It is very important to reconcile the various opportunities for misuse of funds in government undertakings. It is for these reasons that Kautilya felt that there should be a suitable format for accounting methods and affiliation. The rules of accounting should not be left to individual judgment or discretion, but must be subject to the requirements of their compliance; the accountants should be periodically re-examined. Freelance highlighted the single subject as the Controller of Auditor examines the accounts. He is skilled and knowledgeable in understanding the rules, principles, and financial matters of accounting. Kautilya suggested that accountants should be encouraged and promoted to prevent abuses of ethical values, likes (i) accidental chronicle mistakes, (ii) purposeful tricky bookkeeping, (iii) plot among workers to misuse income, (iv) misfortune in profitability due to in-battling among representatives, and in particular he notices (v) that standards are just pretty much as great as individuals who practice them.9 Kautilya says accountants inadvertently and deliberately provide accounting errors and irregularities, which leads to a reduction in revenue from private-public enterprises. The ethical failures of the accounting framework have to be prevented to prevent the loss of revenue, and the investigators and internal investigators are fully competent in this task. Kautilya accepted that the standards of bookkeeping are significant as well as the morals of the individuals who practice them. That is, standards are just pretty much as great as individuals who practice them. He proposes three measures to manage the issue of extortion. In the first place, individuals must be educated regarding the current laws, since it is absurd to expect to comply with them without legitimate data. He systematizes (alongside adjustments and augmentations) every one of the standards and guidelines. As indicated by him, the laws should be exceptionally clear with no ambiguities or escape clauses and ought to be pretty much as thorough as could be expected. Second, he proposes an authoritative design, which diminishes the extension for the irreconcilable situation. Third, he recommends not insignificant arrangements of disciplines for bamboozling the public authority and prizes for honorable help. Kautilya suggests the making of a knowledge administration for catching the violators, reasonable preliminaries, and rebuffing the blameworthy ones relying upon the nature and gravity of their offenses. He suggests a sensible blend of motivator-based remuneration, investigation, management, and suitable discipline to diminish cheating and evading.
Kautilya indicates many bookkeeping rules:

(a) Proper Maintenance of Accounts: He expresses, "All records will be kept up in the appropriate structure and readably composed without rectifications. Inability to do so will be a culpable offense
(b) Timely Submission of Accounts: He proposes, "Everyday records (to be submitted once per month) will be introduced before the finish of the next month and late accommodation will be punished"
(c) He teaches the record officials, "Not lie about the records and make an effort not to insert a section as though it was neglected."