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The decision-making process in the first phase has been shaped by both transnational and national influences. Classifications of actors and types of influence exerted on the decision-making process have been identified as characteristics that can be used for in- depth analysis.

6.2.3.1 Classification of Actors

Table 8 Analysis of actors involved in the decision Vocational

Classification Regional

Classification State

Bodies Professional Bodies Financial Institutions

Transnational AGAOA, ICGFM, DFID IFAC, IPAI, INTOSAI, IPSASB WB, USAID IMF, ADB, OECD National GASAB, Twelfth Finance Commission ICAI, Institute of Cost Accountants of India RBI

Analysis of actors constituting the decision-making arena in the first phase presented in Table 8 shows that on the transnational front there were significant influences from transnational state and financial bodies. On the national front all the actors are either fully authorised state bodies or agencies of the state. For example, the ICAI and the Institute of Cost Accountants of India are professional bodies that are legally subordinate to the central government. It is perhaps the sole presence of state bodies on the national front that led to contrasting differences in the convergence movement in the public and private sectors. However, there are different views on the reasons for contrasts in the public and private sector. According to a USAID official, the public sector convergence movement is relatively easier when compared to the private sector. Elaborating on this point, the interviewee stated,

“…..public sector is not replacing an existing accounting system…..it does not have to undo practices followed for decades now and adopt a new system as in the case of private sector”.

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The same argument has also been stated by some government officials who cite similar convergence processes in other countries and also the point that public sector is not replacing an existing set of accounting standards. This study infers that the apparent absence of resistance in the public sector could also be a reason for the contrast in the convergence decision-making process in the two sectors. Although it is likely that there may have been some differences of opinion, the official statement has emphasised the presence of consensus among all parties involved. However, government statements may not always reflect reality. A senior government official said:

“We have not had any resistance to the move towards accrual accounting and eventually towards IPSAS… all parties involved are supporting the decision” (G2)

The main message that comes out here is the strong presence of transnational actors and their relationship with the national actors. The presence of IFIs such as WB and OECD with whom the state has a donor-recipient relationship further emphasises the influence of transnational actors on the decision-making process. To gain a better understanding of the decision making process in the first phase it would be necessary to analyse the nature of influence exerted by these actors on the decision-making process. The following section presents an analysis of the type and mode of influence exerted on the decision.

6.2.3.2 Type and Mode of Influence

Analysing the different ways in which people or actors were involved in the convergence decision helps to gain a comprehensive understanding of the events or proceedings in the decision-making arena. Table 9 presents an analysis of influences on the decision:

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Table 9 Analysis of Influences

in Phase I ontheDecisioninthePublicSector

TYPE MODE

DIRECT INDIRECT

IFI(s) Professional Government

FORMAL

WB, IMF IPSASB DFID,

USAID, ICGFM ADB, OECD INFORMAL WB - -

Evidence of decision-making process in this phase indicates that communications have been mostly formal through both direct and indirect means. Table 9 shows three layers of direct influence on the decision-making process from IFIs, professional bodies and state agencies or departments of countries such as the US and the UK. For instance, the direct influence of IFIs on the decision-making process is supported by clear evidence of SFAA assessments conducted specifically in India as also in the case of preparation of NMAM. Also the report on the assessments makes very unambiguous recommendations to the GOI for IPSAS convergence. On the other hand, ADB and OECD have been promoting convergence with international accounting standards through platforms organised for other related issues such as fighting corruption. Hence this influence is interpreted to be indirect.

With regard to the influence of USAID on India’s move towards IPSAS convergence, an interviewee stated that the organisation was actively involved in promoting accrual accounting in municipal bodies in India through financial and technical support (IF2). According to a senior member of the USAID, the organisation has its regional offices in India which employs mostly local staff members who actively participate in conferences, seminars and meetings on convergence with international accounting standards. Hence these local offices act as the channels of transnational communication between transnational and domestic actors.

“The meetings and conferences are used as a platform to commence communications with representatives of government bodies and professional associations which are often followed up by informal communications as well” (IF2).

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With regard to informal communications, it could be observed that evidence for the same is limited. Talking about informal influences, the interviewee stated that there was an instance where a WB official had offered financial assistance to the ICAI in an informal meeting to facilitate and speed up the implementation of accrual accounting. She said,

“A friend of mine who is a senior member of ICAI was approached by a World Bank official with an offer of financial aid for the transition…the offer was made during an informal meeting” (IF2).

However, at the time the ICAI had other sources of financial support and hence had declined the offer. The interviewee further explained that USAID has also been providing assistance to conduct training sessions and workshops for chartered accountants. Hence it can be observed that in the same year of 2004, two powerful IFIs were playing significant roles in initiating and shaping the decision-making process for IPSAS convergence in India.

One of the important characteristics that can be observed in this phase is the cyclic nature of the decision-making process. Officially the state in its announcements does not cite specific transnational influences as the cause for its actions towards IPSAS convergence. However, from the timing of transnational communications and local developments, it could be interpreted that steps taken by the state were in response to transnational influences. For instance, the publishing of the SFAA report by the WB and the recommendations of the Twelfth Finance Commission both occurred in February and July 2004 respectively. From this it could be interpreted that the recommendations of the Twelfth Finance Commission were in response to the recommendations for convergence with international accounting standards in the SFAA report which was specifically addressed to the state.

Similarly, the professional development programme co-organised by ICGFM in 2004 is also marked by some interesting aspects that further substantiate the theoretical framework used in this study. It represents that transnational networks, in addition to state-non state interactions, also include state to state interactions where one actor is a national state actor and the other is a transnational state actor. Since these transnational networks are the means through which the convergence decision-making process is shaped and constituted by actors, examining these networks would enable to gain a better

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understanding of the convergence project. The participation of actors and their actions as part of the network represent the influences exerted on the convergence project. In this case the members of ICGFM include state entities handling financial management responsibilities; that is high level government executives, representatives of MoF, accountants and auditors general from countries across the world. (ICGFM, 2008). Hence the professional development programme that was co-organised by the ICGFM in India was a significant example of state and non-state transnational influences on the decision- making process in India.

The programme was called the ‘Joint Professional Development Programme on Public Sector Accounting and Financial Reporting’ and it was conducted to enable the sharing of different kinds of experiences on public sector accounting with specific focus on some important aspects in the Indian context; in particular, the move from cash accounting to accrual accounting. In his inaugural speech, the CAG noted,

“A need to revisit the conceptual underpinnings of government accounting systems has been felt in India largely due to realisation of deficiencies in the cash based system particularly for purposes of modern financial management and the need for greater transparency and user friendliness”.

The CAG further pointed out that the two main issues that require specific attention are the framing of appropriate financial reporting standards and the training of government accountants to equip them with new accounting skills. The INTOSAI and the IFAC PSC were stated to be significant sources of reference points for the development of standards for government accounts (GASAB, 2004a).

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