HISTORY OF ACCOUNTING

A Brief History of Accounting

"It is believed that the every origins of writing itself may have developed out of early marks used to keep account of goods at ancient warehouse more than 5,300 years ago. The notion that pre-numerical counting systems pre-dated
even written language didn't come as a surprise to many historians and archaeologists who have long since
recognized that the history of human civilization is largely indistinguishable from the history of commerce."

ANCIENT ACCOUNTING IN EGYPT, MESOPOTAMIA, GREECE, ROME AND ENGLAND

          The abacus which functioned as a calculator developed by Sumerians in 5,000 BCE followed by the Papyrus which was developed by ancient Egyptians in 4,000 BCE. The papyrus not only allowed recording of commercial transactions but also the transcription of religious text, music, literature and more. 

          In Egypt, archaeologist Dr. Gunter Greyer of the German Institute of Archaeology unearthed clay tablets considered to be among the oldest written tax accounting records. In the tomb of King Scorpion I in Egypt, he discovered old stone labels believed to date back to 3,000 BCE or aroung 5,300 years ago. These old stone labels were complete with marks representing accounts of oil and linens which were believed to be paid to the king as taxes. 
          In Mesopotamia, they had clay tokens and clay tablets to record their loans, herds, crops and system of trade. The scribes whi performed extensive duties in writing and recording in the Mesopotamian civilization are the equivalent of present day accountants. 
          In Greece, the Greeks introduced money in the form of coins. Moreover, they adapted the Phoenician Writing System and invented the Greek alphabet used to facilitate record-keeping. Bankers in Greece offered credit and helped people transfer funds to banks in other cities as evidence by the "banker's books of account".
          In Rome, Accounting helped establish their finance and legal system. The Romans introduced the use of annual budget which coordinated estimated revenues and taxes paid by the citizen relation to the nation's expenditures. Also, Cash Book was maintained by households for their expenses.
          In England, William the Conqueror took possession of all the properties in the name of the king upon his invasion. The Domesday Book contained all the real state surveyed by William the Conqueror and the taxes due to them. The most surviving accounting record in the English language is Pipe Roll/Great Roll of Exchequer that contains the yearly accounting rents, fines and taxes due to the king of England, from 1130 to 1830. 

14th CENTURY - THE BIRTH OF DOUBLE-ENTRY BOOKKEEPING 

          Luca Pacioli of Italy, otherwise known as friar Luca Dal Borgo, a mathematician, friend and contemporary of Leonardo da Vinci and considered the Father of Accounting wrote Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything about Arithmetic, Geometry and Proportion). One section of this book, De Computis et Scripturis (Of Reckonings and Writings) is composed of 36 chapters that describes bookkeeping. Benedetto Contrugli was credited for his original idea of double-entry bookkeeping. Contrugli's manuscript, Della Mercatura et del Mercante Prefetto (of Trading and The Perfect Trader) which contains a brief description of the double entry bookkeeping, was never printed. 

19th CENTURY - THE DAWN OF MODERN ACCOUNTING IN EUROPE AND AMERICA 

          19th century is the domination of Theories of Accounts (rather than accounting theories). In England, Industrial Revolution which replaced hand tools with machine or power tools, otherwise known as factory system, transformed accounting into an actual profession. 
         In Scotland, Queen Victoria granted a royal charter to the Institute of Accountants in Glasgow, on July 6,1854, thereby creating the profession of chartered accountant (CA). 1887 saw the birth of tbe first national US accounting society, the American Association of Public Accountants which provided a formal certification process for accountant was the predecessor of the present American Institute of Certified Public Accountants (AICPA) 

20th CENTURY - THE EVOLUTION OF MODERN ACCOUNTING STANDARDS

          Securities and Exchange Commission (SEC) was formed. The AICPA was tasked to set the accounting and auditing standards for these reports until the establishment of the Financial Accounting Standards Board (FASB). The FASB and the Government Accounting Standards Board (GASB) are the currently two of the significant authorities establishing the Generally Accepted Accounting Principles (GAAB) in the US. 

THE INFORMATION AGE 

          Otherwise known as the Computer Age Digital Age, or New Media Age has brought about a significant change in the work load of accountants. Manual, tedious and time-consuming tasks were replaced by faster and more accurate computer methods. 

21st CENTURY - ACCOUNTING IN MODERN TIMES

          The replacement of the International Accounting Standards Committee (IASC) by the International Accounting Standards Board (IASB) established in January 1, 2001. Enron Scandal, the greatest corporate fraud case recorder in American history, caused Arthur Andersen, one of the top audit firms in the US to close business.
          In order to protect the investors from corporate misinformation, the Sarbanes-Oxley Act wad passed by the US Congress in 2002. This imposed tougher restrictions on accountant conducting consultancy services. The Dodd Frank Act was signed into federal law on July 21, 2010 in response to the Great Recession. This contains 16 major areas of reform.