Evolution & History of Accounting

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Accounting draws on both mathematical and analytical practices. Luca Pacioli--who is known as the father of accounting--noted in 1494 that ethics also play a major role in the accounting profession. Since the first few years of the 21st century, the accounting industry has been under consistent pressure due to the Enron, WorldCom and Qwest scandals.


Though rudimentary accounting practices were in place for centuries, it wasn't until 1494 that an author codified and explained a system of formal accounting. In that year, Luca Pacioli, a Franciscan friar, wrote the first manifesto for formal accounting, “Summa de Arithmetica, Geometria, Proportioni et Proportionalita.” Known as “the father of accounting,” Pacioli describes double-entry accounting, in which a credit in one person’s account must be reflected by a debit in another person’s account, and explained the interconnected system for capital, income, liability and expenses. He also discussed in this book the ethics of accounting.

Industrial Revolution

To match the technological innovations and societal shifts that marked the Industrial Revolution, accountants had to forge new methods for quantifying profitability. Josiah Wedgewood, who pushed the British pottery market toward industrialization, created “cost accounting,” which is the tracking of costs through the stages of production. Wedgewood also secured the support of Queen Charlotte for his products, which marks one of the earliest endorsement deals, as well as money-back guarantees and illustrated catalogues.

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19th Century

In the late 19th century, the American Institute of Certified Public Accountants was formed and began providing a formal certification process for accountants. The Ottoman Empire made a drastic shift toward formal accounting, when Sultan Abdülhamid II permitted the Ministry of Finance to introduce modern methods in 1880.

Modern Era (1900-2000s)

After the stock exchange crash in 1929, Congress began actively regulating the industry. The accounting industry responded by releasing a set of ethical guidelines, the Generally Accepted Accounting Principles (GAAP) book. The 1970s saw another wave of reforms, as the Financial Accounting Standards Board was created by the federal government. In October 2001, the Enron scandal virtually brought down Arthur Andersen LLP, a prestigious accounting firm that had a reputation for unimpeachable ethical behavior for over a century. As a result, Congress passed the Sarbanes-Oxley Act of 2002, which raises the penalties for accounting fraud.


Accounting practices have become more formalized, with certification protocols established in the 1800s and federal regulation in the 1900s. In the first decade of the 21st century, accountants were required to learn methods for valuing complicated financial instruments, such as derivatives and credit default swaps. As a result, colleges and universities have begun to offer degrees, at the B.S., B.B.A., and M.B.A. levels, that provide training in the field. With the rise of globalized businesses and the proliferation of modern information technologies, accountants have faced increasingly complicated responsibilities in the late 20th century and early 21st century.

About the Author

John Yargo is a sports writer, living in Orlando, Fla. His work regularly appears in the "Jackson Free Press," and he has published articles on theater, fiction and art history. He has also received a master's degree in English.

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