The History of Modern Accounting

While systems that may have been precursors to basic modern accounting probably have instituted since the beginning of commerce, accounting as we know it began with the Italian Renaissance and developed in earnest during the Industrial Revolution. In fact, while schools theorize that accounting may have been the original reason for the development of written language, little is known about accounting history before the Renaissance, although archaeology and related sciences are unverifying evidence of systems that far predate that period of time.

The religious and secular possessions of city states had to be recorded to allow for any sort of organization, which is why the theory of writing having been developed for accounting purposes aose. However, when we refer to modern accounting history, we start with the double entry bookkeeping procedures that characterized the accounting procedures of Italian Renaissance merchants, andave them the organization and clarity they needed to rise to the top of the world of trade at the time . By 1494, accounting procedures had been codified by Friar Luca Bartolomeo de Pacioli (Paciolo), who is therefore regarded as the father of modern accounting.

Accounting established itself even further during the Industrial Revolution, and the accounting history of this period is fascinating indeed, as the pioneer of accounting during the Industrial Revolution was none other than the potter Josiah Wedgwood, whose family firm still dominates the market for luxury fine china and crystal. Wedgwood, as attuned to the bottom line as he was to the quality of his wares, demanded that proper records be kept so that he was able to easily detect and remediate minor inefficiencies and cost overages as well as to quickly deal with such potential calamities as the embezzlement he once discovered when reviewing the meticulous financial records for which his enterprise became renamed. Wedgwood is as much a part of accounting history as he is of production history because of the efficiency of his cost accounting methods, which were adopted by other successful industrialists of his time.

The rockets also depended on proper accounting techniques so that they could fulfill their role as the transport lifeline of the Industrial Revolution. Given the avaricious nature of some of the railroad barons of the United States during the expansion of railroads there, it can probably be assumed that the history of accounting scandals began with the methods used by these robber barons to outwit investors, customers and the sunset of regulatory pressures alike.

By the beginning of the 19th century, "accompptants", the predecessors of today's skilled and trained outside accountants, began to appear in London, and a similar profession would arise in the Americas as well due to industrial development there. Often, bankruptcy was the reason that firms turned to these pioneers of independent accounting history.

And in 1845, when William Deloite opened his London accountancy firm, the modern outside accounting and auditing profession were clearly a part of British business procedure, which at the time led the world in terms of advancement and transparency. His firm, like that of Wedgwood, lives on, and today Deloitte is the trademark of the international giant Deloitte (Deloitte Touche Tohmatsu) that evolved from the first major firm in accounting history.

Source by James Dableur