History of Accounting Essay

The name that looms largest in early accounting history is Luca Pacioli, who in 1494 archetypal described the corpse of double-entry bookkeeping used by Venetian merchants in his Summa de Arithmetica, Geometria, Proportioni et Proportionalita. Of course, businesses and governments had been recording business information long in advance the Venetians. But it was Pacioli who was the first to describe the system of debits and credits in journals and ledgers that is still the basis of todays accounting systems.The industrial revolution spurred the need for more advanced cost accounting systems, and the development of corporations created a good deal larger classes of external capital providers shareownersand bondholders who were not part of the firms management but had a vital interest in its results. The rising public status of accountants helped to transform accounting into a profession, first in the United Kingdom and then in the United States. In 1887, thirty-one accountants jo ined in concert to create the American Association of Public Accountants. The first standardized test for accountants was given a decennary later, and the first CPAs were licensed in 1896.The Great Depression led to the creation of the Securities and Exchange Commission (SEC) in 1934. Henceforth all publicly-traded companies had to file periodic reports with the Commission to be certified by members of the accounting profession. The American Institute of Certified Public Accountants (AICPA) and its predecessors had responsibility for setting accounting standards until 1973, when the Financial Accounting Standards Board (FASB) was established. The industry thrived in the late 20th century, as the large accounting firms expanded their services beyond the traditionalauditing process to many forms of consulting.The Enron scandals in 2001, however, had broad repercussions for the accounting industry. One of the top firms, Arthur Andersen, went out of business and, under the Sarbanes-O xley Act, accountants face up tougher restrictions on their consulting engagements. One of the paradoxes of the profession, however, is that accounting scandals generate more work for accountants, and demand for their services continued to bang up throughout the early part of the 21st century.