...A SHORT HISTORY OF ACCOUNTING AND BUSINESS By Gary Giroux September 1999 Preface Overview: Accounting toward the 21st century: Where are we now? How did we get here? 1. From the Ancient World to Pacioli The First Cities Trade Tokens: The First Accounting The Sumerians Complex Tokens and Clay Tablets Cuneiform Writing and Beyond Money, Banking and Credit The Dark Ages and the Rise of the Italian Merchants Luca Pacioli: The Father of Accounting 2. Britain and the Industrial Revolution Prior to 1750 Ironbridge Textiles The Steam Engine Wedgwood and the Importance of Cost Accounting Early Cost Accounting Transportation Development of the Accounting Profession 3. American Big Business and Cost Accounting Early Developments in Manufacturing and Accounting Rockefeller Morgan and Carnegie Cost Accounting in the Era of Big Business Alternative Systems in Asia and Europe Relevance Lost: The Critique of Johnson and Kaplan The American Response 4. Financial Accounting and the Structure of Accounting Regulation The Great Crash and Government Response The New Role of the Accounting Profession The Financial Accounting Standards Board Earnings Management and Economic Consequences Accounting Principles and the Conceptual Framework 5. Auditing Auditing in the U. S. The Big...
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...Accounting history is important because it is the most important professions in economic, business and cultural development. It sum of all the events--that have happened in accounting field. This sum guides our actions in the present in accounting profession. Accountants invented writing, involved development of money and banking, innovated the double entry bookkeeping system that fueled the Italian Renaissance, saved many Industrial Revolution inventors and entrepreneurs survive, participated in the development of the capital markets necessary for western capitalism. In the 20th century, accounting had changed into a profession that brought credibility for complex business practices that sparked the economic, and as a platform to the information revolution that is transforming the global economy . Most of us don’t know the names of accounting innovators; in reality, there are no names were known before the Italian Renaissance. The early history and scholars from many fields showed the importance of accounting to so many aspects of economics and culture in the past. Archaeologists discover the interpretations of the artifacts of the ancient accountants, and it is developed over 5,000 years. Accounting was main factor to the success of Italian merchants, necessary to the birth of the Renaissance and Industrial Revolution firms. Nowadays, a global economy integrated information system is a reality, creating new accounting paradigms. Understanding accounting history is...
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...DeLaune/Simonov From: Courtney Lancaster Date: October 15, 2013 Subject: History of the Auditing Profession Similar to all aspects of the accounting profession, the auditing focus in the business world has evolved considerably over its history. The main drive behind the changes has been new legislation and a strict enforcement standard which more times then not was influenced by the fraudulent activity delivered by corporate management. By the creation of oversight policies and standard setting entities, these countless scandals have shaped the accounting and auditing profession into what we know today. In 1986 the state of New York passed legislation in which the credentials regarding a Certified Public Accountant were formally acknowledged and recognized, thus creating the accounting profession itself. In 1913 the United State of America ratified the 16th amendment leading to the creation of income tax causing a spike in demand for accountants. While these changes in legislation were coming about and the profession itself was growing rapidly there was still no entity in the US that regulated the profession. In 1917 the first step to set a standard for the profession was put into action. The Federal Reserve Board and Federal Trade Commission requested that American Institute of Accountants produce a bulletin for a standardization of auditing procedures. A publication titled “Uniformed Accounting” was released shortly after as a first set of published standards. While it...
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...“The History of Accounting” Accounting is one of the oldest professions and the growth and spread of the profession can be paralleled with the growth and spread of Western Civilizations. Through archaeological discoveries the use of accounting can be dated back almost 7,000 years ago. Many of today’s accounting practices came from the Italian Renaissance. The sophistication of double entry accounting was accompanied by an overwhelming demand for professional accountants to follow the guidelines. The expanding profession of accounting really took off with the coming of the Industrial Revolution in America. The use of accounting practice has been around for ages and the growth of the use and practices can be seen to reflect the growth of trade, cities, and the concepts of wealth and numbers. Ancient Mesopotamian artifacts that date back over 7,000 years ago, give proof that primitive accounting techniques were used to record the growth of crops and herds on clay tablets. The Roman Empire kept records of cash, commodities, and transactions on papyrus rather than clay because it allowed more detail to be kept. “The Great Roll of the Exchequer” which is also called the “Pipe Roll” was kept during the Medieval Times and provided an annual description of rents, fines and taxes due to the King of England. Although these practices are not reflected in modern day accounting, it definitely contributed to the need for detailed records for various transactions. Widely acknowledged to be the...
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...Open Journal of Accounting, 2013, 2, 8-15 http://dx.doi.org/10.4236/ojacct.2013.21003 Published Online January 2013 (http://www.scirp.org/journal/ojacct) Sarbanes-Oxley and the Accounting Profession: Public Interest Implications Sara Ann Reiter1, Paul F. Williams2 2 1 Binghamton University, Binghamton, USA North Carolina State University, Raleigh, USA Email: sreiter@binghamton.edu Received October 31, 2012; revised December 1, 2012; accepted December 12, 2012 ABSTRACT The US accounting profession was caught up in, and some say responsible for, the whirlwind of accounting and business scandals that rocked the US markets in 2002. To restore investor confidence in financial information, the Sarbanes-Oxley Act created a new Public Company Accounting Oversight Board with the authority to set standards for auditors of publicly traded companies, thus ending a century of professional regulation of auditing. In this analysis we employ sociological theories of professionalism [1-4] to help understand the implications of the Sarbanes-Oxley legislation for the accounting profession and for the public interest. We explain why professional self-regulation is important for retaining valuable economic franchises. We also explain why the public interest orientation of the profession is important and how government take-over of auditing standards potentially erodes the public accounting profession’s commitment to the public interest. Self-control over professional work, a key characteristic...
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...Surrounding the Professionalism of Accounting | | 3.0 Literature Review | | 4.0 Presentation of the main Idea about the Professionalism of Accounting | | 5.0 Analysis and discussion | | 6.0 Conclusion | | 7.0 Reference | | 1.0 INTRODUCTION 2.0 ISSUES SURROUNDING THE PROFESSIONALISM OF ACCOUNTING Twenty years ago, Briloff (1986) alerted the profession to the crisis of credibility being faced because society perceived accountants to have lost their commitment to public service. The credibility of the profession is threatened when the ideals of integrity, independence, public service and ethical standards come under suspicion. Well-known scandals of one of the major leading accounting firms in the United States Arthur Andersen coupled with alleged unethical acts committed by Enron have arouse the conscious of the public and stakeholders as to the moral decline and unethical posture of public accountants unveiled a decline in moral reasoning and ethical standards of public accountants (Dellaportas, 2006; Esmond-Kiger, 2004). Over the last few years, the accounting profession has been beaten up badly in the media, somewhat justifiably. The forces at work were numerous and complex and a variety of phenomena created the entire profession had its reputation tarnished. Some forces were not new: delivering services that acted to impair independence; becoming too cozy with clients, active participation in finding ways to circumvent accounting standards, and even simple...
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...“Accounting – the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information.” (Warren, Reeve, & Fess, 1999, p. 5). Accounting, as so many other occupations has a rich history behind it, as well as it’s own language. Throughout this rich history it is clear to see that certain organizations relating to the accounting profession have made significant strives to improve the reliability and accuracy of what is reported. These organizations ensure that there is a framework for standards which accountants use in today’s world to speak this common language of business. The organizations, which have provided this framework, are the American Institute of Certified Public Accountants, Securities and Exchange Commission, Federal Accounting Standards Board, Government Accounting Standards Board, and International Accounting Standards Committee. Each organization plays a major role in defining rules and guidelines to ensure uniformity throughout the profession. One such organization is the American Institute of Certified Public Accountants (AICPA). The history of this organization dates back to 1887, when the American Association of Public Accountants was formed. In 1916, the American Association was succeeded by the Institute of Public Accountants. In 1957, the name was finally changed to what we now know it as today, the American Institute of Certified Public Accountants. “The American...
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...origin of accounting, as well as, the distinction between bookkeeping and accounting. Additionally, an examination of the Financial Accounting Standards Board (FASB) provides insight into the culture, ethical values and professional standards of accountants. Other areas of discussion in this report are the voice and tone used in various forms of communication by the accountant. Also, included in this report is an excerpt from an interview of an accounting professional as well as an example from a journal article. These artifacts will provide the reader with examples of the mind-set and communication style of the accountant. Finally, this report concludes with an examination of the auditor’s as well as the forensic accountant’s culture and communication style. Table of Contents Contents Abstract 2 Table of Contents 3 Accounting has been around for centuries.. 4 Professional Standards and Ethics 4 Culture of Professional Standards 5 Language of Business 6 Voice and Tone 6 Specialized Areas of Accounting 7 Communication 8 Forensic Accounting 8 Communication 9 Conclusion 9 References 11 Appendix A 13 Appendix B 16 The Language and Culture of the Accountant, Auditor and Forensic Accountant Accounting has been around for centuries. History credits an unnamed Arab merchant for creating the first written work in the twelfth century which documented an accurate method of bookkeeping (Maughan, n.d.). Since then, the practice of accounting has permeated...
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...INTERNATIONAL ACCOUNTING FRAUD I INTRODUCTION II HISTORY OF ACCOUNTING PROFESSION AND FRAUD ENVIRONMENT A- Birth of profession B- Lack of accounting STANDARDS III EVIDENCES A- External audit B- Bankruptcy IV MOTIVATIONS OF FRAUD A- Personal initiatives B- Market expectations C- Special circumstances D- Cover-up fraud V METHODS TO REDRESS THE FRAUD A- Court case B- Provisory administration VI CONCLUSION Summary In the book Creative Accounting, Fraud and International Accounting Scandals, by Michael J. Jones, the author provides several important topics with regard to identifying and also correcting fraud. Some of the areas that the author describes is understanding the fraud environment. He also advise creative accounting methods and procedures to redress the fraud. Finally, once those methods are used, the author suggest to identify the evidences to ensure that the accounting method actually fix the fraud issue. “Many scandals occurred because accountants and auditors existing professions standards. Others reveals deficiencies in the standards at that time.” CALLED TO ACCOUNT: fourteen financials fraud shaped the American accounting profession Accounting scandals are characterized by a rapid growth, with high earning smoothing, few outsider on the audit committee, and outsider director that seems to overcommitted. The economic environment of the company, or the personal circumstances of an individual, are important...
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...blacks in the accounting profession in light of the increasing demand for Certified Public Accountants (CPA). The paper ex- plores the various reasons why blacks are underrepresented in the accounting profession. Furthermore, the paper examines these reasons through the lens of race and ethnicity. The paper also synthesizes multiple sources regarding blacks’ underrepresentation in account- ing. Blacks are underrepresented in accounting because of internal and external factors linked to their ethnic identity. Many blacks feel that they do not belong to the accounting profession, and as a result, they rarely choose accounting as a career. Many CPA firms think that blacks are not capable of doing the job and delivering the superior results that clients expect. While the demand for new and diverse accounting talents is increasing in light of recent white-collar crimes committed by Bernie Madoff, Enron and WorldCom, blacks’ representation in the ac- counting field still remains low. Research has shown that blacks are under- represented in most American Certified Public Accountant (CPA) firms. There is much speculation as to why this is so. One reason might be that blacks have some personal qualities that cause them to enter the account- ing profession at a low rate. Some people might even wonder if society is still oppressive towards blacks years after the Civil Rights Movement of the 1960’s. The reasons why blacks are underrepresented in the accounting profession include the historical...
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...Enron Corporation (Case 1.1) Most of us work from rags to riches but this is not the case of the Enron Corporation. Instead of becoming the nation’s greatest company, Enron instead laid claim to being the largest corporate bankruptcy in the history. The greediness and egotism wiped out the honesty and integrity that should instill on the persons who were involved in this case. Arthur Edward Andersen built his firm, Arthur Andersen & Company, into one of the largest and most respected accounting firms in the world through his reputation for honesty and integrity. His motto was “Think straight, talk straight” and he insisted that his clients adopt that same attitude when preparing and issuing their periodic financial statements. Arthur Andersen’s auditing philosophy was not rule-based; instead he invoked a substance-over-form approach to auditing and accounting issues. He avidly believed that the primary role of the auditor was to ensure that clients reported fully and honestly to the public, regardless of the consequences for those clients. Ironically, Arthur Andersen & Co.’s dramatic fall from eminence resulted from its association with a client known for aggressive and innovative uses of “accounting gimmicks” to window dress its financial statements. Enron Corporation was the second largest client of the firm and was involved in large, complex transactions with hundreds of special purpose entities (SPEs) that it used to obscure its true financial condition and...
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...University Abstract As a result of massive accounting scandals in the United States between 2001 and 2002 involving notorious companies, such as Enron, Worldcom, Tyco, and various other recognized entities, President George W. Bush signed into legislation during 2002 the Sarbanes-Oxley Act of 2002. This historic piece of legislation has had a profound effect on the accounting profession. As a result of the act, the PCAOB was created. Since its inception, the PCAOB has created some of the most importing accounting standards that are used every day by auditors of public companies. This paper takes a look at the Sarbanes-Oxley Act of 2002 and its effect on internal controls and small businesses. Also, I will discuss the purpose and specific pronouncements related to accounting information systems and internal controls; as well as the impact of possible future pronouncements. Keywords: Sarbanes-Oxley, PCAOB, Accounting information systems The Sarbanes-Oxley Act and the PCAOB Massive accounting scandals in the United States between 2001 and 2002 involving notorious companies, such as Enron, Worldcom, Tyco, and various other recognized entities, led to the creation of the Sarbanes-Oxley Act of 2002. This historic piece of legislation has had a profound effect on the accounting profession since it was signed into law. As a result of the act, the PCAOB was created. Since its inception, the PCAOB has created some of the most importing accounting standards that are used every day by auditors...
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...Dave A Johnson Bus-340 Ethical & Legal Issues in Business The Legal, Ethical, and Technological Conerns in Business November 20, 2011 The legal, Ethical, and Technological Concerns in Business Introduction The domain of business ethics describe the ethical responsibilities and set the moral boundaries in perspective of doing the particular business in the particular scenario. Furthermore, the domain of business ethics also analyzes the controversies that keep arises from time to time. These controversies are generally multidimensional such as violation of employees’ rights, discrimination in the job, whistle blowing and questionable activities by corporate officials. Ethics and the importance of ethical decision making have become increasingly important because of the pressure on corporate executives by shareholders, creditors and other parties affected by financial performances. It is therefore not new that a study of management companies found that nearly three-quarters of respondents felt that the unethical behavior such as personal trading, insider trading and fraudulent financial reporting are areas of high interest. Expectations of high standards of ethical business behavior are rising; companies are exposed to legal and economic sanctions for the continuation of immoral and illegal behavior. Indeed, some companies have ethical leadership in the market as a central part of their business strategy. They believe...
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...In theorld of financial accounting Sarbanes and Oxley or SOX is one of the most important pieces of legislation passed in this decade or even in the history of financial accounting. Sarbanes and Oxley brought about major changes in financial accounting which allows for more regulation of the accounting profession. It took Accounting form being looked at as a numbers game and placed more importance on the communication aspect of the profession. This essay will focus on Sarbanes and Oxley and its impact on the accounting profession as a whole. How can one piece of legislation weigh so heavily on a profession? To answer that question one has to look at the impact Sarbanes and Oxley has had on the practice of public accounting. Prior to Sarbanes and Oxley the regulation of public accounting was done internally, through organizations such as the SEC. However with the passage of Sarbanes and Oxley the profession was given an overhaul making companies more accountable. Sarbanes-Oxley was established to improve the quality and transparency of the financial statements issued by public companies. With that purpose in mind Sarbanes-Oxley developed a new board to oversee how financial statements are audited according to independent standards, the Public Company Accounting Oversight Board. This changed the game. It decreased the chance of companies falsifying financial statements, mainly because of the threat of penalties and imprisonment. In addition Sarbanes and Oxley have had a cascade...
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...4 Importance of Transparency 7 What Regulation Typically Covers 7 Regulatory Agencies 8 Accounting Reform 10 Conclusion 13 References 15 Abstract Within the accounting profession there are many complex ethical issues that must be dealt with quite often. It is important that the people working within the industry provide high quality financial statements and always pay close attention to ethical concerns that may arise. Since ethics is such a major concern in the accounting industry, a rules based system is in place for enforcing ethical concerns. There are many regulating bodies that exist that enforce many highly detailed regulations that people within the industry must follow at all times. Throughout history there have been several major accounting scandals that have been followed by new regulation to ensure that these problems do not come up again. CLERP 9 and the Sarbanes-Oxley Act are just a couple of acts that have caused significant changes to the accounting world in recent times. This paper will look at some of the different issues that accountants face as well as some of the regulations that seek to end unethical behavior. Ethical Standards in Accounting Introduction The accounting industry is an always changing and constantly growing industry. Accounting plays a vital role in society and business and up until recently accounting was considered to have some of the highest standards for ethical and moral conduct in business...
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