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The History of Accountancy

Accountancy has a long and illustrious history. There is evidence that there were accounts working across the globe centuries ago.

The first accountants

The earliest evidence of accountancy dates back to Mesopotamia. There is also evidence that the Egyptians and Babylonians used accountants. Emperor Augustus had access to and used in-depth financial information to help him to rule the Roman Empire.

In Asia, there is also a strong history of accountancy. The Indian teacher and economist Chanakya is believed to have kept financial records in a book, which he used to come up with and work through his early economic models.

Double entry bookkeeping

In Europe, Luca Pacioli from Italy is viewed by many as the father of modern accountancy. He was a mathematician and Franciscan friar who published the first accountancy book in 1494 in which he explained double entry bookkeeping.

The use of accountancy in business

During the 13th century, the foundations of modern economics were laid, and that is when many businesses started to need accountants. At that stage, it became common for traders to use bank loans. This meant to keep track of profits and to make sure that they were charging enough to cover their costs and turn a profit traders needed to use double entry bookkeeping.

To keep accounts it was necessary to be able to read and write something that the majority of traders could not do. This meant that traders needed to employ someone to do their books for them.

The formation of professional accountancy bodies

For centuries, accountants operated independently. They were not governed by any regulations as such. However, some joined the professional bodies of solicitors and they had to meet professional standards, in particular those who gave evidence in court.

By the mid-1800s accountants in Scotland began to organise themselves into professional bodies. In 1854, The Institute of Accountants in Glasgow was awarded a Royal Charter. ‘The Institute of Chartered Accountants’ in England and Wales was established in 1880.

During the mid-1800s, the industrial revolution was in full swing and demand for professional accountants, who had an in depth understanding of business law as well as the skills to keep detailed books, was high. In 1871, ‘The Council of the Institute of Accountants’ in London introduced an exam as a requirement for entry into the society. Within a decade, all of the major accountancy bodies required their members to pass exams turning accountancy into the profession that we recognise today.

Posted by Louise
August 4, 2015
History

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