The history of modern accounting

While systems that may have been precursors to basic modern accounting have likely been around 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, although scholars theorize that accounting may have been the original reason for the development of written language, little is known about the history of accounting before the Renaissance, although archeology and related sciences are discovering evidence for systems that are highly prior to that time period.

Religious and secular possessions of city-states had to be registered to allow any type of organization, so the theory of writing emerged that was developed for accounting purposes. However, when we turned to the history of modern accounting, we started with the double-entry accounting procedures that characterized the accounting procedures of Italian Renaissance merchants, and gave them the organization and clarity they needed to get to the top of the game. world of commerce at that time. . In 1494, accounting procedures had been codified by Fray Luca Bartolomeo de Pacioli (Paciolo), who is considered the father of modern accounting.

Accounting was further established during the Industrial Revolution, and the accounting history of this period is truly fascinating, as the pioneer of accounting during the Industrial Revolution was none other than the potter Josiah Wedgwood, whose family business still dominates the world. luxury fine china market. and glass. Wedgwood, as in tune with the bottom line as he was with the quality of his products, demanded that proper records be kept in order to easily detect and remedy minor inefficiencies and cost overruns, as well as to quickly address potential calamities such as the misappropriation he once uncovered while reviewing the meticulous financial records for which his company became famous. Wedgwood is as much a part of the history of accounting as it is of the history of production because of the efficiency of his cost accounting methods, which were adopted by other successful industrialists of his time.

Railroads also relied on proper accounting techniques to fulfill their role as the transportation lifeline of the Industrial Revolution. Given the greedy nature of some of America’s railroad tycoons during the expansion of the railroads there, it can probably be assumed that the history of the accounting scandals began with the methods used by these robber tycoons to outwit investors, the customers and the emergence of regulatory pressures alike.

At the beginning of the 19th century, “accomplices”, the predecessors of today’s trained and skilled outside accountants, began to appear in London, and a similar profession would also emerge in the Americas due to industrial development there. Bankruptcy was often the reason companies turned to these pioneers of independent accounting history.

And in 1845, when William Deloite opened his accounting firm in London, the modern profession of external accounting and auditing was clearly a part of British business procedure, which at the time led the world in terms of advancement and transparency. His firm, like Wedgwood’s, 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.