A Review of Bookkeeping and Accounting in 1945

A 1945 Vocational Guidance Film on Bookkeeping and Accounting is available for viewing online at the SEC Historical Society website. This entertaining 10-minute video was provided by courtesy of the Prelinger Archives, United States Library of Congress. It discusses a variety of matters including the household budget book, business bookkeeping, the role of the bookkeeper compared to that of the accountant, an accounting department, calculating and bookkeeping machines, cost accounting, special investigations, preparing tax returns and business principles. It also distinguishes a private accountant from a public accountant (such as a CPA) who should have a pleasing personality, a strong moral character and legible handwriting.

 

The Accountant Who Changed the World

The birth of accounting rocked the world 500 years ago. In the 1400s, much of Europe was still using Roman numerals and finding it really hard to easily add or subtract. Arabic numerals (1, 2, 3, 4, etc.) started catching on and' with those numbers, merchants in Venice developed a revolutionary system we now call “double-entry” bookkeeping.

Every transaction gets entered twice in financial records. If one day, you sold three gold coins' worth of pepper, you would write that the amount of cash you had went up by three gold coins. You would also write in that the amount of pepper you had went down by three gold coins' worth. Before double-entry, people just kept diaries and counted their money at the end of the day. This innovation allowed merchants to see every aspect of their business in neat little rows.

Luca Pacioli was a monk, magician and lover of numbers. He discovered this bookkeeping in Venice. In 1494, he wrote a huge math encyclopedia and included an instructional section on double-entry bookkeeping. Thanks to the new printing press, his book was mass produced and became a hit. One of the first readers was Leonardo da Vinci, who at the time was painting The Last Supper. Pacioli’s encyclopedia covered the mathematics of perspective painting which fascinated da Vinci.

Read the article “The Accountant Who Changed the World” and listen to the full story (about 5 minutes) at NPR online.
 

Achieving International Harmonization of Accounting Standards (1975)

In July 1975, the Accounting Research Committee of the Canadian Institute of Chartered Accountants (CICA) issued an exposure draft on International Accounting Standards for inclusion in the CICA Handbook. The exposure draft notes that the CICA is a member of the International Accounting Standards Committee (IASC) whose objectives are “to formulate and publish in the public interest, basic standards to be observed in the presentation of audited accounts and financial statements,and to promote their worldwide acceptance and observance.”

The exposure draft sets out the procedures that the Accounting Research Committee will follow when an International Accounting Standard is issued. In addition, it notes that: “For companies that report in an international environment, it is desirable to disclose that accounting principles generally accepted in Canada have been followed in preparing the financial statements. It is also desirable to disclose conformity with or identify deviations from International Accounting Standards (but not necessarily the effect on the financial statements). Appropriate disclosure would be in the Summary of Accounting Policies.”

Indiana CPAs - In the beginning …

Before there was a tax code (1913), before there was a Department of Labor (1913), before the SEC (1935) and before the PCAOB (2002), even before audits, there were CPAs (New York – 1896). How did the profession rise to the level of prominence in business without license to do something specific?

What were the requirements in 1915? Well … you had to be 21 years old, a high school graduate, have three years of experience as a professional accountant and submit “proof” of all of that to the newly created “state board of certified accountants”. Then, per Indiana law, “shall be granted without examination a certificate authorizing him to practice as a certified public accountant”. Of course this had to be done within 90 days. After that you would have had to take an examination. The early CPAs were grandfathered. That is how the profession got its start.

The first accounting standards were issued somewhere around 1938, and by 1959 there were 51 pronouncements known as Accounting Research Bulletins – this eventually became GAAP. The pronouncements were issued by the Committee on Accounting Procedure (CAP). The first auditing standards were issued in 1939 by the American Institute of Accountants committee on auditing procedure. In 1941, the SEC mandated that the auditor’s report had to be made in accordance with GAAP (they didn’t do that in 1935 because there was no GAAP).

To learn more, read the article “In the beginning …” posted on the Indiana CPA Society blog on February 16, 2012 by Gary Bolinger.

A brief history of the ACCA

The Association of Chartered Certified Accountants (ACCA) is the global body for professional accountants with 147,000 members and 424,000 students in over 170 countries. It also has a network of 83 offices and centres across the world.

In 1904, eight people formed the London Association of Accountants. Their aim was to provide more open access to the accountancy profession than the two existing accountancy organizations. ACCA went through a number of mergers and amalgamations over the years. In 1984, it became the Chartered Association of Certified Accountants to reflect the fact that it had been granted a Royal Charter of Incorporation. In 1996, it began to use the current name, the Association of Chartered Certified Accountants.

For a brief history of the ACCA from 1904 to the present time, refer to the ACCA website section on "Our History."

Update on the Social Science Research Network

The Social Science Research Network (SSRN) has grown substantially during the last 12 months. The SSRN eLibrary currently has 375,000 paper abstracts from over 175,000 authors and has received 60,000 new submissions during the year. The eLibrary recently delivered its 50 millionth full-text paper download. This is a significant milestone.

During the last year, SSRN changed its server architecture to improve the speed of searches, enhance overall stability and provide the infrastructure required to meet the continued growth. In recent tests, the average eLibrary search time has decreased from 4.5 seconds to less than 1 second. In addition, SSRN's Citereader project with ITX Corp. has extracted 7.4 million references, 4.7 million citations, and 7.7 million footnotes from 306,000 full text papers.

In 2012, SSRN plans to continue expanding its interdisciplinary growth in the social sciences and humanities by creating research networks in Sustainability, Innovation, Rhetoric, Anthropology and Hebrew.

Use and Meaning of "Market" in Inventory Valuation - A CICA Research Study 1963

In January 1963, the Canadian Institute of Chartered Accountants (CICA) published the first in a long series of Research Studies. Prepared by Gertrude Mulcahy, FCA, it was called Use and Meaning of "Market" in Inventory Valuation.

The Foreword states: “While the practice of valuing inventories at "the lower of cost and market" has a long tradition behind it in Canada, relatively little has been specifically written about the use of the term "market", and the purpose and application of the concept, in valuing inventories in this country. The meaning of "cost" in inventory valuation has been covered in the Institute's Bulletin No.5; and there have been official pronouncements by the Institute of Chartered Accountants in England and Wales and by the American Institute of Certified Public Accountants on the use and meaning of "market". While this Research Study, as with all studies in this series, does not purport to represent an official Institute view, it represents an organized examination of this most important area by an author familiar with the background of Canadian business. It is to be hoped that this study will be the basis of much thought and discussion among accountants and other businessmen in Canada; and, probably in other countries as well.”

It goes on to acknowledge that “While the study reflects only the views of the author, Miss Mulcahy received valuable comments and assistance from the Toronto and Montreal members of the 1962-63 Committee on Accounting and Auditing Research, in particular from Mr. R. M. Skinner, F.C.A. who reviewed successive drafts of the study. I know she would want me to express her appreciation for this help.”

Approaches to Dealing with Risk and Uncertainty - 1990 CICA Research Report

The 1990 CICA Research Report, Approaches to Dealing with Risk and Uncertainty, was prepared by J.E. Boritz, PhD, FCA. He was assisted by an 8-member Advisory Group. This Research Report (about 160 pages) was developed in response to a recommendation in the Report of the Commission to Study the Public's Expectations of Audits (published in June 1988), commonly referred to as the Macdonald Commission Report.

The recommendation in  the Macdonald Commission Report stated that "the CICA should initiate and complete as soon as possible a study of risks and uncertainties leading to conclusions as to how they may best be disclosed in financial statements or elsewhere (e.g., in Management's Discussion and Analysis in the annual report)." Accordingly, the primary purpose of the Research Report is to discuss and summarize some of the key issues, and to recommend what further action should be taken.

Historical Notes on the Accounting Hall of Fame

Election to the Accounting Hall of Fame is perhaps the only longstanding national award for accountants -- and probably the only international one as well -- in which both academic and practicing accountants vie for the same award. The Accounting Hall of Fame was established at The Ohio State University in 1950 for the purpose of honoring accountants who have made or are making significant contributions to the advancement of accounting since the beginning of the twentieth century. Through 2008, 85 leading accountants from the United States and other countries have been elected to the Hall of Fame.

While selection to the Hall of Fame is intended to honor the people so chosen, it is also intended to be a recognition of distinguished service contributions to the progress of accounting in any of its various fields. Evidence of such service includes contributions to accounting research and literature, significant service to professional accounting organizations, wide recognition as an authority in some field of accounting, advancement of accounting education, and public service. A member must have reached a position of eminence from which the nature of his or her contributions may be judged.

Welcome to the AAA Digital Library!

The mission of the American Accounting Association (AAA) is to promote worldwide excellence in accounting education, research and practice. Founded in 1916 as the American Association of University Instructors in Accounting, its present name was adopted in 1936. The Association is a voluntary organization of persons interested in accounting education and research. The AAA Digital Library includes the following publications: The Accounting Review; Issues in Accounting Education; Accounting Horizons; Accounting and the Public Interest; The ATA Journal of Legal Tax Research; AUDITING: A Journal of Practice & Theory; Behavioral Research in Accounting; Current Issues in Auditing; Journal of Emerging Technologies in Accounting; Journal of Information Systems; Journal of International Accounting Research; Journal of Management Accounting Research; and Journal of the American Taxation Association. All full-text papers are provided in PDF format and are searchable using the Find utility in Adobe Acrobat Reader. All full-text papers provide links to references, as available. The AAA Newsletter, Accounting Education News, as well as the AAA Section Newsletters are also available online, some dating back to 1995.

Social Science Research Network (SSRN)

The Social Science Research Network (SSRN) is devoted to the rapid worldwide dissemination of research and comprises a number of specialized research networks. Each of SSRN's networks encourages the early distribution of research results by publishing submitted abstracts and by soliciting abstracts of top quality research papers around the world. Academic and other Cooperating Institutions provide working papers for distribution through SSRN's Electronic Library and abstracts for publication in SSRN's electronic journals. The SSRN Electronic Library consists of two parts: an Abstract Database containing abstracts on over 28,400 scholarly working papers; and an Electronic Paper Collection currently containing over 13,400 downloadable electronic documents in Adobe Acrobat PDF format.

A History of the South African Institute of Chartered Accountants (SAICA)

The South African Institute of Chartered Accountants (SAICA) is the foremost accountancy body in South Africa and one of the leading Institutes in the world. It plays an influential role in a highly dynamic business sector. To learn more, see the timeline on the history of accountancy and of the Institute of Accountants and Auditors in the South African Republic, established in 1894 with 65 members. It is also noteworthy that the SAICA recently issued a request for proposal on the History of the CA Profession in South Africa.

ICAEW - Timeline of the Accountancy Profession in the United Kingdom

The comprehensive ICAEW Timeline explores events from ancient times through to the first half of the nineteenth century (for detailed events, click on the red titles – for example, 1853 - 1880 and 1968 - 2003. The Timeline shows when accountancy starts to take form as an organized profession, growing primarily as a result of the commercial and legal activity of bankruptcy, insolvency and the winding up of companies all the way to the current day.

ICAEW - Accounting History Gateway and Accountants’ Directory for 1877

The Institute of Chartered Accountants in England and Wales (ICAEW) has created an Accounting History Gateway. The gateway was developed

as an easy access point to historical materials available from, or about, the Institute. One of these historical documents is the Accountants’ Directory for 1877 compiled by Alfred Harper and published by Williams & Strahan. The directory provides a snapshot of the membership of the first professional bodies for accountancy. Professional bodies were established in Edinburgh and Glasgow (1853) and Aberdeen (1866). These were followed by the Incorporated Society of Liverpool Accountants (1870), the Institute of Accountants (1870), Manchester Institute of Accountants (1871) and the Society of Accountants (1872). Another society was established in Sheffield during 1877, but this falls after the compilation date for this edition of the directory.

ICAS: 150 Years and still counting - A Celebration

The 2004 publication ICAS: 150 Years and still counting - A Celebration marks the 150^th anniversary of The Institute of Chartered Accountants of Scotland (ICAS). It provides an appropriate and readable insight into the history and character of the Institute. The variety and format of the recollections and reflections afford the opportunity to go “behind the scenes” to see how the ICAS has developed over the years. View the Highlights (4 pages), and download the full Research Report (234 pages).

ICAS - more than 30 years of dedicated research

The Institute of Chartered Accountants of Scotland (ICAS) is the world’s first professional body of accountants, receiving its Royal Charter in 1854. It was the first to adopt the designation “Chartered Accountant” and the letters CA. The ICAS is committed to supporting and encouraging high quality research that is timely, relevant and useful to the accounting profession in an international or UK perspective. Research is funded by The Scottish Accountancy Trust for Education and Research (SATER), which focuses on research that is relevant to the public interest and the accountancy profession or business. To encourage dissemination of research findings, a Publications Catalogue and the majority of Research Publications (containing research dating back to 1982) are available to download free-of-charge from the ICAS website. To be notified of new research publications, interested parties can subscribe to an e-news service by e-mail (research@icas.org.uk).

A Day of Recognition and Celebration for Quebec Chartered Accountants

This year marks the 75th anniversary of the Quebec City CA Group and the 130th anniversary of the Ordre des comptables agréés du Québec (OCAQ). A day of activities under the theme "Active capital for your success!" was held in Quebec City on September 30, 2010 to celebrate these two important milestones for Quebec CAs. Read the OCAQ News Release and view the Photo Album online.

Institute of Chartered Accountants of British Columbia - Centenary Website

The Institute of Chartered Accountants of British Columbia (ICABC) celebrated its 100th anniversary in 2005. It was marked with events, articles in Beyond Numbers, Centenary Artwork, an online timeline of the history of CAs in BC, and a calendar. An expanded look at these contributions is provided on the ICABC centenary website which describes the people and events that have shaped the profession in BC.

Institute of Chartered Accountants of Ontario - Innovation and Historical Milestones

There are approximately 72,000 Chartered Accountants (CAs) in Canada. Nearly half (33,000) are Ontario CAs. CAs work in large and small businesses, in government and in public accounting, in the not-for-profit sector, and as professors and teachers - at home and around the world. The year 2010 marks the 131st year of the CA designation in Ontario. From the province's origins as an agricultural society to its emergence as an economic powerhouse, CAs have played a key role in shaping Ontario’s progress. Our history bridges all the major milestones… the great waves of immigration of the early 1900s, the harnessing of Niagara Falls, the birth of Ontario Hydro, the First and Second World Wars... the huge building booms of the 1950s and 1960s, and the signing of the Auto Pact, the Free Trade Agreement and NAFTA. To learn more about CA Innovation since 1879,  Historical Milestones and the 125th anniversary in 2004, visit the website of the Institute of Chartered Accountants of Ontario (ICAO).

About the Ontario Securities Commission: Part 2 - The First Four Chief Accountants, 1986–1996

Published in the June 2010 Accounting Perspectives journal of the Canadian Academic Accounting Association (CAAA), this research article presents Part 2 of a historical review and analysis of the Ontario Securities Commission (OSC). It describes the role played by the first four Chief Accountants in the regulation of accounting and auditing from 1986 to 1996. Part 1 dealt with the period from the 1960s to 1985. Part 3 will treat the role played by the fifth Chief Accountant, from 1996 to 2008. Prior to this series of articles, the academic and professional accounting literature was largely barren on the OSC’s evolving role in accounting and auditing.