The History of Public Accounting
Accounting methods have been used since before the advent of writing. Ancient record-keeping was accomplished with small objects that represented various types of wealth, such as clay formed into different shapes, according to Gary Giroux, a Texas A&M accounting professor. Objects such as these are evidence of the importance of accounting throughout history. After the development of writing, accounting methods began to increase in complexity to what they are today, providing the modern world with the ability to track wealth and value, from simple household budgets to global economies.
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Early History
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In addition to record-keeping, evidence points to accountants as the inventors of writing more than 5,000 years ago, according to Giroux. Over time, more complex trading relationships drove early record-keepers to continually improve their methods, resulting in the development of double-entry bookkeeping in the 13th or 14th centuries.
The Industrial Revolution
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A depression in England in the 1770’s resulted in Joseph Wedgewood’s response to increasing inventories and decreasing demand: cost accounting. Examination of accounting records in the century that followed shows evidence of “cost control, overhead accounting, and standard costing,” according to Giroux. Accounting became a recognized profession in England sometime during the 19th century as accountants began taking on the additional role of auditors for public companies. (See References 1, Britain and the Industrial Revolution page)
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Accounting Grows With Business
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As the Industrial Revolution spread to America, the New York Stock Exchange opened its doors and businesses grew into complex corporations. Accountants continued to respond to more intricate business relationships with refinements in accounting methods and, according to Giroux, John D. Rockefeller claimed to owe “much of his success as the most successful capitalist to his bookkeeping training.”
Regulation
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Early in the 20th century, the public response to questionable business practices demanded regulation of entities such as stock exchanges, banks and corporations. This increased the demand for public accountants to audit and oversee record-keeping and accounting practices, along with federal regulation.
Standards
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In 1973, the Financial Accounting Standards Board (FASB) was established, as it describes itself, as “the designated organization in the private sector for establishing standards of financial accounting that govern the preparation of financial reports by nongovernmental entities.”
Certification
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To become certified, a public accountant must pass the Uniform Certified Public Accountant Examination, developed by the American Institute of Certified Public Accountants. Certification and continuing education are designed to assure the public that the methods and practices of public accountants meet the standard of current government regulations and stay abreast of the latest developments.
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References
- Photo Credit On abacus image by Sergii Shalimov from Fotolia.com
