History of Accounting: Timeline

Accounting in Ancient Civilizations: Mesopotamia, The Roman Empire

A means of keeping track of income and spending is essential to running a business,
or even maintaining personal finances. A system of recording transactions is the
basis of accounting. Accounting has been around since as far back as 3300 BC, with
archaeologists having discovered accounting on clay tablets from Egypt and
Mesopotamia.
The techniques demonstrated on such ancient writing indicates accounting was used
to keep track of herd and crop growth - what now are called commodities - to
project surpluses or shortages, as the price of commodities ultimately are
determined by supply and demand.
Accounting evolved and traveled with traders along trade routes like the ancient
Silk Road. By the time of the Roman Empire, 27 BC, Emperor Caesar Augustus began
recording his own financial transactions and other "good deeds" as 'Res Gestae Divi
Augusti' or "The Deeds of the Divine Augustus." The tome listed distributions to
people, land grants, construction projects, military pensions, religious offerings
and entertainment spending. Roman historians also kept track of public revenues,
treasury holdings, taxes, slaves, and freedmen.
Medieval Accounting:
Barter was the main system of trade during the Middle Ages. But Europe returned to
a monetary economy in the 13th century, according to historians. At that time,
merchants began needing bookkeeping to keep track of multiple transactions. That's
also when "double-entry" bookkeeping began, in which a debit and credit value is
entered for each transaction by an accountant. Merchants used accounting as a
system for ordering transactions, providing them with constant, "real-time"
information about their businesses.
1494: Luca Pacioli, the Father of Modern Accounting:
In 1494, Luca Pacioli published "Summa Arithmetica, Geometria, Proportioni et
Proportionalita," describing the system of double-entry bookkeeping used by
Venetian merchants. In his tome, Pacioli included a 27 treatise purely on the
subject of bookkeeping, called "Particularis de Computis et Scripturis," or
"Details of Calculation and Recording." The treatise described record keeping and
double-entry accounting. His book actually became the teaching tool and reference
text on bookkeeping and accounting for the next several hundred years. Historians
also note his book was the first to publish symbols for plus and minus (addition
and subtraction). As such, besides being the first known published work on the
topic of double-entry bookkeeping, "Summa Arithmetica" also was the first known
book printed in Italy to contain algebra.
Accounting in the Industrial Revolution:
With the advent of industrial corporations, investors and debtors, though not part
of a company's management, nonetheless had a vested interest in the company's
results. This interest spurred a need for more advanced cost accounting, and helped
turn accounting into a profession.
The professionalization of accountants began in the 1800s, first in the United
Kingdom and, later, the U.S.
In the U.S., 31 accountants in 1887 created the American Association of Public
Accountants. A decade later, the first standardized test for accountants was given,
and the first Certified Public Accountants were licensed by the AAPA in 1896.
Accounting in the 20th Century:
While the U.S. government tried to pass laws to create a national standard for
accounting among publicly held companies before the crash of 1929, no commission
existed to monitor or enforce the standards.
On June 6, 1934, President Franklin D. Roosevelt created the Securities and
Exchange Commission, which required all publicly-traded companies to file periodic
reports that had been certified as accurate by professional accountants. Joseph P.
Kennedy, father of the future president, was the first Chairman of the SEC.
The AAPA was succeeded, in 1916, by the Institute of Public Accountants. In 1917,
the professional group that certifies CPAs changed its name again, to the American
Institute of Accountants, and changed its name once more to the American Institute
of Certified Public Accountants (AICPA) in 1957. The different versions and growing
membership of the AICPA, which had set and monitored the standards of accounting in
the U.S., handed that responsibility to a private, independent, not-for-profit
standards board in 1973. That's when the Financial Accounting Standards Board was
established.
The establishment of the FASB was based on recognition of a need to further
standardize accounting practices and reporting by companies. The FASB's main task
from its founding was to establish and keep updating Generally Accepted Accounting
Principles (GAAP) standards for U.S. firms.
Use of the principles isn't required for all businesses, but the SEC does require
publicly traded and regulated companies to follow them in their financial
reporting. This means companies that issue stock are held to the standardized rules
by the Securities and Exchange Act, which also requires yearly external audits by
independent accountants. However, companies that don't have external investors
aren't required to follow GAAP.
Meanwhile, government entities have a slightly different set of standards to
follow. Those standards are managed by the Government Accounting Standards Board
(GASB).
Other countries have GAAP-like rules, established by their own version of the FASB.
Large accounting firms expanded services beyond auditing to different types of
consulting in the late 20th century. But they also became involved in corporate
scandals as their responsibilities beyond auditing other companies' accounts grew.
Accounting Today:
Since establishment of the SEC, the pressure to hire good accountants has
intensified. The financial cost to companies for falsifying records or having
inadequate accounting is high, and continues to grow. Companies that try to
manipulate or omit financial information to appear financially stable, like Enron
in 2001, eventually face legal consequences and risk insolvency.
It was discovered in 2001 that Enron had been using accounting "tricks" to hide bad
debt to the tune of billions of dollars, while also artificially inflating the
company's reported earnings.
An SEC investigation concluded Jeffrey Skilling, the company's Chief Executive
Officer, and former CEO Kenneth Lay, had managed to keep billions of dollars of
debt off the company's reported balance sheet. And the pair were accused of
pressuring the company's outside auditors, Arthur Andersen, to ignore it and
certify the reports.
Besides Skilling and Lay being convicted, Enron went bankrupt and Arthur Andersen,
the once-prestigious auditing firm, was dissolved.
In 2008, the once-prestigious global financial services firm Lehman Brothers - one
of the largest investment banks in the U.S. - was discovered to have hidden more
than $50 billion in loans as sales. The SEC determined the firm had sold toxic
assets to banks in the Cayman Islands, with the understanding Lehman Brothers would
buy back the assets in a short time. From an accounting standpoint, it appeared the
bank had $50 billion more in cash and $50 billion less in "toxic assets."
Lehman Brothers collapsed as a firm, and some cite its collapse as precipitating
the 2008-09 recession.
With modern and consistently updated auditing regulations, accounting standards,
and ethical standards for accountants to follow, accountants play a significant
role in the U.S. as well as global economy these days. Every individual,
government, corporation, company or business uses at least basic accounting
principles during their life - some even during daily activities.

SOURCE: https://www.thestreet.com/investing/history-of-accounting-timeline-14944095