Why Study History?
To identify consequences of past actions and decisionsTo prevent repeating errors of the pastTo understand the present and its relationship to the pastTo become acquainted with our roots and provide continuityTo consider evolving needs for accounting information
History of Accounting
Accounting AntecedentsWriting, arithmetic, private property, money, credit, commerce, capital7500 B. C. first records relating to agriculture and taxes6000 B. C. First coins minted3500 B. C. Clay tablets used3000 B. C. Invention of writing, Arabic numbers and decimal system, paper, medium of exchange, private property5thCentury B.C. (wages, inventory, asset acquisitions, audits, responsibility accounting for construction and agriculture)
History of Accounting
Abacus appeared in China (1200 A.D.)MagnaCartasigned (1215)Accounting added to curriculum at Oxford University (1249)Adding machine invented (1372)South Sea Bubble burst (1420)LucaPacioliwrote Summa, first official book on accounting (1494)Trade and commerce of the Renaissance (1300 – 1500)Corporations created in England (1650)U. S. Federal Accounting System created (1789)First U.S. accounting book (1789)
History of Accounting
Industrial Revolution (1800’s)Joint ventures and corporations (separation of ownership and management; stewardship and return)Companies Acts in England (1845)American Association of Public Accountants (AAPA) formed (1886)Civil War (1861 – 1865)Cash register invented (1879)Interstate Commerce Commission created (1887)Tabulating machine invented for U.S. Census (1890)Haskins Sells organized (1895)War Revenue Act to raise money for Spanish American War (1899)
History of Accounting
1staudited statements (1903)New York creates law for Certified Public Accountant (CPA)International Congress of Accountants organized accounting profession in U.S. (1904)Journal of Accountancy published (1905)Interstate Commerce Commission seeks to set up uniform accounting for railroads through Hepburn Act (1905)1909 Revenue Act assessed excise tax on corporations in U.S.Accounting machine created for National Cash Register Company (1909)16thAmendment to U.S. Constitution establishes Income Tax (1913)Federal Reserve Board created (1913)Clayton Anti-trust Act created the Federal Trade Commission (1914), promotes private sector audits
History of Accounting
American Accounting Association formed as AAUI (1916); became American Accounting Association (AAA) in 1935AAPA became American Institute of Accountants (AIA) in 1916Uniform CPA Exam (1917) offered by AIA; 8 Rules of Professional Conduct and Model CPA Law“Uniform Accounting” published in Federal Reserve Bulletin (1917)National Association of Cost Accountants formed (1919), later became National Association of Accountants and then the Institute of Management Accountants (IMA)American Society of CPAs (ASCPA) formed (1921); later merged into AICPAGeneral Accounting Office, later called the Government Accountability Office (GAO) created (1921)Beta Alpha Psi established (1922)IBM introduces punched card that is machine readable (1928)Stock Market Crash (1929)Great Depression (1929 – 1939)
History of Accounting
Ultramarescase involving negligence and fraud (1931); accountants could be sued by non-clientsNew York Stock Exchange requires audits (1932)AIA and NYSE attempt to develop GAAP (1932)—5 broad principles became 1stchapter of ARB #1; to consider interests of investors and external financial statementsSEC established. Securities Acts of 1933 and 1934; given authority to prescribe accounting principles and reporting practices; required audits by CPAs“Match King” (IvarKreuger) dies; pyramid stock scheme revealed, (1932)American Woman’s Society of CPAs (1934)AAUI becomes American Accounting Association (AAA) in 1935Phrase GAAP first used (1936) by AIAASCPA and AIA merge, creating AICPA (1936)
History of Accounting
AAA Tentative Statement of Accounting Principles Affecting Underlying Corporate Annual Reports (1936)AICPA Committee on Accounting Procedure created (1936); issued Accounting Research Bulletins (ARB) 1939SEC issues Accounting Series Release 4, includes requirement of substantial authoritative support (1938)AICPA Statement of Accounting Principles issued by Sanders, Hatfield, and Moore (1938);McKesson and Robbins case (1939) revealed fictitious assets and profits; auditing procedures expandedGenerally Accepted Auditing Standards (1939)Patton and Littleton’s Introduction to Corporate Accounting Standards (1940); historical cost and matchingThe Basis for Accounting Principles—Scott (1941)Institute of Internal Auditors formed (1941)Income Tax Withholding to help pay for WWII (1943)ARB #32 issued by CAP –unusual and extraordinary items disclosures (1947)
History of Accounting
America’s first commercial computer, UNIVAC 1, delivered to Census Bureau (1951)CAP codified Accounting Research Bulletins (ARB) into ARB 43 (1953)1stcomputer software for accounting (payroll) (1953)Internal Revenue Code (1954) allows historical cost depreciation (1954)American Institute of CPAs (AICPA) formed from AIA (1957)AICPA Accounting Principles Board formed to replace CAP (1959); issued Opinions; research segmentAccounting Research Study #1 Basic Postulates of Accounting byMoonitz(1961)Accounting Research Study #3 Tentative Set of Broad Accounting Principles bySprouseandMoonitz(1962)APB Opinion 2 Accounting for Investment Tax Credit (1962)ARS 5 (1963) CombinationsSEC issues ASR 96 allowing both flow through and deferred methods for investment tax credit (1963)Inventory of GAAP by Grady (1965)
History of Accounting
AAA recommends accounting professors have doctorates (1965)A Statement Of Basic Accounting Theory (ASOBAT) issued by AAA (1966); relevance , verifiability, freedom from bias, and measurability; oriented to userAICPA issued Horizons for a Profession recommending a common body of knowledge and a five-year education requirementARS 10 (1968) GoodwillTax Reform Act of 1968 changed focus of tax code from economic focus to social objectivesContinental Vending case (1969) relying on GAAP not sufficient to protect against litigationAPB issued Statement 4 Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises (1970); service activity, diverse users
History of Accounting
AICPA Wheat Committee called for alternative to APB (1972)Financial Accounting Standards Board created to replaced APB (1973); statement, interpretations, technical bulletins, statement of financial accounting conceptsAICPATruebloodCommittee identifies objectives of accounting (1973); emphasis on external usersInternational Accounting Standards Committee (IASC) established (1973); became IASB in 2001; issues IASs and IFRSEquity Funding collapsed; computer fraud involved (1973)Cohen Commission warns of expectation gap (1974)First personal computer invented (1975)Moss/Metcalfe Committees recommend increased regulation of accounting profession (1976); lack of independence and failure to protect the publicForeign Corrupt Practices Act forbids bribery and requires effective internal control systems (1977)AAA issues Statement on Accounting Theory and Theory Acceptance (SATTA) in 1977;International Federation of Accountants (IFAC) is formed (1977)
History of Accounting
FASB issues Statements of Financial Accounting Concepts 1-7 (1978-2000); the Conceptual FrameworkElectronic spreadsheets (VisiCalc) produced by Apple (1979)Single Audit Act (1984) established guidelines for audits of state and local governmentsAICPA/NASBA approves Uniform Accountancy Act (1984)Emerging Issues Task Force created by FASB (1984)Savings and Loans collapse (1985-1988); Congress considers taking over the issuance of accounting standards and oversight of auditorsTax Reform Act of 1986AAA publishes Anderson and Bedford Reports, offering criticisms and suggestions for accounting education (1986)Treadway Commission reports on fraud and expectations gap (1987)150-hour requirement for membership in AICPA (1988)
History of Accounting
World Wide Web became available to the public (1991)Jenkins Reports recommends enhanced business reporting model (1994)AICPA launches Vision Project (1995)More AICPA members employed in industry than in public accounting (1996)AICPA launches Business Valuation credential (1997)AICPA introduces Certified Information Technology Professional designation (2000)Enron and Arthur Andersen (2001) scandalsWorld Com scandal (2002)Sarbanes Oxley Act (2002); PCAOB created; SEC must draft a report on principles-based standardsNorwalk Agreement between IASB and FASB (2002)PCAOB issues first auditing standards (1-3) (2004), #4 in 2006, #5 in 2007, and #6 in 2008.Computer-based testing for CPA exam (2004)July 1, 2009 FASB Accounting Standards Codification goes “live,” replacing the Hierarchy of GAAP
People and History of Accounting
BallBarrBeaverBellBeresfordBloughBriloffBrownBurtonCanningEdwardsGradyHatfieldHorngren
IhlanfedtJenkinsJenningsKohlerKuhnLittletonMayMetcalfeMontgomeryMoonitzMoorePacioliPatton
People and History of Accounting
RossSandersScottSorterSpacekSprouseSterlingStoreyTruebloodWattsZeffZimmerman
Additional Historical Developments
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