The History of Modern Accounting

While systems that may have been precursors to basic modern accounting probably have existed 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, while scholars theorize that accounting may have been the original reason for the development of written language, little is known about accounting history before the Renaissance, although archaeology and related sciences are uncovering evidence of systems that far predate that period of time.The religious and secular possessions of city states had to be recorded to allow for any sort of organization, which is why the theory of writing having been developed for accounting purposes arose. However, when we refer to modern accounting history, we start with the double entry bookkeeping procedures that characterized the accounting procedures of Italian Renaissance merchants, and gave them the organization and clarity they needed to rise to the top of the world of trade at the time. By 1494, accounting procedures had been codified by Friar Luca Bartolomeo de Pacioli (Paciolo), who is therefore regarded as the father of modern accounting.Accounting established itself even further during the Industrial Revolution, and the accounting history of this period is fascinating indeed, as the pioneer of accounting during the Industrial Revolution was none other than the potter Josiah Wedgwood, whose family firm still dominates the market for luxury fine china and crystal. Wedgwood, as attuned to the bottom line as he was to the quality of his wares, demanded that proper records be kept so that he was able to easily detect and remedy minor inefficiencies and cost overages as well as to quickly deal with such potential calamities as the embezzlement he once discovered when reviewing the meticulous financial records for which his enterprise became renowned. Wedgwood is as much a part of accounting history as he is of production history because of the efficiency of his cost accounting methods, which were adopted by other successful industrialists of his time.The railroads also depended on proper accounting techniques so that they could fulfill their role as the transport lifeline of the Industrial Revolution. Given the avaricious nature of some of the railroad barons of the United States during the expansion of railroads there, it can probably be assumed that the history of accounting scandals began with the methods used by these robber barons to outwit investors, customers and the onset of regulatory pressures alike.By the beginning of the 19th century, “accomptants”, the predecessors of today’s skilled and trained outside accountants, began to appear in London, and a similar profession would arise in the Americas as well due to industrial development there. Often, bankruptcy was the reason that firms turned to these pioneers of independent accounting history.And in 1845, when William Deloite opened his London accountancy firm, the modern outside accounting and auditing profession were clearly a part of British business procedure, which at the time led the world in terms of advancement and transparency. His firm, like that of Wedgwood, 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.

The Globalization Impact on Accounting Education

According to globolization101.org, globalization is defined as a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. Globalization is a trend that has created a huge impact on accounting education today. Globalization has its positives and negatives, but when it comes to accounting education it brings some difficulties. Globalization has the ability for any company to expand and export to other countries all over the world. The problems that come with globalization regarding accounting students are the accounting principles which are learned in school, compared to the accounting principles that are used internationally.One of the main concerns that globalization brings to the accounting students is that they are learning the Generally Accepted Accounting Principles, also known as GAAP, which is not used globally. This can make it even harder for some students to receive a job that deal with international finances because their main focus while in school was directed towards GAAP and in the United States only. On the other hand, IFRS, or International Financial Reporting Standards is also briefly covered in education in the United States. This would be more beneficial to students learning accounting because it deals with International principles, which involve most businesses. Because there are two different accounting principles to learn, globalization has a big impact on the students’ needs to know both GAAP and IFRS to be more educated when they are entering corporations. Also, because these accounting principles are being updated and changed very frequently, it puts a lot of pressure on accounting students to stay up to date with the current principle. With that being said, it is way more beneficial for students to be learning IFRS while in school than to be focusing all of their time on GAAP because it is not the accounting principle worldwide.IFRS is becoming a standard in accounting education because of globalization. The world’s economies are becoming increasingly interdependent, as illustrated by the 2008 financial crisis, and global standards allow financial performance to be better understood. These standards also strengthen accounting and auditing practices throughout the world, as accountants and auditors only have to familiarize themselves with one set of standards (Needles, 603).One good thing about being an accounting major, or business major in general is that you have the opportunity now to study abroad. This would include learning IFRS more in detail than you would with regular college classes in the United States. Studying abroad would give these students a major advantage over students that do not chose to study abroad.Globalization has made accounting firms find the need for employees with the ability in both of these accounting principles. Firms need employees who can do financial statements both using IFRS, and also GAAP. With globalization rising, it would be smart for university’s to start teaching the accounting students IFRS as well as GAAP.Works CitedNeedles, Belverd E. “Accounting Education: The Impact Of Globalization.” Accounting Education 19.6 (2010): 601-605. Education Research Complete. Web. 18 Nov. 2014.