Accounting is a system of recording and summarizing business and financial transactions. Ancient civilizations including the Mesopotamian, Babylonian, and Egyptian Empires, as well as the Greek city states, were all engaged in trade and organized systems of government, in which they utilized various methods of record keeping and accounting. By the time of the Emperor Augustus, the Roman government had gained sophisticated access to large amounts of detailed financial information regarding patrician investments and estates.
In India, Chanakya, a royal chamberlain to the Emperor of the Mauryan Empire, wrote a manuscript similar to a financial management text. His work, the “Arthashasthra,” contains directives for maintaining accounts of the sovereign state. Yet the recognized father of modern accounting is the Italian monk Luca Pacioli, who published his Summa de Arithmetica, a compilation of double-entry bookkeeping during the Renaissance which is still used today. After Pacioli’s contribution, the next evolutionary development in accounting occurred in Scotland.
Eighteenth century Scotland became the birthplace of the accounting profession, because the oldest societies of public and chartered accountants existed there. The development of the profession was first exhibited when accountants, who belonged to the same association, began offering specialized services to business clients. Scottish accountants often belonged to the same associations as solicitors, and those solicitors offered accounting services to their clients. This transformation enhanced the importance of accounting in Scotland.
These changes were accompanied by a growth in international trade made possible by the Royal Navy’s dominance of strategic maritime trade routes. As the British Empire expanded, London became the financial capital of the world. Thus, the evolution of modern accounting in Scotland was not isolated from the dynamic events in the United Kingdom at that time. The Industrial Revolution was also in full swing as joint-stock companies and corporations continued to multiply. Consequently, the accounting profession became an integral part of Britain’s financial system.
In the meantime, Scotland had produced an abundance of accounting texts as part of the intellectual achievements of “The Scottish Enlightenment.” During this remarkable epoch in Scotland, renowned works were also published in the areas of philosophy, law, science, and economics. This sudden burst of genius occurred between the Act of Union (1707) and the death of Sir Walter Scott (1832). Scotland had 4 universities compared to only 2 in England, while Scottish thinkers like Adam Smith, Tobias Smollett, Robert Burns, and David Hume typified this unique era.
During the Scottish ascendency accountants were operating in major towns, and a knowledge of accounting was common in the business community. This situation was aided by a proliferation of accounting text books. Scotland soon attained a reputation as the “land of accountants,” due to a steady stream of accounting documents. Many works printed by Scottish presses could be considered accounting classics. This dissemination of knowledge assisted the rise of chartered accountants, but it wasn’t until the mid-19th century that accounting became a distinct profession.
The first professional organization of Scottish accountants appeared as a result of a separate Scottish legal system, and powerful business oligarchs in London whose proposals threatened the interests of Scottish accountants. In 1854, the “Institute of Accountants” in Glasgow, petitioned Queen Victoria to grant them a Royal Charter. The petition, signed by 49 Glasgow accountants, argued that accountancy had existed a long time in Scotland as a distinct profession of great respectability, and that the number of practitioners was rapidly increasing.
The petition further stated that accountancy required special skills including: a mathematical aptitude, and an acquaintance with the legal system, since accountants were employed by the Crown to present evidence in financial matters. These accountants also had to be aware of changes in legislation such as the New Company Law, which was introduced in Parliament. After its formation, the Edinburg Society adopted the title of “Chartered Accountant” (CA) and over the next few decades, the accounting profession transitioned into a more unified organization.
In keeping with this trend, local professional bodies merged into “The Institute of Chartered Accountants,” which was established by Royal Charter in 1880. The Institute was founded to improve the status of accountants and combat low standards. Later that year more organizations were brought together under “The Institute of Chartered Accountants in England and Wales.” The Institute drew up standards of conduct, examinations for admission, as well as the titles of Fellow Chartered Accountant (FCA) for a partner, and Associate Chartered Accountant (ACA) for a staff member.
Eventually, the term “Chartered Accountant” was recognized throughout the British Empire, or wherever else the English language was spoken. In 1904, “The London Association of Accountants” was formed to open up the profession to a wider audience. In 1996, after several name changes, the organization became “The Association of Chartered Certified Accountants” (ACCA), a designation still used today.
Accounting Pro is grateful to be able to participate in the evolution of the modern accounting profession. Moreover, our highly professional staff proudly holds several designated titles in today’s certified accounting community.
— Daniel Fitz-Simons