When did accounting start?
It’s a difficult question to answer exactly because the definition of what accounting is has changed over the years. Let me start from the beginning.
The duties of an accountant have evolved significantly throughout history. In approximately 9,000BC, the hottest technologies of the day were agriculture and animal husbandry. Humans had just discovered how to domesticate animals and plant seeds and for the first time in human history, we had more than we could carry. Humans transitioned from a nomadic life to a settler’s life. Suddenly, the need to count heads of goats or kilograms of grains in the granary became important to operating a farm, tribe or village.
“Humans transitioned from a nomadic life to a settler’s life.”
Around 3,000BC we saw the emergence of the shekel and other early forms of currency and stores of value. People were no longer trading goods solely in kind and instead were using currency as an intermediary. This added complexity changed accountancy again and arguably gave birth to the practice of bookkeeping to prevent theft and fraud, and also allow for forecasting to make sure there was enough food and money to survive the winter.
In around 1,000BC we start to see the emergence of markets in Ancient Egypt as the barter system slowly gave way to the merchant system. Merchants needed to know how much they made, how much they could spend and how much they needed to save.
“People were no longer trading goods solely in kind and instead were using currency as an intermediary.”
The duties of the accountant changed again in Ancient Rome around 50BC. There is evidence from the Res Gestae Divi Augusti that Augustus Caesar had detailed financial information on his empire, which he used to make military decisions and also used for taxation purposes. It is likely that around this time accountancy transformed from an activity performed solely by an owner operator to an activity performed by a skilled professional, collecting data on the empire.
Flash forward now to 1494 when Luca Pacioli published Summa de arithmetica, geometria. Proportioni et proportionalita which contained the first written description of bookkeeping used by Venetian merchants during the Italian Renaissance. This was the birth of double-entry bookkeeping and Pacioli warned that a person should not go to sleep at night until debits equalled credits, something many of you would be all too familiar with.
“The duties of the accountant changed again in Ancient Rome around 50BC”
I could go on to explain how the formation of the Dutch East India Company or the founding of the Institute of Accountants in 1854 in Glasgow each again shaped accountancy but the point is this: every time a new technology or method is discovered, accountants count something new. It started with counting livestock and grains and moved to revenue, then assets and liabilities, then profits on behalf of shareholders and so on.
Written By: Patrick De Ruvo
Chief Technology Officer