Question

Along with the rise of accounting in the age of the railroad came the rise of the accountant and the accounting profession. Discuss the origins of the accounting profession in the mid to late 1800’s.

Answer 1

ACCOUNTING HISTORY (MID and LATE 1800s)

   Scotland {modernizes accounting-Mid 1800s}

The Institute of Accountants in Glasgow(Scotland) petitioned Queen Victoria for a Royal Charter, so accountants could distinguish themselves from solicitors.For a long time accountants had belonged to associations of solicitors, which offered accounting in addition to a firm’s legal services. In 1854 the institute adopted ‘chartered accountant’ for its members, a term and demarcation that still carries legal weight globally.It was on the 6th of July 1854 the petition being signed by 49 Glaswegian accountants, and it argued that the accounting profession had long existed in Scotland as a distinct profession of great respectability.The numbers of those practising accounting has increased rapidly those days,even though initially it had only few men.

The petition further highlighted the varied skills required to be a professional accountant.The Accountant should be well acquainted in mathematical skills as well as in general legal principles since they often get employed by courts for providing evidences on financial matters.

Industrial revolution

During the middle of 1800s, England was in the midst of prosperous times brought on by the Industrial Revolution and London was the financial center of the world. It was the leading producer of coal, iron and cotton textiles. With the growth of the limited liability company and large-scale manufacturing and logistics, demand surged for more technically proficient accountants capable of handling the growingly complex world of global transactions.

[The increasing importance of accountants helped to transform accounting into a profession, first in the UK and then in the US. In 1904 eight people formed the London Association of Accountants to open the profession to a wider audience of people than was available through the UK’s older associations. After several name changes the London Association of Accountants adopted the name the Association of Chartered Certified Accountants (ACCA) in 1996].

Industrial Revolution Era-Accounting History (More Details)

In 1880, the newly formed Institute of Chartered Accountants in England and Wales brought together all the accountancy organizations in those countries. In addition to the 587 members initially enrolled, an additional 606 members were soon admitted on the basis of their experience. Standards of conduct and examinations for admission to the Institute were drawn up, and members began using the professional designations "FCA" (Fellow Chartered Accountant, for a firm partner or proprietor in practice) and "ACA" (Associate Chartered Accountant, signifying a qualified member of an accountant's staff, or a member not in practice). In the late 1800s, large amounts of British capital flowed to the rapidly growing industries in the United States. Scottish and British accountants traveled to the U.S. to audit these investments, and a number of them stayed on and set up practice in America. Some of the existing American accounting firms trace their origins to one or more of these visiting Scottish or British chartered accountants.Groups of accountants joined together to form professional societies in cities across America. In 1887, the first national accounting society was formed - the American Association of Public Accountants, predecessor to the American Institute of Certified Public Accountants.