Question

n our conversation on Accounting Professionalism, there are repeated references to ethics, to trust, to the morality of accounting, etc. Accounting is seen as not only a financial system, but a system based on trust and subject to oversight. A system needed to provide assurance to investors and taxpayers, to bring order to financial records, to give government to ability to review business activity, etc.

While accounting began as a tool for merchants to account for investment and the daily activity of their businesses, the system of accounting we have today can be traced back to Luca Pacioli’s first written accounting book, his Summa de Arithmetica. Who was Pacioli and do you think that his influences and beliefs affected how we view and use accounting today? If the author of that first accounting book had a different background (e.g., an attorney, a merchant, a Prince, a banker), would modern accounting be different from what we have today?

Answer 1

Luca Pacioli was an Italian mathematician, whose work on developing accounting in the early days brought the double-entry method of accounting to the forefront. It was his summarization of best accounting practices, that constructively systemized the accounting profession along with making it popular and altogether important for the business community, since it brought a whole new spectrum through which the businesses could now supervise their operations, widely improving their efficiency and profitability. He often considered the subject as a contemplation of a man's character, thus instilling a sense of ethics while doing book-keeping and accounting. All this work brought him famously the title, through which he is to date known as the "Father of Accounting".

Had the author of the first accounting book belonged to a different background, then also modern accounting had been more or less the same, the reason being that the accounting as a system is not just a set of fixed principles and rules, but is a means and an end in itself. While the art side of the system gives creative judgment (how), the science side lays down the scientific path (why). It is precisely the reason behind accounting to be considered as a concoction of both art and science.