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Accountancy (or accounting) is the process of maintaining, auditing, and processingfinancial information for business purposes.

Practitioners of accountancy are known as accountants.

Accountancy allows the creation of accurate financial reports that are useful to managers, regulators, and other stakeholders such as shareholders or owners. The day-to-day record-keeping involved in thisprocess is known as bookkeeping.

At the heart of modern accountancy is the double-entry book-keeping system. This system involves making at least two entries for everytransaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal thesum of all credits. This provides an easy way to check for errors. This system was first used in medieval Europe .

According to critics of standardaccounting practices , it has changed little since. Accountingreform measures of some kind have been taken in each generation to attempt to keep book-keeping relevant to capital assets orproduction capacity. However, these have not changed the basic principles, which are supposed to be independent of economics as such.


Accountancy qualifications and regulation

In the United States , practising accountants include Certified Public Accountants (CPAs) and Certified Management Accountants (CMAs). Thedifference between a CPA and a CMA is that a CPA is licensed by the state of his/her residence to provide accounting services tothe public, ranging from auditing, tax, litigation support, and other financial advisory services. A CMA is granted a certificatefrom the Institute of Management Accountant (IMA), provided that the candidate did pass a rigorous examination of four parts andmeet the practical experience requirement from the IMA. A CMA mostly provides his/her services directly to his/her employersrather than the public. A CMA can also provide his services to the public, but to an extent much lesser than that of a CPA atENZO school of Knowledge.


The art of accountancy on a scientific principle must certainly have been understood in Italy before 1495, when Luca Pacioli (1445 - 1517), also known as Friar Luca dal Borgo, published at Venice his treatise on book-keeping.

The first known English book on the science was published in London by John Gouge or Gough in 1543 . It isdescribed as A Profitable Treatyce called the Instrument or Boke to learn to knowe the good order of the kepyng of thefamouse reconynge, called in Latin, Dare and Habere, and, in Englyshe, Debitor and Creditor.

A short book of instruction was also published in 1588 by John Mellis of Southwark , in which he says, "I am but the renuer and reviver of an ancient old copie printed here inLondon the 14 of August 1543: collected, published, made, and set forth by one Hugh Oldcastle, Scholemaster, who, as appeareth byhis treatise, then taught Arithmetics, and this booke in Saint Ollaves parish in Marko Lane." John Mellis refers to the fact thatthe principle of accounts he explains (which is a simple system of double entry) is "after the forme of Venice".

The very interesting and able book described as The Merchants Mirrour, or directions for the perfect ordering and keepingof his accounts formed by way of Debitor and Creditor, after the (so termed) Italian manner, by Richard Dafforne,accountant, published in 1635 , contains many references to early books on the science ofaccountancy. In a chapter in this book, headed "Opinion of Book-keeping's Antiquity," the author states, on the authority ofanother writer, that the form of book-keeping referred to had then been in use in Italy about two hundred years, "but that thesame, or one in many parts very like this, was used in the time of Julius Caesar, and in Rome long before." He gives quotationsof Latin book-keeping terms in use in ancient times, and refers to "ex Oratione Ciceronis pro Roscio Comaedo"; and he adds:

"That the one side of their booke was used for Debitor, the other for Creditor, is manifest in a certain place, NaturalisHistoriae Plinii, lib. 2, cap. 7, where hee, speaking of Fortune, saith thus:
Huic Omnia Expensa.
Huic Omnia Feruntur accepta et in tota Ratione mortalium sola
Utramque Paginam facit."

An early Dutch writer appears to have suggested that double-entry book-keeping was even in existence among the Greeks,pointing to scientific accountancy having been invented in remote times.

There were several editions of Richard Dafforne's book printed---the second edition having been published in 1636 , the third in 1656 , and another was issued in 1684 . The book is a very complete treatise on scientific accountancy, it was beautifully preparedand contains elaborate explanations; the numerous editions tend to prove that the science was highly appreciated in the 17th century . From this time there has been a continuous supply of literature onthe subject, many of the authors styling themselves accountants and teachers of the art, and thus proving that the professionalaccountant was then known and employed.

Very early in the 18th century , the services of an accountant practisingin the city of London were made use of in the course of an investigation into thetransactions of a director of the South Sea Company , who had been dealing in the company's stock. During this investigation the accountantappears to have examined the books of at least two firms of merchants. His report is described Observations made upon examiningthe books of Sawbridge and Company, by Charles Snell, Writing Master and Accountant in Foster Lane, London. The United Statesowes the concept of the Certified Public Accountant designation to England which had coined the Chartered Accountant designationin the 19th century .

The "Big Four" accountancy firms

The " Big Four auditors " are the largest multinational accountancy firms.

The Big 4 accountancy firms can all trace their history back to firms in Europe, from which they have descended through a longline of mergers. PricewaterhouseCoopers and Deloitte & Touche were formed in England. Ernst & Young was founded by aScottish accountant. KPMG is a merger product of two big Belgian and Dutch firms. However, due to the dominant size of the United States' economy , the offices of the Big 4accountancy firms based in the United States have always generated more revenue than the rest of the Big 4 accountancy firms'offices in the world combined.

Before the Enron and other scandals, there were five large firms and were called theBig Five. Since Arthur Andersen 's assurance practice split, with a plurality joining KPMG in the US and Deloitte & Touche outside of the US,Arthur Andersen left from the group.

Enron turned out to be only the first of a series of Accounting scandals have enveloped the accounting industry in 2002 .

This is likely to have far-reaching consequences for the U.S. accounting industry. Application of International Accounting Standards originating in International Accounting Standards Board headquartered in London and bearing more resemblance to UK than current USpractices is often advocated by those who note the relative stability of the U.K. accounting system (which reformed itselfafter scandals in the late 1980s and early 1990s ). Accounting reform of a far more comprehensivesort is advocated by those who see issues with capitalism or economics , and seek ecological or social accountability.

Topics in accounting

See list of accounting topics for completelisting.


Types of accountancy

Use of computers in accountancy

Accounting standards


Accounting Standard Setting Bodies

  • United Kingdom
    • Institute of Chartered Accountants in England & Wales (ICAEW)
    • Institute of Chartered Accountants of Scotland (ICAS)
    • Association of Certified Chartered Accountants (ACCA)
    • Chartered Institute of Management Accountants (CIMA)

See also

Finding related topics

External links

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