The history of accounting spans thousands of years, taking us back to ancient civilizations like Mesopotamia, Egypt, and Babylon. It emerged alongside the invention of writing, counting, and currency. As the Roman Empire embraced accounting, they gained access to detailed financial information and auditing practices. India’s Mauryan Empire saw Chanakya penning the economic management book “Arthashastra,” which delved into the meticulous maintenance of state accounts. However, it was Luca Pacioli, the renowned Italian scholar, who truly revolutionized the field by introducing double-entry bookkeeping in the fifteenth century.
During the nineteenth century, the modern profession of chartered accountancy originated in Scotland. Accountants often associated with solicitors, who provided accounting services to their clients. Interestingly, early modern accounting shares similarities with forensic accounting today. The Institute of Chartered Accountants in England and Wales was established in the nineteenth century, marking a pivotal moment in accounting’s transition into a more organized profession with local bodies. Custom, thought, habit, action, and convention shaped modern accounting into what it is today.
Modern accounting is built upon two fundamental concepts. The first is the double-entry bookkeeping system pioneered by Luca Pacioli. The second is the professionalization of accountancy, which took root in nineteenth-century Scotland. Like present-day forensic accountants, accountants of the past also fulfilled the role of expert financial witnesses in addition to their general services. In 1854, Queen Victoria received a petition requesting a Royal Charter for The Institute of Accountants from Glasgow, signed by forty-nine accountants emphasizing the profession’s importance in Scotland. These professionals possessed diverse skills, including mathematics and an understanding of the legal system, as they frequently provided financial evidence in court proceedings. The Edinburgh Society of Accountants adopted the title “Chartered Accountant” for its members.
During the nineteenth century’s Industrial Revolution, with London as the global financial hub, the demand for competent accountants soared. As companies multiplied and complex financial transactions became the norm, accountants played a pivotal role in managing assets depreciation, inventory valuation, and staying abreast of evolving legislation. However, as accounting became integrated into business and financial systems, the demand for individual accounts diminished. In response, professional accountants in England established the Institute of Chartered Accountants in England and Wales in 1880, enhancing their status and addressing criticisms regarding standards.
Across the Atlantic, the American Institute of Certified Public Accountants (AICPA) emerged in 1887. Today, it stands as the national professional organization for Certified Public Accountants (CPAs), boasting over 418,000 members across 143 countries. The AICPA sets ethical standards for the profession and establishes auditing standards for private companies, non-profit organizations, and governmental entities in the United States. The association also develops and administers the Uniform CPA Examination. The AICPA’s purpose revolves around accounting and finance, with its headquarters in New York City, led by President and CEO Barry C. Melanco, CPA, CGMA, and Chairman Eric L. Hansen, CPA, CGMA.
Over time, the AICPA expanded its scope and influence through various milestones. In 2012, it partnered with the Chartered Institute of Management Accountants (CIMA) to establish the Chartered Global Management Accountant (CGMA) designation. The AICPA and CIMA co-created the Global Management Accounting Principles (GMAPs) in 2014. These principles, informed by input from CEOs, CFOs, academics, regulators, and professionals from twenty countries, guide best practices in management accounting. In 2017, the joint venture evolved into The Association of International Certified Professional Accountants, aligning the strengths of the AICPA and CIMA to empower the accounting profession in both public and management domains.
The AICPA’s success is underpinned by its committee system, which has a long-standing tradition dating back to its formation in 1887. Task forces, introduced in 1999, allowed for more targeted efforts and efficient completion of specific assignments. Currently, over 1,700 volunteers occupy more than two thousand seats, each contributing to fulfilling the AICPA’s mission.
As the business landscape evolves, accounting faces new challenges. The Global Management Accounting Principles serve as a guide for decision-making in this era of rapid innovation, disruption, and increasingly complex unstructured data. Developed through extensive research and a 90-day public consultation involving over four hundred participants, these principles have universal applicability across the public and private sectors. Their purpose is to enhance decision-making by providing quality management information, enabling organizations to benchmark themselves against global best practices.
Accounting, one of the oldest professions in the world, continually evolves to meet the demands of a changing business and financial landscape. As complexity increases and the world moves at a rapid pace, accounting will undoubtedly continue to improve and adapt, playing an essential role in shaping the future.
