Chapter 1: A Profession Emerges: to 1913
The story of the Certified General Accountants' Association of Canada is embedded in the sweep of
modern history and related to the deep human impulse to create order through organization. Organization
surrounds us in the late twentieth century, most visibly in the management of public and private enterprise.
And as all human concerns have become increasingly complex and costly, those responsible for operations
have taken ever more stringent measures to define, monitor, and control productivity, incomes, and
expenditures. Accounting is simply central to management.
Some version of this process has always existed in the past. The Babylonians had a veritable mania
for system and order. Their scribes meticulously recorded the financial affairs of the Empire. The Greeks,
whose intellectuals quested for understanding in many spheres, had public servants to keep close track of
their government's expenditures. In the Middle Ages, the Church and its many monasteries, lords of manors,
and princes had secretaries and stewards record their financial affairs. Recording accounts was primarily
to aid the memory, not to determine profits and losses. Even so, the twin spheres of modern accounting — private record keeping and public accountability
— were well established by the end of the
Middle Ages. These record-keepers became known, in modern times, as accountants.
Effective accounting required flexible arithmetic. But Roman numerals, commonly used in western
societies until the fourteenth century, made calculation cumbersome. The adoption of Arabic numerals
liberated and revolutionized mathematics. The significance
of the new arithmetic for accounting emerged
in Renaissance Italian city states.
Venice, Milan, and Genoa were epicentres of Western Europe's commercial revolution. Modern politics
cites Nicolo Machiavelli as its intellectual godfather. The arts and sciences revere Leonardo da Vinci,
a versatile genius. Mathematics and ac counting look to the lesser known Luca Pacioli as their patron.
Pacioli, a friend of da Vinci's, was a mathematician who possessed the integrated knowledge common among
learned men of the time. Pacioli investigated commercial affairs while tutoring the children of a
wealthy merchant. In 1494, he published a mathematical treatise in which he described a system of
double entry bookkeeping which he had devised.
In 1581, Italy also spawned the world's first professional accounting association, the Collegio
dei Rexonati of Venice. The Collegio selected, apprenticed, examined, and ultimately certified
accountants as qualified for public practice. The Collegio adopted Medieval methods and sought a
professional status equivalent to that enjoyed by physicians and lawyers.
In the sixteenth and seventeenth centuries, the commercial revolution spread beyond the
Mediterranean to countries in the west and north. Improvements in shipbuilding and navigation
lowered transportation costs and improved safety records and profits. Dutch, German, English, and
Scottish merchants successively carved out substantial mercantile networks in Europe's overseas
empires. Money began to replace barter as the basis of trade, commercial law and courts sympathetic
to mercantile interests emerged, assemblies replaced arbitrary royal levies with predictable taxes,
and stable banks appeared.
Entrepreneurs developed regular business methods to cope with these changes. In 1543, Hugh
Oldcastle translated Pacioli's accounting system from Italian into English. By 1773 and 1776,
Edinburgh and London directories listed many self-employed accountants
competing for clients
among the city merchants.
After the mid-eighteenth century, profits from the commercial revolution financed the
beginnings of the Industrial Revolution. Rising productivity, new markets, effective procedures,
legions of entrepreneurs, and falling costs modernized Western Civilization. Politics changed,
populations increased and became concentrated, economic production steadily diversified and
expanded, and wealth spread beyond the landed classes. As individual currencies stabilized,
international exchange values evolved. Governments acquired larger bureaucracies and sought
closer control of their countries' social and economic affairs to increase national power and
revenues. Modernization created a plethora of specialized occupations. Such changes reflected
the human search for order.
Accountants became central contributors to this modernizing world. Management of both public
and private financial matters fell under the control of experts. Corporations dominated, but did
not entirely replace, entrepreneurial and limited-partnership capitalism. Every department of a
company and every agency that handled money needed to know how and where revenues and expenditures
occurred. As ever more governments became accountable beyond close-knit ruling circles, companies
also democratized and became accountable to thousands, even millions of shareholders.
Continued...
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