For as long as people have traded goods and services with each other, there has been a need for accounting, even before the development of cash-and-commerce economies and currency as we know it today.
However, the accounting world of the Mesopotamians 7,000 years ago is very different to the modern, fast-paced and technology-driven world of today, and the field, as well as accountancy recruitment, has constantly evolved its methods whilst maintaining the field’s core principles.
Here are some of the biggest ways in which accounting has changed.
From Bartering To Currency
Accountancy predates banks and even currency and cash, and the reason for this is that before banking there was the barter system.
If you have ever traded cards, stickers or owed someone a favour, you have engaged in bartering; it is the principle of trading one type of commodity for another type.
Bookkeepers would quickly emerge to ensure that these transactions were recorded and agreed to, often being used as evidence if there was a dispute.
Ledgers from that era were individually written and exceptionally descriptive compared to modern bookkeeping, with the items and services agreed to and the transaction dates dutifully noted, particularly for more complex transactions that took a long time to complete.
The transition to currency was initially a form of shorthand, with the Mesopotamians using complex clay tokens with representations of each type of desired good, serving more as receipts of goods traded rather than a tradable commodity in its own right.
There were at least 16 types of tokens as well as other subcategories for finished goods.
Eventually, to stop the near-constant arguing about the relative value of goods related to other goods, the Sumerians started to adopt silver as a currency, typically in the form of rings along with copper and shells.
These metals had a relatively stable value and so could provide a central point to which all other goods were valued.
Once currencies were formed, this had a profound effect on bookkeeping as well, as rather than chapter and verse about bartering deals, ledgers could be simplified to outgoings, incomings and descriptions of transactions.
The Father Of Modern Accounting
Whilst ledgers in the early days of currency were simpler than previous methods, they were still far from perfect, using a single-entry system that tracked money going in and out on the same entry, a principle known as single-entry bookkeeping.
Whilst it was simple, it was also exceptionally time-consuming as each entry needed to be checked when calculating profit or loss for a period.
The person credited with changing this principle was Friar Luca Bartolomeo de Pacioli, who became known as The Father of Accounting after he published his greatest work, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Summary of Arithmetic, Geometry, Proportions and Proportionality).
The idea was to record debits and credits separately, which made it considerably easier to know the overall health of a business.
The UNIVAC
One of the biggest recent changes to accounting started in 1953 and has changed the core of accountancy to this very day.
The UNIversal Automatic Computer (UNIVAC) was not technically the first commercial fully-digital computer, as the BINary Automatic Computer (BINAC) beat it to market by four years.
However, the UNIVAC was the first computer to be commercially successful, helped in no small part to the computer ‘predicting’ the 1952 Presidential Election would be won in a landslide and being proven correct.
It would first be used for accounting in 1953 when General Electric asked consultants Arthur Anderson to set up a payroll processing system.
It was expensive and required a team of experts to use but was a sign of what was to come for the industry, as spreadsheets were available in 1961 and account auditing software that could be bought ‘off the shelf’ existed by 1968.
In 1979, the first spreadsheet computer programme for personal computers was launched in the form of VisiCalc, which not only made computer-based accountancy possible but turned computers from a hobbyist plaything to a business necessity, spurring the creation of the IBM PC in 1981.