The 10th of November is International Accountant's or Bookkeeper's Day, the day on which we celebrate the first ever documentation of double-entry bookkeeping by Italian monk and mathematician, Luca Pacioli. On 10 November 1494, Pacioli published the first book on modern bookkeeping practices, changing the way in which accounts were conducted forever.

The Institute of Certified Bookkeepers (ICB) is holding its Bookkeepers Summit as part of a celebration of Global Bookkeepers' Week, while the Accountex Virtual Summit is happening this week as well. It's also worth mentioning that the ICB's annual LUCA Awards are named after Pacioli and that the trophies they award are meant to resemble him!

It's worth reflecting on just how far we've come - and on what the future may hold.

To read about the LUCA Awards shortlist, take a look at our blog here.

While we celebrate Pacioli and the beginnings of accounting and bookkeeping practices as we know them, it's worth reflecting on just how far we've come - and on what the future may hold.

Accounting predates Pacioli by centuries with historians tracing it back to Ancient Mesopotamia and the development of writing and counting around 7, 000 years ago. The Mesopotamians kept records of trade involving animals, livestock, and crops.

Other early evidence of accountants can be found from:

Initially, bookkeepers emerged when societies used the barter system and needed to keep a record of agreements they made in terms of goods or service transactions. As time progressed, accounting ledgers were handwritten in either a single-column or double-column system. With the development of currencies, tradesmen and merchants began to accumulate wealth, and bookkeeping evolved to address the new issues of the day.

Initially, bookkeepers emerged when societies used the barter system and needed to keep a record of agreements they made.

While merchants often had good business sense, they were not always great with figures, and would often employ bookkeepers to keep track of who owed them money. Not so different from today, is it?

The reason Pacioli is considered so important to us today is that he is the father of modern accounting practices - the practices that most closely resemble our own. In his book, Summa de Arithmetica, Geometria, Proportioni et Proportionalita, Pacioli describes the system of debits and credits used by 15th century Venetian merchants. At the time, Venice was a hub of economic activity. Think, for instance, of Shakespeares' The Merchant of Venice, a play in which a prominent Venetian merchant defaults on a large loan provided by a Jewish moneylender.

In Pacioli's book, he explains how one should list an entity's resources separately from any claims on those resources by other entries. This could be accomplished by creating a ledger with distinct debits and credits. Pacioli is credited with the invention of the financial statement with his records serving as the foundation of the balance sheet and income statement. His book also documents the use of a trial balance to prove a balanced ledger that is still open, as well as how to make year-end closing entries.

Pacioli credited Bendetto Cotrugli with the invention of double-entry bookkeeping, stating that he relied upon an unpublished work by Cotrugli to write the accounting sections of his textbook. However, double-entry bookkeeping was around for several centuries before it was recorded in the form of an instructive book.

While merchants often had good business sense, they would often employ bookkeepers to keep track of who owed them money.

However, it's significant that Gutenberg's printing press was invented a few decades before Pacioli wrote his manuscripts as it is this invention that enabled Summa de Arithmetica, Geometria, Proportioni et Proportionalita to become the most-read mathematics book in Europe! Pacioli's book was such a success that he was invited to work under the patronage of the Duke of Milan, Ludovico Sforza, the same man who financed Leonardo da Vinci and commissioned one of his most famous artworks, the Last Supper. Pacioli went on to meet da Vinci, teach him mathematics, and form an intimate bond with him.

And the principles that Pacioli documented remain the basis of accounting and bookkeeping practices today.

Accounting and bookkeeping practices have always adapted to meet the needs of contemporary businesses and individuals. If our systems were to remain exactly the same as they were in 1494, today's accountants and bookkeepers would not be able to provide the value that 21st century clients need and desire. However, this was already the case far before this century.

In 1760, the industrial revolution began, spurring a proliferation of companies that needed much more advanced accounting systems. Alongside the industrial revolution came the development of corporations, large groups of investors, and more complex structures of ownership. This meant that the practice of accounting had to evolve.

If we jump forward to the mid-1800s in Scotland, the Institute of Accountants in Glasgow petitioned Queen Victoria for a Royal Charter so that accountants could differentiate themselves from solicitors. Prior to this, accountants were part of associations of solicitors which offered accounting as an add-on to legal services. The Glaswegian petition argued that accountancy was a distinct profession requiring particular skills. Consequently, in 1854, the institute adopted the title "chartered accountant" for its members.

The height of the industrial revolution in Britain was around this time and, as limited liability companies and large-scale manufacturing and logistics grew, so too did the demand for more technically proficient accountants.

Bookkeeping followed European colonists to the Americas where it was referred to as "accounting", though what it predominantly entailed was basic data entry and calculations for business owners.

Bookkeeping followed European colonists to the Americas.

Business owners didn't need more complex financial statements or cost-benefit analyses at least until the appearance of corporations and the creation of the American railroad, a catalyst for the transformation of bookkeeping into accounting in America.

The American railroad required distribution networks, shipping schedules, fare collection, and competitive rates.

Moreover, travel by train meant that things could be transported around the country at much greater speed. As a result, transactions that would've previously taken months to settle could now be settled in a matter of days. This enabled a uniform system for delivery across the country to be enforced in 1883 which necessitated more uniform accounting practices country-wide.

In the 19th century, corporations began to publish their financials in a bid to attract financial investors. Financial statements were used to prove an entity's ability to turn a profit. They typically included a:

Financial statements were particularly important to show to shareholders. And they remain important to this day.

Accountants are increasingly being relied upon for analytics and business advice.

On the anniversary of Pacioli's publication of Summa de Arithmetica, Geometria, Proportioni et Proportionalita, it's good to reflect on how far the profession has come and how much it will change in the future. Today, accountants have specific standards and regulations to follow, including important ethical considerations. Accounting is key to the functioning of every entity and plays a major role in the economy.

Today, accounting and bookkeeping have changed from handwritten accounts to digitized ledgers that can be transformed into easy to understand visualizations. With the advent of computers, and, more recently, cloud technology and apps like Syft Analytics, the complexities of modern-day accounting can be tackled far more efficiently than before.

Accountants are increasingly being relied upon not just for record keeping, compliance, or financial statements to show shareholders, but for analytics and business advice. They have also been crucial when it came to helping businesses through recessions and the pandemic. To build and a resilient, "future-proof" business, having a reliable accountant is key.

No matter how much the profession has changed over time, it's worthwhile to consider where it all came from and to appreciate the impact of accountants of the past on what many take for granted today. There's something humbling that comes from looking back at one's forebears, considering what it would've been like to record transactions in Renaissance Venice - or far before.

The profession travelled across continents, into different economic environments and societies.

Happy World Accountant's and Bookkeeper's Day! As you celebrate, I hope you'll remember that you're part of a profession steeped in history. Accounting and bookkeeping practices have always evolved alongside the seismic shifts of the world, from the advent of currency to the industrial revolution to Scotland's assertion that accountants are distinctive professionals.

The profession travelled across continents, into different economic environments and societies, and has adapted and grown to be more effective and helpful in its offers. I have no doubt that accounting will continue to change alongside the latest economic and technological shifts of this century and the centuries to come.

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