The accounting profession – which is defined as a system of recording and summarizing business and financial transactions – has been around for as long as people had to keep track of commerce.
For thousands of years, accountants have been analyzing data, keeping records, and interpreting and producing reports on financial and operational activities to enable business owners, stakeholders and others to make sound decisions.
Accounting evolved around the time societies started trading with each other. Evidence of accounting has been found on clay tablets from Egypt and Mesopotamia, as early as 2,000 to 3,300 B.C.
Over time, the mathematical calculations of accounting were adopted by nearly every culture.
In the 15th century, an Italian mathematician and writer, Luca Pacioli, created a system of basic accounting and recorded it in a simple textbook. Pacioli, a friend of Leonardo DaVinci, published “The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality” in 1494.
One section contained a description of double-entry accounting. The book was widely distributed and translated into several languages, and earned Pacioli the title “Father of Accounting,” though Pacioli wasn’t the inventor of double-entry accounting. His book simply explained the method used by merchants in Venice.
However, he did create a system of journals, ledgers, receivables, inventories, closing entries and trial balances – and these methods are still used today.
Pacioli’s accounting system changed little over 500 years. The modern trial balance sheet came about in 1868, and statements of financial position in the 1980s.
But as technology advanced and information became more readily available, companies could no longer wait the standard two weeks after their books closed to receive reports based on historical information.
Modern companies started leveraging technology and utilizing accounting systems that gathered real-time data for quantitative and qualitative analysis. The essential attributes of a modern accounting system include:
- Automated, flexible processes: Businesses need to analyze, manage and present financial information according to their industry standards, as well as customized to the company’s needs. Instead of limitations, the system should add flexibility without requiring new software or custom coding.
- Business insights: In-depth, real-time insights into business activities, costs and profitability allow decision makers to capitalize on new opportunities and change direction when corrections are needed.
- Cloud architecture: Cloud-based systems offer lower costs and higher productivity with access from anywhere. They typically integrate easily with other software solutions to create the best possible solution for an individual business.
Finding the right provider is key to implementing an accounting system that will help move a company forward and contribute to its goals.
At a minimum, the system should automate functions such as accounts receivable and payable, financial close, time and expense capture, fund and project accounting, and revenue recognition and management. Modern accounting systems are designed to grow with a company and if needed, to integrate seamlessly with those of key suppliers.
The accounting profession has a long history with its origins in the earliest transactions conducted by humans. It remains a robust, respected and essential profession today.