Origins and Evolution of Accounting and Challenges it is Currently Facing Accounting is the process that is used to identify, record, measure, verify, interpret and evaluate financial data of an organization. Accounting techniques and principles were developed during the times of ancient Roman Empire. The development of trade through the ancient Roman Empire up to the Industrial revolution necessitated the development of accounting. The changing business environment and modernization have improved the mode of doing business bringing several challenges to the world of accounting. This paper primarily discusses the origin, evolution and challenges facing accounting. Accounting has been in existence since the first occurrence of civilization almost 5000 years ago.
In Rome, by 12th Century B. C., there was an advent of increased trading and the Roman Empire, being the most developed society at that time, needed an organized system that would document the profits it earned from its trading (Pacioli, 2010, 3). Luca Pacioli believed to be the father of accounting developed the system of double entry in accounting. He originally provided a base for double entry in bookkeeping and helped traders and merchants on proper accounting and better business practice (Pacioli 5). The Industrial revolution brought about the emergence of the need to have a more pronounced cost accounting systems as businesses developed into large corporations with more than one capital providers (Pacioli 7).
Luca Pacioli says, “If you are in business and you fail to know all about your money, it will go like flies; you will lose it” (Pacioli 7). In 1887 during the industrial revolution, the rising need for public accountants led to the transformation of accounting into a profession in both the United States and England.
Accounting developed into several branches such as, the financial accounting, management accounting, auditing, among others (Mukherjee & Hanif 112). Financial accounting is the periodic reporting of financial condition of a company while management accounting deals with external forces such as business processes, monitoring and general business evaluation (Mukherjee & Hanif 117). Auditing involves the periodic examination and verification of company accounts. Accounting has not been left behind with the global modernization, the emergence of computerized accounting and software engineering has developed software such as SAGE, Quick books and Microsoft Excel, which has supplemented and rationalized the accounting systems a factor that has reduced costs and improved business operations (Mukherjee & Hanif 114 ). Accounting has currently faced several challenges with one being finding jobs for the rising number of fresh graduates from accounting institutions.
The adverse global recession of 2008-2009 led to several closures of several corporations a factor that has reduced the availability of accountants’ jobs. Health problems related to stress and high blood pressure has been reported within the profession as the increase in the level of workloads business (Schroeder 57).
Integrity in reporting financial condition of corporations by accounting professionals has come out as another challenge. Uncouth accountants who broadcast wrong figures to influence investors to invest in their companies stocks have in some occasions misguided investors on the financial conditions of some corporations (Schroeder 65). This has caused adverse effects with some leading to a crash in stock market. In conclusion, accounting has undergone a tremendous evolution from a simple bookkeeping to a wider and significant factor in determining the course of business, monitoring and evaluating financial condition and forecasting of where to invest and not to invest.
Works Cited Douglas A Schroeder: Accounting and Causal Effects: Econometric Challenges-Springer, 2010. Print. Luca Pacioli: The Rules of Double-entry Bookkeeping: Particularis De Computis Et Scripturis- Create Space Independent Publishing Platform, 2010. Print. Mukherjee & Hanif: Modern Accountancy Vol Ii, 2/E, Volume 2-Tata McGraw Hill Publishing Company Limited, 2 003. Print.