List of Economic Topics 
Accountancy
- Accounting
Accountancy (British English)
or accounting (American English) is the process by which financial information
about a business is recorded, classified, summarized, interpreted, and communicated.
Auditing, a related but separate discipline, is the process of an independent
review of financial statements in order to express an opinion as to the fairness
and adherence to generally accepted accounting principles.
Practitioners
of accountancy are known as accountants. Also, refer to Chartered Accountant and
their equivalent in English speaking world as well as Certified Public Accountant
in U.S.A.
Accountancy
attempts to create accurate financial reports that are useful to managers, regulators,
and other stakeholders such as shareholders, creditors, or owners. The day-to-day
record-keeping involved in this process is known as bookkeeping.
At
the heart of modern accountancy is the double-entry book-keeping system. This
system involves making at least two entries for every transaction: a debit in
one account, and a corresponding credit in another account. The sum of all debits
should always equal the sum of all credits. This provides an easy way to check
for errors. This system was first used in medieval Europe, although claims have
been made that the system dates back to Ancient Greece.
According
to critics of standard accounting practices, it has changed little since. Accounting
reform measures of some kind have been taken in each generation to attempt to
keep book-keeping relevant to capital assets or production capacity. However,
these have not changed the basic principles, which are supposed to be independent
of economics as such.
History
The
art of accountancy on a scientific principle must certainly have been understood
in Italy before 1495, when Luca Pacioli (1445 - 1517), also known as Friar Luca
dal Borgo, published at Venice his treatise on book-keeping.
The
first known English book on the science was published in London by John Gouge
or Gough in 1543. It is described as A Profitable Treatyce called the Instrument
or Boke to learn to knowe the good order of the kepyng of the famouse reconynge,
called in Latin, Dare and Habere, and, in Englyshe, Debitor and Creditor.
A
short book of instruction was also published in 1588 by John Mellis of Southwark,
in which he says, "I am but the renuer and reviver of an ancient old copie
printed here in London the 14 of August 1543: collected, published, made, and
set forth by one Hugh Oldcastle, Scholemaster, who, as appeareth by his treatise,
then taught Arithmetics, and this booke in Saint Ollaves parish in Marko Lane."
John Mellis refers to the fact that the principle of accounts he explains (which
is a simple system of double entry) is "after the forme of Venice".
The
very interesting and able book described as The Merchants Mirrour, or directions
for the perfect ordering and keeping of his accounts formed by way of Debitor
and Creditor, after the (so termed) Italian manner, by Richard Dafforne, accountant,
published in 1635, contains many references to early books on the science of accountancy.
In a chapter in this book, headed "Opinion of Book-keeping's Antiquity,"
the author states, on the authority of another writer, that the form of book-keeping
referred to had then been in use in Italy about two hundred years, "but that
the same, or one in many parts very like this, was used in the time of Julius
Caesar, and in Rome long before." He gives quotations of Latin book-keeping
terms in use in ancient times, and refers to "ex Oratione Ciceronis pro Roscio
Comaedo"; and he adds:
"That
the one side of their booke was used for Debitor, the other for Creditor, is manifest
in a certain place, Naturalis Historiae Plinii, lib. 2, cap. 7, where hee, speaking
of Fortune, saith thus:
Huic Omnia Expensa.
Huic Omnia Feruntur accepta
et in tota Ratione mortalium sola
Utramque Paginam facit."
An
early Dutch writer appears to have suggested that double-entry book-keeping was
even in existence among the Greeks, pointing to scientific accountancy having
been invented in remote times.
There
were several editions of Richard Dafforne's book printed---the second edition
having been published in 1636, the third in 1656, and another was issued in 1684.
The book is a very complete treatise on scientific accountancy, it was beautifully
prepared and contains elaborate explanations; the numerous editions tend to prove
that the science was highly appreciated in the 17th century. From this time there
has been a continuous supply of literature on the subject, many of the authors
styling themselves accountants and teachers of the art, and thus proving that
the professional accountant was then known and employed.
Very
early in the 18th century, the services of an accountant practising in the city
of London were made use of in the course of an investigation into the transactions
of a director of the South Sea Company, who had been dealing in the company's
stock. During this investigation the accountant appears to have examined the books
of at least two firms of merchants. His report is described Observations made
upon examining the books of Sawbridge and Company, by Charles Snell, Writing Master
and Accountant in Foster Lane, London. The United States owes the concept of the
Certified Public Accountant designation to England which had coined the Chartered
Accountant designation in the 19th century.
Accountancy
qualifications and regulation
The
requirements for entry in the profession of accounting vary from country to country.
United
States of America
In
the United States, practising accountants include Certified Public Accountants
(CPAs), Certified Internal Auditors (CIAs) and Certified Management Accountants
(CMAs). The difference between these certifications is primarily the types of
services provided, although individuals may earn more than one certification.
A
CPA is licensed by the state of his/her residence to provide auditing services
to the public, although most CPA firms also offer accounting, tax, litigation
support, and other financial advisory services. The requirements for receiving
the CPA license varies from state to state, although the passage of the Uniform
Certified Public Accountant examination is required by all states. This examination
is designed and graded by the American Institute of Certified Public Accountants.
A
CIA is granted a certificate from the Institute of Internal Auditors (IIA), provided
that the candicate passed a rigorous examination of four parts. A CIA mostly provides
his/her services directly to their employers rather than the public.
A
CMA is granted a certificate from the Institute of Management Accountants (IMA),
provided that the candidate passed a rigorous examination of four parts and meet
the practical experience requirement from the IMA. A CMA mostly provides his/her
services directly to his/her employers rather than the public. A CMA can also
provide his services to the public, but to an extent much lesser than that of
a CPA.
British
Commonwealth
In
the United Kingdom, Canada, Australia and several other Commonwealth countries,
the equivalents of Certified Public Accountant (CPA) include Chartered Accountant
(CA - in UK, British Commonwealth and former British states), Chartered Certified
Accountant (ACCA - United Kingdom), International Accountant (AIA - United Kingdom),
Certified Public Accountant (CPA - Ireland and CPA - Hong Kong), Certified General
Accountant (CGA - Canada), and Certified Practising Accountant (CPA - Australia).
Please
refer to the latest statutory auditing rights of above accounting bodies in individual
jurisdictions and distinction from non-audit bodies for various consumers. In
UK, only 3 chartered accountants (England & Wales, Scottish and Irish)and
their equivalents (AIA and ACCA) are "Registered Auditors" under Companies
Act.
Canada
In
Canada, there are three recognized accounting bodies: the Canadian Institute of
Chartered Accountants (CA), the Certified General Accountants Association of Canada
(CGA), and the Society of Management Accountants of Canada (CMA). CA and CGA were
created by Acts of Parliament in 1902 and 1913 respectively and CMA was established
in 1920.
The
CA program focuses in public accounting and candidates must obtain auditing experience
from public accounting firms; the CGA program takes a general approach allowing
candidates to focus in their own financial career choices; the CMA program focuses
in management accounting. All three programs require a candidate to obtain a degree
and practical accounting experience before certification.
Auditing
and Public Accounting are regulated by the provinces. Historically, only CAs can
perform audits in Ontario. After the corporate accounting scandals including the
Enron fiasco, the provincial government of Ontario passed a new Public Accounting
Act allowing qualified CAs, CGAs and CMAs to audit. In Quebec, CAs still have
monopoly in the audit of public companies; In British Columbia and Prince Edward
Island, CAs and CGAs have equal status regarding public accounting and auditing;
In the rest of Canada, CAs, CGAs, and CMAs are considered equivalents pursuant
to provincial and territorial legislations.
A
recent attempt between the CAs and CMAs (in 2005) to join forces to form a new
unified body failed as the respective organisations could not reach consensus
on a number of important issues. This failure represented a factual indicator
of the continued and strong resentment of the infringement of other accounting
designations' influence and opinion upon others, as well as a possible measure
of the degree of pride that still remained within each of Canada's three recongised
accounting bodies. The recent measure (2004) of opening Ontario's public practice
to all three bodies may actually have exacerbated the competition between these
organisations, especially in light of the historic monopoly conferred to the CA
association.
Accounting
scholarship
Refer
Accounting scholarship for professorship.
The
"Big Four" accountancy firms
The
"Big Four auditors" are the largest multinational accountancy firms.
Economics,
Banking & Finance
