Caero, Kurt Von Raven M.
BS-Act | Phil Hist MW 1:00-2:30PM
HISTORY OF ACCOUNTING & TECHNOLOGY ITS MEANING, ROLE, DEVELOPMENT
& ITS PURPOSE
What is Accounting?
It is the recording of financial transactions plus storing, sorting, retrieving, summarizing,
and presenting the information in various reports and analyses.
Why is it important?
Because it is the language of business. Without it, the business world will be in full
chaos. One of the reasons why accounting is important because it makes the
management and financial matters easily and understandable to everyone.
What is its role?
Accounting communicates information that owners, managers, and investors
need to evaluate a companys financial performance.
Accountants typically work in one of two major fields: management accounting,
which helps you keep your business running, or financial accounting, which tells
you how well youre running it.
The purpose of management accounting is to supply relevant, accurate, timely
information to managers in a format that will aid them in making decisions.
The purpose of financial accounting is to provide information that helps with the
assessment of a firms financial history and current performance.
Financial accounting includes income statements, balance sheets, and
statements of cash flows.
How did it developed through-out time?
Accounting is thousands of years old; the earliest accounting records, which date back
more than 7,000 years, were found among the ruins of Ancient Mesopotamia. At the
time, people used accounting techniques still used today in determining crop surplus or
shortage.
During the Middle Ages, bartering was the primary form of money-change, but when
Europe changed to a monetary economy in the 13th Century, merchants began relying
on bookkeeping to keep record of multiple transactions.
Double-entry bookkeeping first emerged in Italy in the 14th century, where trading
ventures began to require more capital than a single individual was able to invest. Luca
Pacioli wrote his Summa dealing with record keeping and double-entry accounting,
one of the very first published books that became the accounting textbook for the
next 500 years.
Before 1981, the Philippines did not have a formal process for the development of
accounting practices. Accounting principles then were patterned from what were found
in actual business practices, mostly based on the accounting practices and principles
developed by the United States of America. It was only in the late 1981, when the
Philippine Institute of Certified Public Accountants (PICPA) organized the Accounting
Standards Council that formalized the standard setting process in the Philippines.
In 1996, the Philippine accounting standards had been changed and based on IASC
Accounting Standards. The International Accounting Standards Committee or IASC is an
independent private sector which establishes the uniformity of the accounting principles
in business organizations around the world.
From 1997 to 2000, the ASC developed accounting standards that were already based
on IAS. But it is in the year 2001 that sweeping revisions of Philippine accounting
standards are made in conformity with their counterpart in the IAS. The ASC set the year
2005 for the full adoption of the International Accounting standards in the Philippines.
However, even before the Philippines had made full adoption of the International
accounting Standards, improved and revised IAS and IFRS have been developed and
promulgated.
To monitor the revisions and redrafting of the IFRS and to ensure that improvements in
the IFRS are being made effective in the Philippines, the Financial Reporting Standards
Council (FRSC) was established in 2006. It succeeded the ASC in its main function of
establishing generally accepted accounting principles in the Philippines.
In November 2006, FRSC formed the Philippine Interpretations Committee (PIC) to assist
the former in establishing the financial reporting standards of the Philippines. Its main
function is to recognize, measure, present and disclose requirements dealing with
transactions and events that are important in the financial transactions. Other than the
FRSC, the Board of Accountancy closely monitors the implementation of the PFRS.
Accounting and Technology
Every accountant knows that accounting is the language of business. That language has
gone through many changes throughout the ages. But through all the changes,
technology has always played a part in making the accountants job just a little easier
from the abacus, to the first adding machines, calculators and then computers and
software. As our knowledge of technology increased so has the accountants ability to
analyze statistical values. Technology has enhanced the ability to interpret data
efficiently and effectively. Accountants now can interpret the language of business with
the right financial solutions with such ease that they have become a corporations most
trusted business advisor.
While the principles remain the same, the tools have drastically changed. The need to
efficiently manage massive amounts of complex financial data necessitated the
development of Enterprise Resource Planning (ERP) solutions. Through ERP solutions,
accountants armed themselves with management information that spanned an entire
organization, embracing finance, accounting, manufacturing, sales, service and
customer relationship management, and made themselves even more integral to the
success of their organizations.
Accounting today
Today, accountants can run Dynamics GP on premise or the cloud, and run reports on tablets
and smart phones. Information can come from several different systems using a Web interface.
As we continually improve systems, Accountants are free to leverage the knowledge and
advantages offered by technology. With increasing prevalence of mobile technology and faster
networks, people expect to have up-to-date information available wherever and whenever.
Businesses today, require information not two weeks after month-end but immediately;
performance must be available at the push of a button.
Accountants have to stay in touch with changing trends in business, technology, rules and
governance, said Dave Brougham, CMA. With the world getting smaller, economies growing
and technology providing instant access to information, the accounting profession has had to
evolve.
Accounting technology has eliminated the number cruncher sitting behind a desk and has
allowed the accountant to find new challenges with much more to offer then decades ago
when they relied on an abacus for a calculating tool.
Since the Dawn of Man, the accounting profession has been our trusted advisor and has
provided immeasurable value; the high standards the profession has set, and the immeasurable
value accountants bring to organizations. In our changing and complex world, accountants are
needed to translate the complexities of finance into summary numbers that the public can
understand.
No one can see into the future. However, it doesnt take a crystal ball to know that tomorrows
accountant will strive for the same goals as today: deliver the highest quality of service to their
organizations while minimizing work and maximizing profitability. Technology will continue to
be the key enabler, and we will continue to lead in providing the best tools to enhance their
ability to do what they do best, and not waste time and effort on inadequate technologies.
How Accounting Has Been Changed Over Time By Technology
Luca Pacioli (1494) the first to describe the systems of debits, credits, journals and ledgers.
Pacioli's writings are the basis of modern accounting. Summa de Arithmetica, Geometria,
Proportioni et Proportionalita ("Review of Arithmetic, Geometry, Ratio and Proportion"), a
twenty-seven page treatise on double-entry accounting, was one of the first items to be
published on the Gutenberg printing press. Leonardo da Vinci was one of Pacioli's students in
Milan.
The Modern Accountant
Before accounting computer programs:
Entries were done manually
Eistakes could mean hours of recalculation and "missing" money
Einding errors was tedious work
Stereotypical introverted/glasses-wearing/math nerd/pocket-protector image is
perpetuated
After accounting programs:
Eliminated calculators, paper ledgers, and pencils
Lowered the margin for error
Made mistakes easy to find and correct
Got the job done faster
2010 saw 1,216,900 employed accountants.
Expected job growth of 16% (average)
Everage annual wage at $61,690
1/5 work more than 40 hours a week
Computers have changed the nature of accounting, turning it into a fast-paced and dynamic
profession.
The beginning of the shift in accounting technology came in the form of simple spreadsheet
programs.
VisiCalc - 1978
Upgraded companies from manually calculated spreadsheets.
VisiCalc pioneered automatically updating cells
Quickbooks - 1998
Quickly dominated the market for day-to-day bookkeeping
Over 80% of bookkeeping using Quickbooks
4.5 million companies use QuickBooks
The most popular accounting program in the US
SaaS (software as a service) Accounting
Web-based
Secure hosting locations
Clients and accountants collaborate on the same information
For most companies, moving to the Cloud reduces IT expenses from between 30% and
70%
People skills have become just as important as keeping the numbers in check. Because of these
automated programs, accountants have more time to:
Interpret data
Give good financial advice
Suggest smart business decisions
Be more involved in their client's business
Now accountants are expected to recommend best-practices to management and suggest ways
to reduce costs while improving profit. The stereotypical "task-oriented" accountant is
outdated as is the the "shoe box full of receipts". The accountant has become a business
consultant rather than a mathematical tool.
