History of Accounting and interesting current trends in Accounting up till 2024

Learn Accounting

1 Jul 202305:47

Summary

TLDRThis video explores the rich history of accounting from its origins in ancient Mesopotamia and Egypt around 3000 BCE to the establishment of modern standards. Key milestones include Luca Pacioli's introduction of double-entry bookkeeping in 1494, the impact of the Industrial Revolution, the formation of professional bodies like the AICPA and the IASB, the response to crises like the Enron scandal with the Sarbanes-Oxley Act, and the emergence of IFRS. The narrative culminates with the establishment of the ISSB for sustainability standards and the ongoing integration of technology in accounting practices.

Takeaways

📘 The origins of accounting date back to 3000 BCE in ancient Mesopotamia and Egypt, where it began as bookkeeping to track and record economic transactions using clay tablets and papyrus scrolls.
📖 In 1494 CE, Luca Pacioli, an Italian mathematician, published the first book on Double Entry bookkeeping, which became a foundational tool in accounting, earning him the title 'Father of Accounting'.
🏭 The Industrial Revolution in the 1800s brought significant changes to the business landscape, leading to the growth of corporations and increased accounting needs due to advancements in technology and manufacturing processes.
📜 The American Association of Public Accountants was founded in 1887, which later evolved into the modern-day American Institute of Certified Public Accountants.
📊 The Great Depression in the 1930s necessitated standardized accounting practices, leading to the establishment of the Securities and Exchange Commission and the Committee on Accounting Procedure to set accounting standards.
🏛️ In 1949, the Institute of Chartered Accountants in England and Wales was formed, providing professional guidance and oversight for accountants in the United Kingdom.
📈 The Financial Accounting Standards Board (FASB) was established in 1973 in the United States to replace the Committee on Accounting Procedure and assume responsibility for setting accounting standards.
🌐 Also in 1973, the International Accounting Standards Committee was formed to develop International Accounting Standards, which later became known as International Financial Reporting Standards (IFRS).
🚨 The Enron Scandal in 2001 exposed major accounting irregularities and corporate fraud, prompting increased scrutiny and calls for stronger accounting regulations and ethics.
📋 In response to the Enron Scandal, the Sarbanes-Oxley Act was enacted in 2002 in the United States to enhance corporate governance, internal controls, and financial reporting transparency.
🌍 In 2005, the International Accounting Standards Board replaced the International Accounting Standards Committee and introduced IFRS as a globally accepted set of accounting standards.
💼 The global financial crisis of 2007 had significant implications, revealing weaknesses in the accounting treatment of financial instruments, particularly regarding the recognition of impairments and fair value measurements.
📝 In 2014, IFRS 9 was issued to address the deficiencies revealed by the 2007 financial crisis and to strengthen accounting and reporting standards.
🌱 The rise in the need for companies to disclose information about their climate and sustainability-related activities led to the formation of the International Sustainability Standards Board (ISSB) in 2021.
📢 On June 26, 2023, the ISSB issued IFRS S1 for general sustainability-related disclosures and IFRS S2 for climate-related disclosures, set to become effective from 2024 onwards.
🔧 Accounting continues to evolve with technological advancements such as artificial intelligence, automation, and blockchain in financial reporting and auditing processes.