Reinventing The Accounting Profession

Noble beginning

Double entry accounting was first documented in book form in 1494 by Luca Pacioli, a Franciscan monk, contemporary & actual buddy of Leonardo Da Vinci. Giovanni di Bicci de Medici introduced double entry accounting to the Medici family in the 14th century. The use of double entry accounting in the records of the office of the Treasurer of the Medici family has been confirmed as early as 1440.  But Antonio Manucci’s use of double entry records predates the most recent of those by 150 years,

Government treasurer’s offices are rarelly considered creative or innovative, as you’ve all learned by now if you are old enough to read this blog. If your mother is reading this to you, just trust me on this. Governments originate nothing. They copy of things they’ve seen elsewhere. Which is a lead pipe cinch double entry accounting was in widespread use by the time the treasurer’s office heard about it.

So it is safe to assume, if double entry accounting was in widespread use in Italy in the middle of the 15th century, the 13th century date documented by the Manucci family is a reasonably safe bet. It was probably in use well before that.

800 years

The point of all that laboring is to make the further point that the accounting profession is in dire need of updating. We have been using the same basic structure and financial reports for 8 centuries … That’s 800 years … almost a millennium. Actual financial reports have been found in these ancient records. That is a very long time, especially when you consider everything else in the world from iphones to Chevrolets are updated annually, or even semi-annually. Magazines are updated monthly, and blogs, but not this one, are updated daily. In a mere decade the products barely resemble each other. But accounting is still plodding along using the same old stuff.

Applause please

It was a remarkable invention, allowing us to measure a business’ progress or regression over time or at a moment in time.The former came to be known as the income statement and the latter came to be known as the balance sheet. Some have said the industrial revolution rested on the back of double entry accounting. It was at least one of the legs on the stool because it made it possible to manage a shop’s progress and health even if you couldn’t see it. But, silly us, here we are talking about this as though it were historical.

One more thing

At one time accounting was an art. But the technocrats who failed quantum physics have taken it over and given everyone the impression it involves higher mathematics. But in actual fact, all you ever needed to know then, which is less the case now, was how to add and subtract, which you could do on your fingers. And many did. Then came calculators which were as large as harvestors and hopped around on tables and made as much mechanical crunching, crashing noises as any actual harvestor. (I have witnessed them and they are truly terrifying.) At that point you didn’t even need a passing acquaintance with your fingers. Today you don’t even need to know how to hold a pencil or recognize paper. Lacking creative or innovative abilities, these lower technocrats have been happily copying (much like the treasurer’s office) what came before them. Before long, 800 years have passed and this is where we are today.  It is as though we’ve digitized the Roman Legions without accounting for modern military appurtenances.

Negative Progress?

Accounting has progressed backwards since it was originally invented prior to the 13th century from a respected art (remember Pacioli was buddies with Leonardo Da Vinci) to a little considered backwash of lower technocrats. Most people consider the accounting department analogous to the swamp.  If you want to drive people away in a bar, tell them you’re an accountant. Serial killers attract more and friendlier people. A further indication of the profession’s standing in the world is this, most accounting graduates want to be a tax person instead of an accountant. (Holy cow. How is that possible?) Tax is related to accounting like a carrot is related to a national forest. But to them, it’s the epitome.

Accounting, all by itself, should be a respected and valued profession. Accountants should be as popular as guys doing magic tricks. Like them, accountants should hear exclamations like, “I can’t believe you did that.” You certainly have the tools to do wonderful and magical things for businesses.

To be continued.  We’ll come back to this subject from time to time.

Best Advice

The lack of progression in the the accounting profession is of course an unsettling circumstance for some of us accountants, who have, at least myself, become determined to reinvent the accounting profession to better serve the needs of a battered clientele during the troubled and turbulent 21st century.

Here is my best advice … avoid accountants and accounting firms that develop relationships as a marketing tool. These are the guys who work the room like a politician at every event, who want to play golf with you. They’ll buy you drinks, wash your dog and mow your lawn. The problem is, while they’re patting you on the back, they may be picking your pocket.

Try to go with one who is a value or results based marketer.

It’s a sad fact of life, but we all market our services. Most of us, it’s sad to say, by developing relationships.

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