ACCOUNTANCY AND ACCOUNTANTS. Originally, accountancy was the same thing as account-keeping or bookkeep ing, and "accountant" and "bookkeeper" were interchangeable terms, but an increasing recognition of the importance of account ing in the development of modern business methods has led here, as elsewhere, to the division of labour. In the early days of navigation it was doubtless reasonable to assume that the man who navigated a canoe was in all probability also the man who designed and constructed it : to-day, the distinctions between the engineer officer, the naval architect and the shipbuilder are clearly defined and well recognized. Much the same process of evolution has been going on in the accountancy world, and although the distinction may not yet be universally accepted, it may be stated that, whereas the bookkeeper is the person who keeps the books or accounting
of an undertaking, the accountant is rather the person who decides how such records ought to be kept. The term accountancy is now generally applied to all the work that falls to the lot of the accountant, although under modern conditions (as is shown later on) that work is now exceedingly
often extends far beyond the region of accounts.
Very little is known of the origin of account ancy as a profession. In the modern acceptation of the word, however, a professional man is one who places his skill and learn ing at the disposal of all and sundry for a reward, as distinct from one who serves a single employer. Accordingly, while there are several references in mediaeval and even classic times to stewards and auditors, these references do not throw much light upon the origin of professional accountancy, as the persons re ferred to were manifestly in the whole-time employment of a single individual or body. The first association of accountants of which there is any record is the Collegio dei Raxonati, which was founded in Venice in 1581, but it is by no means certain that the members of this body were professional or public accountants, or whether they were not rather employees of public bodies. At Milan, however, in 1742, the Government established a scale of charges for accountants, so it may be assumed that then, if not earlier, professional accountancy (as here defined) actually existed in that city. It has been said that the first Scottish professional accountant was one George Watson, born in Edinburgh in 1645; but whether he was really able to carry on a practice as a pro fessional accountant in addition to his "large private banking business" seems somewhat doubtful. Holden's Triennial Directory of London, Westminster and Southwark was first published in 1799, and contains the names of II accountants. The British Universal Directory, published in 179o, had given the names of five accountants only. It seems clear, therefore, that there was very little professional accountancy in London before the 19th century, and in the issue of Holden for 1822 the number of prac tising accountants had only risen to 73. Indeed, little progress was made by professional accountancy in Great Britain, or else where, until the middle of the 19th century, when (so far at least as Great Britain is concerned) it received a great impetus from the growth of limited liability companies, and a little later from the Bankruptcy Act, 1869, which to a very large extent with drew the administration of insolvent estates from the hands of public officials. The advent of the limited liability company led to business operations being undertaken upon a scale which had formerly not been thought of. The proper control of these large scale operations naturally called for better accounting systems than had formerly been deemed adequate.
The first step in the direction of organizing professional accountancy in Great Britain was taken when the Society of Accountants in Edinburgh was incorporated by Royal Charter in 1854. Similar societies in Glasgow and Aberdeen were also incorporated by Royal Charter in 1855 and 1867 respectively. Each of these bodies, however, had assigned to it definite geographical limitations, although the individual members of all three may, and do, practise in various parts of the world. The Institute of Accountants was formed in London in 187o, was in corporated by Royal Charter in 188o as The Institute of Char tered Accountants in England and Wales, provision at the same time being made for all accountants then practising in England or Wales to become members. The Society of Incorporated Ac countants and Auditors was registered under the Companies Act in 1885. (For particulars of these and other bodies see ACCOUNT ANTS' SOCIETIES.) The Institute of Chartered Accountants in Ireland was incorporated in 1888.
But little development has as yet taken place on the continent of Europe as regards professional accountancy, but professional bodies have existed in Holland, Sweden and Belgium since 1895, 1899 and 1903 respectively. Most British colonies have one or more professional bodies of their own.
It has been stated that originally accountants were bookkeepers. Hence, naturally, as soon as the necessity or desira bility of checking, criticizing or auditing the records of account ing parties was appreciated, skilled accountants whose probity could be relied upon would naturally be selected for the work. In the first instance, accordingly, professional accountants were in the main auditors of other people's accounts. Where the auditing was not a whole-time job there were obvious economies in secur ing the services of a professional accountant, while the fact that he was a professional accountant ensured his independence. As, however, the centre of gravity tended to shift in Great Britain from agriculture to industry, the professional accountant found thrust upon him an ever-enlarging sphere of activities over and above his primary function as an expert in accounts. Thus, pro fessional accountants are frequently called upon to design sys tems of accounting (in recent times increasingly mechanized) for new or growing concerns ; to assist in the establishment of an adequate system of cost accounts ; to prepare business statistics; to investigate accounts in connection with partnership changes, the amalgamation of business interests, or the flotation of companies formed to acquire established businesses ; to deal with compensa tion cases on the compulsory purchase of businesses by railway companies or public bodies; to give expert evidence on matters relating to accounts ; to prepare accounts for the use of counsel ; and to act as arbitrators in differences relating to matters of ac counts or finance. Besides acting as directors of companies, deal ing mainly with financial affairs, they also very frequently act as secretaries of companies whose operations are not upon a suf ficiently large scale to justify a whole-time appointment, and the accounts of executors and trustees under wills and settlements are often kept by professional accountants. In addition, professional accountants act as trustees in bankruptcy ; trustees under deeds of arrangement ; liquidators of companies; receivers for debenture holders ; and managers of businesses where a receiver is in pos session of the assets.
Anyone desirous of be coming an English chartered accountant must first serve under articles with a practising member for five years, or three years in the case of graduates. A premium of from i5o to 500 guineas is usually required. Before signing articles, the pupil must have passed the preliminary examination of the Institute, or some accepted equivalent of matriculation standard. After half the period of articles has expired, the pupil may submit himself for his intermediate examination in general commercial knowledge, bookkeeping and accounts and auditing; on the termination of his articles, before admission as a member, he must pass his final examination in advanced bookkeeping and accountancy (includ ing costing and taxation) ; auditing; partnership and executor ship law and accounts (including the rights and duties of execu tors, trustees and receivers) ; bankruptcy and company law; the principles of mercantile law and the law of arbitrations and awards; and either (a) economics, (b) banking, currency and foreign exchanges or (c) actuarial science. The regulations of the Society of Incorporated Accountants and Auditors similarly pro vide for articles of clerkship with a practising incorporated ac countant, and the society's examinations must be passed. For candidates who for any reason are unable to enter into articles, the society provides an alternative method of qualifying by nine years' approved experience in lieu of five years' articles. The nine years' experience must be gained in the office of a practising incorporated or chartered accountant, or—subject to certain conditions—of a municipal or county treasurer or accountant.
The regulations of Scottish chartered accountants as to admis sion, etc., are upon similar lines, there being a general examining board which deals with candidates articled to members of all three bodies. In Scotland as a rule no premium is charged, but no salary is paid during the period of articles. The Institute of Chartered Accountants in Ireland also has similar regulations.
In New Zealand and the Transvaal there are statutory registers of public accountants, and only those upon the register are permitted to undertake certain specified accountancy duties. The registration of professional account ants has been mooted at various times from 1889 onwards, but opinions are so divided as to its desirability that statutory regis tration in Great Britain seems as far off as ever.
Brown, A History of Accounting and Bibliography.-Richard Brown, A History of Accounting and Accounts (19o5) ; A. H. Woolf, A Short History of Accountants and Accounts (1912) ; L. R. Dicksee, The Fundamentals of Accountancy (1921) ; The Accountant, vol. i. (1877) ; The Accountants' Journal, vol. i. (1883) ; The Accountants' Magazine, vol. i. (1897) ; Incorpo rated Accountants' Journal, vol. i. (1889). (L. R. D.) United States.—Accountancy, in the United States, is among the newer professions. In the short time of its existence it has not acquired the traditions which characterize such of the older professions as law, medicine and theology. The first formal recog nition was given to accountancy in the laws of New York State in April 1896. Since that time all of the States have officially recognized the public accountant by creating the title, certified public accountant (C.P.A.), such title to be granted or awarded to applicants who satisfy the requirements regarding character, education and professional skill of the State in which recognition is sought. While there is still a lack of uniformity among the several States in the matter of requirements, there is a constant tendency toward greater strictness as laws are modified and new legislation enacted.
As indicative of the requirements imposed by State laws, the following summary sets forth the standard maintained by New York State : (a) an applicant for the certificate of certified pub lic accountant must submit evidence that he is over 21 years of age and of good moral character; (b) he must have completed at least four years of high-school and since January 1, 1938, must also have completed a course in a college of accountancy reg istered by the department of education; (c) he must submit evi dence of five years' experience in accountancy, at least two of which must have been in the office of a certified public accountant and of no less grade than that of junior accountant ; such two years' accounting experience must have been in the office of a certified public accountant in this State or in the office of one residing in another State holding a certificate from such State granted on no lower requirement than that of this State, and he must submit evidence of three years' experience attained prior to his admission to the C.P.A. examination; (d) he must take pro fessional examinations conducted by the State department of education in the following subjects theory of accounts, auditing, practical accounting and commercial law. The passing grade in each subject is 75%. A candidate who fails in one subject only may take a subsequent examination in that subject to be given within two years from the date of the examination at which he passed the other three subjects.
In the United States, as in other countries, a high standard of professional ethics is fostered. The accountant acting as cus todian of his client's interests must safeguard them in every legitimate way. His service to the client carries with it a strict responsibility to the client which cannot be divided or escaped. Confidences of the client must be held inviolable. The acceptance of contingent fees is frowned upon by members of the profession. As an obligation to the client, the accountant must keep himself informed on current developments in the profession.
Education for accountancy, in the United States, was formally provided for as early as 1881. In that year the Wharton School of Finance and Economy of the University of Pennsylvania was established. In 1898 the University of Chicago opened its College of Commerce and Politics (later known as the School of Com merce and Administration), and the University of California its College of Commerce. Two years later there were established at New York university the School of Commerce, Accounts and Finance; at Dartmouth college the Amos Tuck School of Admin istration and Finance; and at the University of Vermont, a de partment of economics and commerce. In the first quarter of the new century business education developed throughout the entire country so that at the opening of the year 1925 about 183 Ameri can colleges and universities provided instruction in business. In practically all of these schools, education for accountancy has dominated the business curricula.
See T. A. Budd, The Interpretation of Accounts (1927) ; R. B. Kester, Accounting Theory and Practice (1933) and Sanders, Hatfield and Moore, Statement of Accounting Principles (1938).
(J. T. MA. ; X.)
