Double entry bookkeeping and

the role of accounting in society

References

Clarke, F. L. & G. W. Dean., Indecent Disclosure: Gilding

the Corporate Lily, Cambridge University Press, 2007
(especially Chapter 1)

Crosby, A. W., The Measure of Reality: Quantification and

Western Society, 1250-1600, Cambridge University Press, 1997
(especially Chapter 10)

Edwards, J. R., Dean, G. W., & F. L. Clarke., “Merchants’

accounts, performance assessment and decision making in
mercantilist Britain”, Accounting, Organisations and Society,
34 (2009) pp. 551-570
1. Genesis of modern accounting

(i) Luca Pacioli’s Summa. . . .

(ii) Pacioli an intellectual giant
(iii) Proportion and perspective -
(a) the essence of humanism
(b) the manifestation in art – Piero della Francesca,
Giotto, da Vinci and (say) Palladio
(iv) The accounting equation – perfect proportionality in
commercial affairs
A + E = Re + L + R
(v) Financial elements in transactions – assets, expenses,
revenues, liabilities, owners’ (residual) equity

(vi) Accounting equation mechanics - maintaining proportionality

– described by Crosby as the exemplar form of Renaissance
quantification

(vii) Facilitating growth of capitalism – (see - Byers, Weber;

Sombart; Chiapello; Edwards, Clarke and Dean)
2. Facilitating economic development

(i) Progressive commercialism and accounting

refinement – banking, cost accumulation, printing
and accounting education

(ii) Commerce through sole traders, partnerships and

a few Chartered companies – gradual capitalism,
investment growth

(iii) Industrial revolution – capital needs necessitate

organisational change
(iv) UK Companies Acts 1844, 1856 and 1901 – accounting reports and
audit formalised

(v) Separation of ownership and control - professional managers -

imperative that accounting discloses wealth & progress

(vi) Early exploiters – the robber barons

(vii) Consider modern instances: Enron, WorldCom, HIH, Allco, Centro,

Opes Prime, One.Tel

Plus ça change, c’est plus la même chose?

3. When accounting fails its function – with little regulation

(i) 1920s Royal Mail collapse

(ii) 1929 Stock market collapse

(iii) Roosevelt’s New Deal to put truth in securities – birth of

rules and sanctions SEC style regulatory mode – accounting
is a critical element of corporate governance

(iv) USA Pecora Commission and banks behaving badly –

bonuses and executive remuneration
Now consider: the Australia’s Productivity Commission’s 2009
enquiry in to executive remuneration enquiry

Plus ça change, c’est plus la même chose?

 `

4. Accounting in the modern setting

(i) Accounting as the language of business – major source of

financial information about company wealth and progress

(ii) When accounting and audit fail in their functions –

reconsider the recent and current disputes over accounting
and auditing

(iii) Accounting’s alleged role in the GFC – the case for telling it
how it is! – real Roosevelt’s drive for truth in securities