This article is about the business practice of accountancy. Accountant was also the name of an aircraft designed as a replacement for the Douglas_DC-3 Dakota. A prototype was made in or soon after 1945, but the design never reached full production.

Accountancy (British English) or accounting (American English) is the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated. Auditing, a related but separate discipline, is the process of an independent review of financial statements in order to express an opinion as to the fairness and adherence to generally accepted accounting principles.

Practitioners of accountancy are known as accountants. Officially licensed accountants are recognized by titles such as Chartered Accountant (UK) or Certified Public Accountant (US).

Accountancy attempts to create accurate financial reports that are useful to managers, regulators, and other stakeholders such as shareholders, creditors, or owners. The day-to-day record-keeping involved in this process is known as bookkeeping.

At the heart of modern accountancy is the double-entry book-keeping system. This system involves making at least two entries for every transaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits. This provides an easy way to check for errors. This system was first used in medieval Europe, although claims have been made that the system dates back to Ancient Greece.

According to critics of standard accounting practices, it has changed little since. Accounting reform measures of some kind have been taken in each generation to attempt to keep book-keeping relevant to capital assets or production capacity. However, these have not changed the basic principles, which are supposed to be independent of economics as such.



The art of accountancy on a scientific principle must certainly have been understood in Italy before 1495, when Luca Pacioli (1445 - 1517), also known as Friar Luca dal Borgo, published at Venice his treatise on book-keeping.

The first known English book on the science was published in London by John Gouge or Gough in 1543. It is described as A Profitable Treatyce called the Instrument or Boke to learn to knowe the good order of the kepyng of the famouse reconynge, called in Latin, Dare and Habere, and, in Englyshe, Debitor and Creditor.

A short book of instruction was also published in 1588 by John Mellis of Southwark, in which he says, "I am but the renuer and reviver of an ancient old copie printed here in London the 14 of August 1543: collected, published, made, and set forth by one Hugh Oldcastle, Scholemaster, who, as appeareth by his treatise, then taught Arithmetics, and this booke in Saint Ollaves parish in Marko Lane." John Mellis refers to the fact that the principle of accounts he explains (which is a simple system of double entry) is "after the forme of Venice".

The very interesting and able book described as The Merchants Mirrour, or directions for the perfect ordering and keeping of his accounts formed by way of Debitor and Creditor, after the (so termed) Italian manner, by Richard Dafforne, accountant, published in 1635, contains many references to early books on the science of accountancy. In a chapter in this book, headed "Opinion of Book-keeping's Antiquity," the author states, on the authority of another writer, that the form of book-keeping referred to had then been in use in Italy about two hundred years, "but that the same, or one in many parts very like this, was used in the time of Julius Caesar, and in Rome long before." He gives quotations of Latin book-keeping terms in use in ancient times, and refers to "ex Oratione Ciceronis pro Roscio Comaedo"; and he adds:

"That the one side of their booke was used for Debitor, the other for Creditor, is manifest in a certain place, Naturalis Historiae Plinii, lib. 2, cap. 7, where hee, speaking of Fortune, saith thus:
Huic Omnia Expensa.
Huic Omnia Feruntur accepta et in tota Ratione mortalium sola
Utramque Paginam facit."

An early Dutch writer appears to have suggested that double-entry book-keeping was even in existence among the Greeks, pointing to scientific accountancy having been invented in remote times.

There were several editions of Richard Dafforne's book printed---the second edition having been published in 1636, the third in 1656, and another was issued in 1684. The book is a very complete treatise on scientific accountancy, it was beautifully prepared and contains elaborate explanations; the numerous editions tend to prove that the science was highly appreciated in the 17th century. From this time there has been a continuous supply of literature on the subject, many of the authors styling themselves accountants and teachers of the art, and thus proving that the professional accountant was then known and employed.

Very early in the 18th century, the services of an accountant practising in the city of London were made use of in the course of an investigation into the transactions of a director of the South Sea Company, who had been dealing in the company's stock. During this investigation the accountant appears to have examined the books of at least two firms of merchants. His report is described Observations made upon examining the books of Sawbridge and Company, by Charles Snell, Writing Master and Accountant in Foster Lane, London. The United States owes the concept of the Certified Public Accountant designation to England which had coined the Chartered Accountant designation in the 19th century.

Accountancy qualifications and regulation

The requirements for entry in the profession of accounting vary from country to country.

United States of America

In the United States, practicing accountants include Certified Public Accountants (CPAs), Certified Internal Auditors (CIAs) and Certified Management Accountants (CMAs). The difference between these certifications is primarily the types of services provided, although individuals may earn more than one certification. Additionally, much accounting work is performed by uncertified individuals, who may be working under the supervision of a certified accountant.

A CPA is licensed by the state of his/her residence to provide auditing services to the public, although most CPA firms also offer accounting, tax, litigation support, and other financial advisory services. The requirements for receiving the CPA license varies from state to state, although the passage of the Uniform Certified Public Accountant examination is required by all states. This examination is designed and graded by the American Institute of Certified Public Accountants.

A CIA is granted a certificate from the Institute of Internal Auditors (IIA), provided that the candidate passed a rigorous examination of four parts. A CIA mostly provides his/her services directly to their employers rather than the public.

A CMA is granted a certificate from the Institute of Management Accountants (IMA), provided that the candidate passed a rigorous examination of four parts and meet the practical experience requirement from the IMA. A CMA mostly provides his/her services directly to his/her employers rather than the public. A CMA can also provide his services to the public, but to an extent much lesser than that of a CPA.

British Commonwealth

In the United Kingdom, Canada, Australia and several other Commonwealth countries, the equivalents of Certified Public Accountant (CPA) include Chartered Accountant (CA - in UK, British Commonwealth and former British states), Chartered Certified Accountant (ACCA - United Kingdom), International Accountant (AIA - United Kingdom), Certified Public Accountant (CPA - Ireland and CPA - Hong Kong), Certified General Accountant (CGA - Canada), and Certified Practising Accountant (CPA - Australia).

Please refer to the latest statutory auditing rights of above accounting bodies in individual jurisdictions and distinction from non-audit bodies for various consumers. In UK, only 3 chartered accountants (England & Wales, Scottish and Irish)and their equivalents (AIA and ACCA) are "Registered Auditors" under Companies Act.


In Canada, there are three recognized accounting bodies: the Canadian Institute of Chartered Accountants (CA), the Certified General Accountants Association of Canada (CGA), and the Society of Management Accountants of Canada (CMA). CA and CGA were created by Acts of Parliament in 1902 and 1913 respectively and CMA was established in 1920.

The CA program focuses in public accounting and candidates must obtain auditing experience from public accounting firms; the CGA program takes a general approach allowing candidates to focus in their own financial career choices; the CMA program focuses in management accounting. All three programs require a candidate to obtain a degree and practical accounting experience before certification.

Auditing and Public Accounting are regulated by the provinces. Historically, only CAs can perform audits in Ontario. After the corporate accounting scandals including the Enron fiasco, the provincial government of Ontario passed a new Public Accounting Act allowing qualified CAs, CGAs and CMAs to audit. In Quebec, CAs still have monopoly in the audit of public companies; In British Columbia and Prince Edward Island, CAs and CGAs have equal status regarding public accounting and auditing; In the rest of Canada, CAs, CGAs, and CMAs are considered equivalents pursuant to provincial and territorial legislations.

A recent attempt between the CAs and CMAs (in 2005) to join forces to form a new unified body failed as the respective organisations could not reach consensus on a number of important issues. This failure represented a factual indicator of the continued and strong resentment of the infringement of other accounting designations' influence and opinion upon others, as well as a possible measure of the degree of pride that still remained within each of Canada's three recongised accounting bodies. The recent measure (2004) of opening Ontario's public practice to all three bodies may actually have exacerbated the competition between these organisations, especially in light of the historic monopoly conferred to the CA association.

Accounting scholarship

Refer Accounting scholarship for professorship.

The "Big Four" accountancy firms

The "Big Four auditors" are the largest multinational accountancy firms.

The Big 4 accountancy firms can all trace their history back to firms in Europe, from which they have descended through a long line of mergers. PricewaterhouseCoopers and Deloitte & Touche were formed in England. Ernst & Young was founded by a Scottish accountant. KPMG is a merger product of two big Belgian and Dutch firms. However, due to the dominant size of the United States' economy, the offices of the Big 4 accountancy firms based in the United States have always generated more revenue than the rest of the Big 4 accountancy firms' offices in the world combined.

Before the Enron and other scandals, there were five large firms and were called the Big Five. Since Arthur Andersen's assurance practice split, with a plurality joining KPMG in the US and Deloitte & Touche outside of the US, Arthur Andersen left from the group. Previous to this there were also groupings referred to as the "Big Six" and the "Big Eight".

Enron turned out to be only the first of a series of Accounting scandals that enveloped the accounting industry in 2002.

This is likely to have far-reaching consequences for the U.S. accounting industry. Application of International Accounting Standards originating in International Accounting Standards Board headquartered in London and bearing more resemblance to UK than current US practices is often advocated by those who note the relative stability of the U.K. accounting system (which reformed itself after scandals in the late 1980s and early 1990s). Accounting reform of a far more comprehensive sort is advocated by those who see issues with capitalism or economics, and seek ecological or social accountability.

Topics in accounting

See list of accounting topics for complete listing.


Types of accountancy

Use of computers in accountancy

Accounting standards


Accounting standard-setting bodies

Auditing standards-setting bodies

See also

Finding related topics

External links


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