‘A PERSON should not go to sleep at night until the debits equal the credits’, said Luca Pacioli. Pacioli wrote a book, Summa de Arithmetica, Geometria, Proportioni et Proportionalita, which means ‘Everything about Arithmetic, Geometry and Proportion’, which was published from Venice.
This is the very first record on double-entry book-keeping that laid the foundation for future works on business accounting. The author of the book was an Italian mathematician called Luca Bartolomeo de Pacioli, who described the use of journals and ledgers. He warned that one should not sleep at night until the debits equalled the credits.
On November 10, 1494, this first book on double-entry bookkeeping was published. We mark International Accounting Day on November 10, when the book was published in 1494, by paying tribute to Pacioli, the father of modern accounting, to reflect on what it means to be accountants and to celebrate all accountants.
We honour all those who have chosen the profession of accounting that is meant to help businesses and individuals to balance the books and keep their tax affairs in order. However, modern-day accountants must do much more than reconciliation and tax calculations. Clients now expect their accountant to help them to achieve their goals in every step in life.
The first official celebration of Accounting Day was held in 1972. The San Diego chapter of the California Society of Certified Public Accountants is reported to have organised the event to encourage young people to take up accounting as a career. Many others, however, believe that the Institute of Management Accountants first organised the event.
The day, which recognises accountants, began to be celebrated to honour Pacioli, born in 1445 in Tuscany, Italy. Pacioli’s book was the first great general work on mathematics that was widely read and used by mathematicians in the 16th century. The book was also the first to include information on double-entry bookkeeping, which involves debit and credit entries for transactions, known as ‘the method of Venice’ that time.
Accounting can be defined as ‘a system of recording and summarising business and financial transactions.’ The first accountants worked in temples in ancient Mesopotamia where they kept track of taxes paid to religious authorities. They invented writing in the process as a way to record receipts. Ancient tax records have been found on clay tablets there and also in Egypt.
The importance of accounting expanded in the 13th century when Europe moved towards a monetary economy. This was followed by Pacioli’s book. The first professional organisations for accountants started in Scotland in 1854: the Edinburgh Society of Accountants and the Glasgow Institute of Accountants and Actuaries. The profession continued to grow and the American Institute of Certified Public Accountants started in 1887. Today, accountants who pass certification examinations may have titles such as cost and management accountant, chartered accountant, certified public accountant, etc.
Since its inception in 1972, the annual event has been celebrated globally to honour accountants for managing finances, and devising and implementing economic, business and financial strategies, thereby, making organisations healthy.
It is also in recognition of key role of the accountants in enhancing public trust through high-quality financial reporting. The day is a good reminder to celebrate a century-old profession that is vital to business success. Let us know about reconciling debit-credit in daily life for sound sleep at night.
Md Touhidul Alam Khan is deputy managing director and chief business officer of Prime Bank Limited.
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