0 Items in Your Cart
Vault Guides are THE source for insider insight on career information and employer reviews. Shop Vault Guides
Industries & Professions /
Accounting is nearly as old as civilization itself. Even before coins were introduced in about 600 B.C., farmers kept track of their livestock and other valuable possessions in order to have an accurate financial record. This came in handy when it was time to plan how many sheep to keep to ensure continued offspring, and how many could be traded. This was the first, most basic, type of accounting.
Financial records have been found in the ruins of ancient Greek and Roman towns showing that accountants and bookkeepers were at work balancing the financial records of businesses. Once currency in the form of paper money came into play—about 600 A.D. in China but not until the 1600s in Europe—more advanced accounting skills were needed to keep track of where the money went.
In 1494, Luca Pacioli, an Italian mathematician, wrote a treatise on accounting and bookkeeping that established the foundation for modern bookkeeping methods. One of these was the double-entry method of bookkeeping, in which each transaction is recorded twice in a financial ledger, once to the debit of one account and once to the credit of another. This method allowed businesses to keep track of the movement of their funds.
As property investment, taxation, and tax write-offs made running a business more complex, there was a growing need for flexible, comprehensive bookkeeping methods. In the 18th century, the Industrial Revolution gave birth to large businesses that were involved in a vast array of production and manufacturing services. The heads of these companies needed accurate financial records to determine the cost and effectiveness of doing business. This set the stage for the establishment of the first professional accounting firms in London by William Deloitte (1845), Samuel Price and Edwin Waterhouse (1849), William Cooper (1854), William Peat (1867), and George Touche (1899).
The U.S. accounting profession dates back to the 1880s, when English and Scottish investors began buying stock in American companies. Needing experts to keep an eye on their investments, they sent over accountants. Many of these accountants stayed in the United States and started their own accounting businesses.
Federal legislation, including the introduction of the income tax in 1913 and the excess profits tax in 1917, helped bring about an accounting boom that has made the profession one of the largest in business today.
In order to establish standardization and identification of qualified public accountants, the certified public accountant (CPA) examination was developed in 1917. The Uniform CPA exam measures professional competence and earning the CPA certificate is evidence of professional qualification.
Until the 1980s, eight large, conservative, and stable firms known as the Big Eight dominated the industry. Accounting jobs tended to be predictable and dependable. But that changed as accounting firms became "lean and mean," consolidating and diversifying to become more competitive. Some, like Arthur Andersen, added new services such as management and computer consulting. Others bought out rival companies. The Big Eight was reduced to the Big Six as companies were hit by the recession and the savings and loan crisis.
Accounting firms were blamed as savings and loan institutions went bankrupt and were sued for faulty audits. Facing costly lawsuits while in the midst of a recession, firms began to cut jobs in an effort to lessen costs. Salaries were reduced, training programs cut, and the days of guaranteed employment, promotion, and job security came to an end.
In 1998, the Big Six became the Big Five with the merger of two of the industry's powerhouses. To better compete in the global marketplace, Price Waterhouse and Coopers & Lybrand joined to form PricewaterhouseCoopers. In 2002, the Big Five became the Big Four as a result of Arthur Andersen's indictment for obstruction of justice for its role in the bankruptcy of Enron Corporation, which defrauded investors and energy consumers on a massive scale. The company was convicted, and although the conviction was overturned in 2005, Arthur Andersen ceased nearly all business operations.
In response to this financial crisis, the federal government passed the Sarbanes-Oxley Act in 2002. This law requires higher levels of financial accounting and disclosure from all publicly held companies. In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which increases regulation of the financial industry and offered improved protections to consumers. It also passed the Patient Protection and Affordable Care Act, which increased the need for professionals who specialize in health-care accounting.
Today, the four largest public accounting firms are Deloitte, EY, KPMG, and PricewaterhouseCoopers. In addition to opportunities in public accounting, there is strong demand for accountants in corporations, government agencies, and nonprofit organizations. Advances in technology (computers, Internet, mobile devices, cloud computing)—have automated many basic accounting tasks, and accountants are now being tasked with more demanding duties such as management consulting, mergers and acquisitions, litigation, and business development.
As the economy wavers and Social Security becomes increasingly less of...
The Vault Guide to Top Internships rates 118 internship...
In the United States alone, there are more than 270 million Internet...
It takes more than a solid résumé and cover letter to make...
Opportunity is definitely knocking for information technology...
Practice Perspectives: Vault’s Guide to Legal Practice Areas is the...
Case interviews are a crucial part of the hiring process in the...
The Vault Guides to Jobs series provides essential...
The Vault Guide to Finance Interviews, Ninth Edition is a must-have...
December 7, 2016
December 6, 2016
December 5, 2016
December 2, 2016
November 30, 2016