ACCOUNTING IN PRE-PACIOLI ERA: GENESIS AND IMPACT ON
THE DEVELOPMENT OF ACCOUNTING PROFESSION IN NIGERIA
BY
ABUBAKAR SALISU
Mobile No.: +234-803-3860665
e-mail: smylisu@yahoo.co.uk
Lecturer, Department of Accounting, Institute of
Administration, Ahmadu Bello University, P. M. B. 1013, Zaria – Nigeria.
Abstract
This
study traces the genesis of accounting in the pre-Pacioli era and evaluates its
impact on the development of accounting profession and nation building. The
study aims at increasing the knowledge of accounting history so that its origin
could be widely understood and appreciated by all and sundry; so that the
development of the profession in Nigeria could be fostered. The study employed
expository, descriptive and survey research methods in order to obtain the
opinions of accounting theorists and practicians relative to the history of
accounting and its impact on the development of accounting profession in
Nigeria. Data were collected via accounting literatures, archives and the use
of questionnaires. The hypothesis formulated for this study is tested using
Chi-Square. The findings revealed that accounting has a long history prior to
Luca Pacioli era and the post-Pacioli history of accounting could only be
appreciated and adequately comprehended when the genesis is known. Also, the
archeological remains discovered on accounting have assisted the development of
the discipline and its continued evolvement towards nation building in Nigeria.
It is recommended, amongst others, that accountants in practice and the
academia should attach significant level of importance to the history of
accounting, which will allow them know the past of the discipline, understand
its present status and assist them in making valuation suggestions and
additions to its continued development.
Keywords:
Accounting history, Pre-Pacioli era, Luka Pacioli, Accounting literature, Accounting
system, Accounting profession.
Introduction
There are no household names credited
with the innovation of accounting because virtually no names survive before the
Italian Renaissance (Have, 1976; Giroux, 1999). The role of accounting in the
ancient pre-Pacioli era is coming into clearer focus with new archaeological
discoveries and innovative interpretations of the artifacts. Although accounting
was better appreciated as a discipline during the Pacioli era and the
Renaissance period, its ancient history provided the bases for its evolvement
and the general development of human civilization. It took archaeologists to
dig up the early history and scholars from many fields to demonstrate the
importance of accounting to so many aspects of economics and culture (Previts,
Parker and Coffman, 1990b). It is now evident that writing developed
over 5,000 years and archeological findings revealed that writing was in fact
developed by accountants.
The
discovery of primitive trade routes that dated 9500BC suggests that global
merchandising predates the birth of civilization. Also, tokens found at the
earliest fortified cities, revealed evidences of the existence of accounting
around that time. Accountants participated in the development of cities, trade,
and the concepts of wealth and numbers (Parker, 1977). Accountants invented
writing, participated in the development of money and banking, invented double
entry bookkeeping that fueled the Italian Renaissance, saved many Industrial
Revolution inventors and entrepreneurs from bankruptcy, helped develop the
confidence in capital markets necessary for western capitalism, and are central
to the information revolution that is transforming the global economy.
Accounting
profession in Nigeria received a formal reckoning in the mid 1960s (Chibuike,
2008). During that period, Nigerian accountants, mostly trained by professional
accounting bodies in the United Kingdom, came together and formed a
professional accounting body that is responsible of training accountants in
Nigeria and fostering the development of the profession in the country.
Presently, however, a number of professional accounting bodies carry out such
functions concurrently. These bodies pay much attention to the teaching of
technical and practical aspects of accounting thereby attaching little impetus
to the historical background of the profession especially the period prior to
the year the first publication of accounting nature was made in 1494AD by Luca
Pacioli. Accounting underwent some transformation and revolutionary stages
prior to that publication, which contributed immensely to the development of
the profession. To what extent is the knowledge of accounting history necessary
for the development of the profession? What relevance does the study of
accounting history, especially pre-Pacioli era, have on the development of the
profession in Nigeria? These are the questions that this study intends to find
solution to.
The main objective of this study is to
find out the perceptions of accounting theoreticians, accountants in practice
and the academia on the history of accounting during the pre-Pacioli era and
how that history could enhance the development of the profession in Nigeria.
The study also aims at increasing the knowledge of accounting history so that
its origin could be widely understood and appreciated by all and sundry; so
that the development of the profession in Nigeria could be fostered.
Research Hypotheses
The following hypothesis is formulated
and addressed in this study:
H0:
The pre-Pacioli history of accounting has no significant impact on the
development of accounting profession in Nigeria.
Ha:
The pre-Pacioli history of accounting significantly impact on the development
of accounting profession in Nigeria.
Review of Relevant and Related
Literature
The word history
connotes
inquiry and the knowledge acquired by investigation (Appleby, Hunt and Jacob,
1995; Lister, 1983). History is the study of the human past and a field of
research which uses a narrative to examine and analyze the sequence of events,
and it sometimes attempts to investigate objectively the patterns of causes and
effects that determine events (Burke, 1992). Where events of the past occurred prior
to written record, they are referred to as and considered prehistory. History provides
perspective on the problems of the present so that improvements could be
effected to better the future.
The field of accounting history has been
receiving the attention of researchers particularly the accountants. This is
due to the facts and evidences discovered by archeologists the conclusions
drawn from the remains, artifacts and tablets discovered in the process and
relating to accounting. It is interesting to know that conclusion of
archeologists in respect of the genesis of accounting is that accounting is as
old as civilization (Goldberg, 1974; Hopwood and Johnson, 1986; Hopwood 1987).
The writing used in documentation and communication was said to be invented by
the accountants. This confirmed the old existence of the discipline and its
relevance in driving human civilization.
Pre-Pacioli History of Accounting
In the words of Mattessich (1989),
Funnell (1996), and Chibuike (2008), within the last 10,000 years civilization
began with the development of cities and agriculture. According to Mattessich
(1989), Jericho, the oldest city yet discovered, started as a trade center for
salt. Although no complete accounting was evidenced there, the artifacts
revealed remains of a temple
priest taking inventory of the village livestock using tokens to keep track of
the herd size and count the grain harvest. Another ancient city in Turkey called Catal
Huyuk was also a trade center for obsidian. The citizens used available
materials plus limited trade goods to make a variety of products, which
increased and improved over time. With pottery, textiles, and agricultural
surpluses, humans discovered wealth (Flesher and Samson, 1990; Butchell et al,
1980; Brown, 1905). Wealth was equated with money and the ability to exchange
goods. Precious metals and various trade goods became the equivalent of money,
but the coinage of silver and gold standardized the concept of money and
enhanced trade. This also means that accounting pre-dates the concept of money.
Thus at about 9500BC, evidence of primitive trade
routes, as discovered by archeologists, suggest that global merchandising
predates the birth of civilization (Funnell, 1996). Also, tokens found at the
earliest fortified cities at about 8000BC revealed the evidence of accounting.
Scribes became accountants during these periods and in the process invented the
abstract of numbers and writing (Mattessich, 1998). From the
simple tokens, complex tokens evolved in Sumeria about 3700 BC. Complex tokens
were covered with lines, notches, and other markings and represented a more
sophisticated accounting system (Hopwood, 1987; Have, 1976). According to
Pervits and Bricker (1994), these markings can be explained as abstract
representations of both objects of wealth (possibly finished goods such as
processed foods, textiles, or luxury goods such as perfume) and the development
of numbers. Tokens could be impressed on clay tablets and a single tablet could
have marking of several tablets (Lister, 1983; Have, 1976). Tablets could
represent summary document of inventories or transactions and contain
additional explanatory markings. With stylized signs all information could be
recorded directly on the tablets, eliminating the need for tokens. From this
beginning, writing developed (invented by scribes serving as accountants). The
earliest texts were pictographs on tablets written with a stylus (Goldberg,
1974). The standardized script was called Cuneiform (Lation for wedge) because
of its shape, invented between 3500-3100 BC, perhaps at Uruk. Soon, historical
events were recorded and a written literature born (Loft, 1988).
The
late Stone Age became over at around 3300BC. Thereafter, Copper tools were used
to construct the great stone temples and palaces (Bisaschi, 2003). City states began
to be forming, based on military might. Crafts were expanding; merchants traded
wares on an ever-increasing basis to foreign lands. The archeologists found
that in Sumeria of 3,000 BC, a scribe was uncovered (the penetrating gaze, the
intelligent eyes, the love handles and pot belly) and concluded that this may
be the first accountant (Bisman, 2009). Among
the scribes functions were scribbling figures on a wet clay tablet, developing
a better scheme to record the ruler's wealth, the tribute of grain and
livestock and gold, foodstocks entering and leaving the stores, gold delivered
to the artisans to craft jewelry.
Five
thousand years before the appearance of double entry, the Assyrian,
Chaldaean-Babylonian and Sumerian civilizations were flourishing in the
Mesopotamian Valley, producing some of the oldest known records of commerce
(Funnell, 2009; Sombart, 1979; Wells, 1976). In this area between the Tigris
and Euphrates Rivers, now mostly within the borders of Iraq, periodic floodings
made the valley an especially rich area for agriculture. During this era (which
lasted until 500 B.C.), Sumeria was a theocracy whose rulers held most land and
animals in trust for their gods, giving impetus to their record-keeping
efforts. Moreover, the legal codes that evolved penalized the failure to
memorialize transactions. The renowned Code of Hammurabi, handed down during
the first dynasty of Babylonia (2285 - 2242 B.C.), for example, required that
an agent selling goods for a merchant give the merchant a price quotation under
seal or face invalidation of a questioned agreement (Previts, Parker and
Coffman, 1990a). Thus it is believed that most transactions were
recorded and subscribed by the parties during this period.
Egyptian
bookkeepers associated with each storehouse kept meticulous records, which were
checked by an elaborate internal verification system (Previts and Parker, 1994).
These early accountants had good reason to be honest and accurate, because
irregularities disclosed by royal audits were punishable by fine, mutilation or
death. Although such records were important, ancient Egyptian accounting never
progressed beyond simple list-making in its thousands of years of existence
(Gaijsbeek, 1914; Lemarchand, 1999). Perhaps more than any other factors,
illiteracy and the lack of coined money appear to have stymied its development.
Double Entry Bookkeeping, Luca
Pacioli and the Relevance of Accounting History
According to Peragallo (1938), at about
1200AD Italian merchants use double entry
accounting information, to extend trade throughout much of the known world.
Evidence suggests that double entry bookkeeping developed in the
Genoa-Venice-Florence area in the 1200-1350 period, part of a vast commercial
revolution. Accounting records of Rinierie Fini and Brothers (from 1296-1305)
and Farolfi and Company (1299-1300) indicate complete double entry accounting
(Keister, 1963; Lemarchand, 1994). Each accounting entry had a separate debit
and credit, with the equivalent of journals and ledgers.
Luca Pacioli (1447-1517),
Franciscan monk and mathematician, published Summa de Arithmetica,
Geometrica, Proportioni et Proportionalite in 1494. It was a summary of
existing mathematical knowledge of the time and contained a section on
"Details of Accounting and Recording" that described bookkeeping as
used in Venice. Pacioli's Summa was the first complete description of
double entry bookkeeping (Gaijsbeek, 1914). A memorandum book, journal, and
ledger were required, with the journal and ledger similar to modern
equivalents. A trial balance was used when the books were closed. The profit or
loss was entered into the capital account to balance the balance sheet
(Lemarchand, 1999; Paragallo, 1938). Luca
Pacioli was the first writer of the Italian bookkeeping methods. Aided by the
printing press, Pacioli's Summa spreads the "Venetian system" across
Europe (Paragallo, 1938).
On
the other hand, some accounting history researchers opined that accounting
history has no much relevance to the study and development of accounting. In
examining evidence of accounting transactions from Ancient Egypt and
Mesopotamia, Stevelinck (1985) dismisses the relevance of such ancient
accounting practices to contemporary accounting historians. Stevelinck raises
two concerns; first, that “these accounts appear far too distant from us. They
may be admissible but what can we learn from them that will be of use to us
professionally?” He added that attempt should be made to discourage students
from learning techniques that are out of date. The second concern, as posited
by Stevelinck (1985), is “accounting has been kept since time immemorial, but double-entry
bookkeeping goes back less than 1,000 years. According to him,
“it
is this system of double-entry bookkeeping that really interests us, because it
is still in use, and because it would be instructive to examine its origins, to
follow its evolution step by step, to identify progress, the path it took, the
tentative innovations of our predecessors, the soultions they arrived at.”
Salvador,
Mahmoud and Gutiérrez (2004) buttress the arguments of Stevelinck (1985) by
stating that the concerns underpin traditional accounting history research and
demonstrate most clearly its emphasis on origins, evolution, progress, and the
privileging of double-entry, over all other admissible forms, as the only
interesting form of accounting practice. Miller and Hopper (1991) and Napier
(1989) have established the relevancy link of ancient accounting history to the
study of new dimensions in accounting and its development.
Methodology
This
study employed historical and survey research methods, which was conducted in a
two-stage process. The initial stage was
the conduct of interviews with twenty (20) experienced accountants in practice
and in the academics in Kaduna state. The essence of the interview was to obtain
the interviewees’ knowledge and perceptions of pre-Pacioli accounting history
and its significance towards the development of the profession. The final stage
was the administration of questionnaires. The questionnaire contains a
combination of ten open and closed-ended questions within the premise of
accounting history especially the pre-Pacioli era. The questionnaires were
distributed to systematically selected accounting theoreticians, accountants in
practice and other academic accountants.
The
population of this study is the total number of accounting
theoreticians, accountants in practice and other academic accountants in Kaduna
state. They comprise of full time accounting lecturers in seven identified
tertiary institutions in Kaduna state that run accounting program, students
studying accounting in those tertiary institutions at both undergraduate and
postgraduate levels, and practicing audit firms staff in Kaduna state. Their
number was estimated, as at June 2010, at five thousand, six hundred &
sixty six (5,666).
The sample size of the respondents for questionnaire
distribution is computed using the Yemane (1967) formula as follows:
n =
N
1 + N (e) ²
Where: N = Study population
e = Marginal
error
n = Sample
size
Now, computing the sample size at 95%
confidence level (i.e. e = 0.05), we have:
n = 5,666
1
+ 5,666 (0.05) ²
=
5,666
1 + 14.165
= 5,666
15.165
=
373.62
Therefore, 374 questionnaires were
administered.
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