Accounting has evolved as humans have evolved and as the concepts of the accounting subject are directly coined from its most fundamental principle of conservatism, it is not difficult to see why the design of accounting at every time has a direct link with the age. 會計審計 As man has developed from a primitive age to today’s interdependence age, living has advanced from being subsistent as a hunter-gatherer to a knowledge driven globalised world concept of ‘effectiveness embracing greatness’ and all additionally evolution, self accounting with the abacus has developed through stewardship accounting to financial accounting and now managerial accounting; that includes a concentrate on decision making.
The Financial Accounting Standards Board (FASB) of the US which generally standardised and strengthened the globally adopted Generally Accepted Accounting Principles (GAAP) took significant strides in the entire year 2012 to come alongside the International Accounting Standards Board (IASB) in a way termed as ‘International Convergence’. This type of convergence is likely to gradually harmonise the GAAPs and the IFRS until they become one and exactly the same in a bid to stream line corporate/company reports right into a uniform process globally.
1.1 Statement of the Problem
There is absolutely no absolute certainty in regards to what the near future holds for the Accounting Profession. It thus seems however, that the future age which definitely would be among scientific advancement, would move man from greatness to something worthier for the time. Spiritualism, Environmentalism and Developmentalism could be key factors in the future age. This paper would be to learn if Accounting itself will be more of a reality providing accurate answers to financial problems where man’s ability to value natural capital fairly would give rise to a significant asset on the balance sheet as opposed to the industrial age when even man himself was regarded as labour and not being considered as important as the machines he operated.
2. LITERATURE REVIEW
This paper was approached from the content analysis view point – both conceptual and relational. A content analysis is “a research technique for the objective, systematic, and quantitative description of manifest content of communications” – (Berelson, 52). The conceptual analysis was simply to examine the presence of the issue, i.e. whether there exists a stronger presence of positive or negative words used in combination with respect to the precise argument as the relational analysis built on the conceptual analysis by examining the relationships among concepts. As with other sorts of inquiry, initial choices pertaining to what is being studied determined the possibility of the particular paper.
2.1 Evolution of Accounting Theory
In accordance with investopedia.com, Accounting Theory in the light of its evolution can be defined as the overview of both historical foundations of accounting practice as well as the manner in which accounting practices are verified and put into the study and application of financial principles. Accounting as a discipline is believed to have existed since the 15th Century. From that time to now businesses and economies have continued to evolve greatly. Accounting theory must adjust to new ways of conducting business, new technological standards and gaps that are discovered in reporting mechanisms hence, it is a continuously evolving subject. As professional accounting organisations help companies interpret and use accounting standards, so do the Accounting Standards Board help continually create more efficient practical applications of accounting theory. Accounting may be the foundation of efficient and effective business management and intelligent managerial decision making, without which businesses and trade world-wide would operate blindly and fatally. It is therefore necessary to link how it has evolved to its future role.
2.2 The Origin of Accounting
Luca Pacioli wrote a Maths book in 1494 (ehow) that consisted of a chapter on the mathematics of business. As this book is regarded as first official book on accounting, Luca Pacioli has severally been regarded as ‘the father of accounting’. In his Maths book, Pacioli explained that the successful merchant needed 3 things: sufficient cash or credit; an accounting system that may tell him how he is doing; and a good book keeper to use it. Pacioli’s theory still holds today, it included both journals and ledgers and it is believed to have popularised the usage of the double entry accounting that were in place because the late 1300s.
2.2.1 The First Change in Accounting
During the depression of 1772, the Accounting profession went beyond book keeping to cost accounting. The idea and the idea were transformed into a method determining whether a small business is operating efficiently or using an excess of labour and resources. The new theory of cost accounting allowed a tuned book-keeper or an accountant to utilize the book kept to extract financial reports showing the efficiency represented by such data. This new idea resulted in the survival of businesses during the depression; business that could otherwise have failed without an intelligent management decision making informed by a cost accounting breakthrough.
2.2.2 The American Revolution/ British Courts Influence
The finish of the American Revolution saw the first United States (US) governmental accounting system being created in 1789 and it was established to account for and manage the treasury of the US. The double entry practice and theory were adopted. The British courts ruled they needed professional accountants to create financial information in relation to court cases. Chartered accounting bodies/ concepts were introduced in Britain (and in the US in particular, the Certified Public Accountant – CPA). In 1887, the first standardised exam emerged with Frank Broaker becoming US’s first CPA.
2.3 Modern Cost Accounting
This is first established by General Motors (GM) Company in 1923 and it developed methods that helped cut its costs and streamlined operations and this remained relevant for over 50 years. The new accounting techniques developed included profits on return, return on equity and GM’s flexible/adjustable budget concept.
2.4 Accounting Concepts and Conventions
This was established in US between 1936 and 1938 by the Committee on Accounting Procedure (CAP) thereby standardising Accounting practices for several companies through the entire US. In 1953, the Generally Accepted Accounting Principles (GAAP) was updated to new standards, CAP became Accounting Principles Board (APB) in 1959 and later in 1973, APB (having suffered from poor management) was replaced by Financial Accounting Standards Board (FASB) with greater powers and opinion for its professional stance.
2.5 International Financial Reporting Standards
FASB issued almost 200 pronouncements between 1973 and 2009 thereby establishing the foundation of Accounting Standards in use presently and is now making current moves to harmonise all accounting principles of GAAP with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB). It really is widely believed that development of accounting profession in virtually any nation and around the world is really a mixed effort of both accounting theoreticians and practicing accountants. Thus, the framework of accounting is a harmony of efforts whereby professional accounting bodies are usually in the lead of a path to regulation and standardisation of issues associated with accounting.
2.6 The Nigerian Scenario
In Nigeria, the case isn’t different from what was already discussed. Most of the country’s accounting standards (concepts and conventions) were inherited from the British colonial masters. And as the world has indeed turn into a large global village with globalised accounting bodies supervising and ensuring all member countries are abreast with current Generally Accepted Accounting Principles, Nigeria in addition has tagged along making several public sector and private sector reforms the most recent and famous which are the approval by the Federal Government in July 2010 to adopt International Public Sector Accounting Standards (IPSAS) for the public sector and the International Financial Reporting Standards (IFRS) for the private sector as a conscious effort to make sure a uniform chart of reporting system through the entire country by both public sector and private sector.