Accounting is facilitated by :Category:Accounting organizations such as standard-setters, accounting networks and associations and professional accounting body. Financial statements are usually audited by Accounting networks and associations, and are prepared in accordance with accounting standard (GAAP). GAAP is set by various standard-setting organizations such as the Financial Accounting Standards Board (FASB) in the United States and the Financial Reporting Council in the United Kingdom. As of 2012, "all major economies" have plans to Convergence (accounting) towards or adopt the International Financial Reporting Standards (IFRS).IFRS Foundation, 2012. [http://www.ifrs.org/Use+around+the+world/Use+around+the+world.htm?WBCMODE=PresentationUnpublished The move towards global standards]
The history of accounting is thousands of years old and can be traced to Ancient history civilizations.Robson, Keith. 1992. “Accounting Numbers as ‘inscription’: Action at a Distance and the Development of Accounting.” ''Accounting, Organizations and Society'' 17 (7): 685–708. The early development of accounting dates back to ancient Mesopotamia, and is closely related to developments in writing, counting and money; there is also evidence of early forms of bookkeeping in ancient Iran,Oldroyd, David & Dobie, Alisdair: ''Themes in the history of bookkeeping'', The Routledge Companion to Accounting History, London, July 2008, , Chapter 5, p. 96 and early auditing systems by the ancient Egyptians and Babylonians. By the time of Emperor Augustus, the Ancient Roman Government had access to detailed financial information.Oldroyd, David: ''The role of accounting in public expenditure and monetary policy in the first century AD Roman Empire'', Accounting Historians Journal, Volume 22, Number 2, Birmingham, Alabama, December 1995, p.124, [http://clio.lib.olemiss.edu/utils/getfile/collection/aah/id/14276/filename/14276.pdf Olemiss.edu]
Double-entry bookkeeping was pioneered in the Jewish community of the early-medieval Middle East Parker, L. M., “Medieval Traders as International Change Agents: A Comparison with Twentieth Century International Accounting Firms,” The Accounting Historians Journal, 16(2) (1989): 107-118.''MEDIEVAL TRADERS AS INTERNATIONAL CHANGE AGENTS: A COMMENT'', Michael Scorgie, The Accounting Historians Journal, Vol. 21, No. 1 (June 1994), pp. 137-143 and was further refined in medieval Europe. With the development of Joint-stock company, accounting split into financial accounting and management accounting.
The first work on a double-entry bookkeeping system was published in Italy, by Luca Pacioli ("Father of Accounting").Lauwers, Luc & Willekens, Marleen: "Five Hundred Years of Bookkeeping: A Portrait of Luca Pacioli" (Tijdschrift voor Economie en Management, KU Leuven, 1994, vol:XXXIX issue 3, p.302), [https://lirias.kuleuven.be/bitstream/123456789/119065/1/TEM1994-3_289-304p.pdf KUleuven.be] Accounting began to transition into an organized profession in the nineteenth century,
The word "accountant" is derived from the French word . The word was formerly written in English as "accomptant", but in process of time the word, which was always pronounced by dropping the "p", became gradually changed both in pronunciation and in orthography to its present form.Pixley, Francis William: Accountancy—constructive and recording accountancy (Sir Isaac Pitman & Sons, Ltd, London, 1900), p4
An audit of financial statements aims to express or disclaim an opinion on the financial statements. The auditor expresses an opinion on the fairness with which the financial statements presents the financial position, results of operations, and cash flows of an entity, in accordance with the generally acceptable accounting principle (GAAP) and "in all material respects". An auditor is also required to identify circumstances in which the generally acceptable accounting principles (GAAP) has not been consistently observed.
Tax accounting in the United States concentrates on the preparation, analysis and presentation of tax payments and tax returns. The U.S. tax system requires the use of specialised accounting principles for tax purposes which can differ from the generally accepted accounting principles (GAAP) for financial reporting. U.S. tax law covers four basic forms of business ownership: sole proprietorship, partnership, corporation, and limited liability company. Corporate tax in the United States and Income tax in the United States income are taxed at different rates, both varying according to income levels and including varying marginal rates (taxed on each additional dollar of income) and average rates (set as a percentage of overall income).
Organizations in individual countries may issue accounting standards unique to the countries. For example, in the United States the Financial Accounting Standards Board (FASB) issues the Statements of Financial Accounting Standards, which form the basis of US GAAP, and in the United Kingdom the Financial Reporting Council (FRC) sets accounting standards. However, as of 2012 "all major economies" have plans to Convergence (accounting) towards or adopt the IFRS.
Accounting research is carried out both by academic researchers and practicing accountants. Methodology in academic accounting research include archival research, which examines "objective data collected from Information repository"; experimental research, which examines data "the researcher gathered by Controlled experiments"; analytical research, which is "based on the act of Scientific modelling Theory or substantiating ideas in mathematical terms"; Antipositivism research, which emphasizes the role of language, interpretation and understanding in accounting practice, "highlighting the symbolic structures and taken-for-granted themes which pattern the world in distinct ways"; critical theory research, which emphasizes the role of power and conflict in accounting practice; Case study; computer simulation; and field research.Coyne, Joshua G., Scott L. Summers, Brady Williams, and David a. Wood. 2010. “Accounting Program Research Rankings by Topical Area and Methodology.” ''Issues in Accounting Education'' 25 (4) (November): 631–654.
Many accounting practices have been simplified with the help of accounting computer-based software. An Enterprise resource planning (ERP) system is commonly used for a large organisation and it provides a comprehensive, centralized, integrated source of information that companies can use to manage all major business processes, from purchasing to manufacturing to human resources.
Accounting information systems have reduced the cost of accumulating, storing, and reporting managerial accounting information and have made it possible to produce a more detailed account of all data that is entered into any given system.
The Enron scandal deeply influenced the development of new regulations to improve the reliability of financial reporting, and increased public awareness about the importance of having accounting standards that show the financial reality of companies and the objectivity and independence of auditing firms.
In addition to being the largest bankruptcy reorganization in American history, the Enron scandal undoubtedly is the biggest audit failure.Bratton, William W. "Enron and the Dark Side of Shareholder Value" (Tulane Law Review, New Orleans, May 2002) p. 61 It involved a Accounting scandals of Enron and their auditors Arthur Andersen, which was revealed in late 2001. The scandal caused the dissolution of Arthur Andersen, which at the time was one of the five largest accounting firms in the world. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron filed for Chapter 11 bankruptcy protection in December 2001.
One consequence of these events was the passage of Sarbanes–Oxley Act in the United States 2002, as a result of the first admissions of fraudulent behavior made by Enron. The act significantly raises criminal penalties for securities fraud, for destroying, altering or fabricating records in federal investigations or any scheme or attempt to defraud shareholders.Aiyesha Dey, and Thomas Z. Lys: "Trends in Earnings Management and Informativeness of Earnings Announcements in the Pre- and Post-Sarbanes Oxley Periods (Kellogg School of Management, Evanston, Illinois, February, 2005) p. 5