Accounting History and Ethics

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The history of the development of accounting runs parallel with the evolution of civilization. The growth and decrease of ethics which wax and wane with the boom and bust economic model is seen as a deepening fissure of trust between the average individual and the financial institution. In many cases throughout history technology has provided the means for exploitation, and only a personal code of ethics could stem this tide of abuse.

History and Development of Accounting

Information is power, and the magic of numbers has been intriguing humanity for thousands of years as a system of coding, record, and retrival. This is seen in the fact that “The first accounting artifacts were uncovered in the city of Jericho in Israel from among the ruins that date as far back as 7,000 years ago” (Cantoria). The development of accounting has changed as the evolution of human culture redefined its conception and execution of economics. This process is largely tied to the evolution of agriculture and technology. Foundationally, “Accounting by its most basic definition is a method of recording economic transactions, which allows users to arrive at judgments, projections and reasonable conclusions” (Cantoria). Thus, accounting is a system of agreements on which to base judgements. However, today accounting is largely governed by the language of law, which for those who know where to find them, has many loopholes. 

Archeology shows evidence that even Paleolithic caveman used accounting to come to understanding and agreements about economic transactions. Although cavemen’s brains were not developed enough to count up to large numbers, they found ways to make do with small increments. This understanding has been supported by the discovery of prehistoric caves in Czechoslovakia (1937) and in some parts of Africa produced evidences of how cavemen devised their own system of recording economic transactions. The jawbone of a wolf found in the Czechoslovakian cave revealed fifty-five notches carved into groups of five. Although the significance of the number is unexplained, the pattern of the carvings denoted a form of tally system. (Cantoria)

This discovery was only the beginning, and the more that was uncovered about our ancient ancestors, the more the history of accounting developed. In the 1960, finds in the Congo showed the numerical iterations of 11, 13, 17, and 19 carved onto an animal bone perhaps as a rudimentary calculator. As a result of continued investigation, “Thirteen years later, the 1973 excavation report of the artifacts found in the Border Cave of Lebombo Mountains in Swaziland revealed a more discernible style of tally system. The fibular bone of a baboon showed notch-carvings in groups of 29” (Cantoria). Most likely there were many more examples of this primary practice of accounting that withered away with time.

The transition from human communities being primarily hunters to an agricultural society with the evolution of Homo sapiens created a dramatic shift in accounting practices. This was a result of the increasing complexity of economics due to the newfound abundance of food reserves and production skill. With this surplus humanity was able to specialize for the first time, because not everyone needed to farm. During this time artisans and craftsmen began to perfect their craft, as communities became more stationary as opposed to a more nomadic past. As a result;

In most of the archaeological sites in this area, tokens in varying geometric forms were found and were surmised to have been used as a means for establishing the equivalent quantity of a bartered item. Accordingly, the tokens were widely used for about 5,000 years before a more sophisticated system of numbering was conceptualized in 3,500 B.C. (Cantoria)

Thus, the path of accounting’s evolution, like so many paths, was concurrent with the evolution of civilization around the world. Searching for more long-lasting records and contracts, the Sumerian people developed cuneiform writing of inscribing marks on clay and firing it for posterity. It was believed to be around 3,500 B.C. when the Sumerian recording systems improved into a globular clay envelope. This technology “permitted traders to enter into a form of forward contract agreement to deliver and to pay for goods at some future time. Tokens were baked into a globular clay vessel to indicate the quantity of goods to be delivered” (Cantoria). At this time there was a rapid expansion of technology and exchange, and the industry of accounting began to take on a more solid form. 

In a way, scribes were the first accountants, and their role was crystalized in the period of high Egypt. The creation of papyrus revolutionized record keeping as it was possible to make copies, it was much more lightweight than clay, and enabled documents to travel. This innovation led to the elevation of the ancient accountants, and “Egyptian scribes were chosen to act as administrators of palaces and temples and overseers of the Pharaoh’s many projects. They kept records of grains, stocks, copper implements, and various forms of materials withdrawn from royal warehouses by keeping ledgers” (Cantoria). Such ledgers would form the foundation of modern accounting, and the rest is history.

Ethics of Accounting 

Any industry with responsibility is governed by a philosophical field of ethics. This is a contract of trust which enables the industry to function with others in mutual benefit and trust. The lack of ethics in accounting, regulation, and trading led to the economic crash of 2008 in which many CEOs still made money even as millions lost their homes, jobs, and the economies of entire nations crumbled. Since this time regulatory bodies have not been empowered, laws have not been strengthened, and individuals who fraudulently profited off of inflating bad stocks have not been held accountable. Rather, the boom and bust economic model of modern capitalism has just been send on another round of growth unrelated to value on its way to popping (Cohen). 

For those in the know this represents a fundamental breakdown in trust in all the industries associated with the financial sector (Senaratne). Such widespread corruption has a way of warping practices, understanding, ethics, and penalties for all involved. It is important that accounting ethics not be disregarded in this corrupt environment. For only when individuals in a position to influence collective culture stand up for ethics may there be some tread on justice rather than a quick slippery slide without ethics. As such, ethics in Accounting is one of the most important, yet most misunderstood, concerns in the world of business today. The field of business ethics deals with questions about whether specific business practices are acceptable. Regardless of their legality, actions taken in such situations will surely be judged as right or wrong, as either ethical or unethical. The very nature of business ethics is controversial, and there is no universally acceptable approach for addressing these issues. (Onyebuchi 275)

Since there is no universally accepted ethical approach, many in the industry have chosen shaky or manipulative meanings for the words they use which really hide unethical practices (Bogdan, Mester, Popa, and Balaciu). The chief motivation for unethical behavior is profit. Ethical measures in accounting to deter fraud, falsification, and padding are supported by the ethical framework; ensure compliance with laws and regulations; safeguarding of the company assets; avoid falsification of information in the financial records; and accountability and responsibility for functions assigned (Onyebuchi 275).

The American Institute of Certified Public Accountants (AICPA) have adopted a Code of Professional Conduct which help guide contemporary accountants in such murky times. The pressure is on, and accountants are some of the safeguards of rampant financial corruption. The pressure is only building as the unsustainability of the boom and bust model takes its toll, and “In a survey taken six years ago, over 60 percent of workers surveyed reported greater pressures than just five years earlier, and 40 percent reported that the pressures had increased in just one year” (Onyebuchi 276). All evidence points to corruption in every sector of the financial industry in the service of the world’s wealthy: 

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. (Stiglitz)

(List redacted for preview. Available via download).

Caught up in this matrix of corruption ethics matter more than ever, but due to a shrinking job pool with increased risk and corruption, more and more people are finding themselves cutting ethical corners (Hirshleifer and Teoh). 


In light of the technological advancement of the present age and the growth of big data it is possible that accountants will soon be replaced by computer programs and algorithms. This offers no better guarantee of ethical behavior, for a program is only as ethical as the person who writes it. The exploitive nature of the financial industry has fully tried the patience of the average citizen, who believes rules are being made to hide where they are being broken.

Works Cited

Bogdan, Victoria, Ioana Teodora Mester, Dorina Nicoleta Popa, and Diana Elisabeta Balaciu. “The Relevance Of Psychology Theories To Financial Accounting.” IDEAS, 2016. Retrieved from:

Cantoria, Ciel S. “Highlights of Accounting History from Prehistoric Era to Computer Age.” Bright Hub, 19 Oct. 2011. Retrieved from:

Cohen, Gail. “How to Apply Cognitive Psychology to Accounting.”, 2016. Retrieved from:

Hirshleifer, David, and Siew Hong Teoh. “The Psychological Attraction Approach to Accounting and Disclosure Policy.”  Contemporary Accounting Research, (Dec. 2009). Retrieved from:

Onyebuchi, Vincent N. “Ethics in Accounting.” International Journal of Business and Social Science Vol. 2 No. 10; (June 2011), pp. 275. Retrieved from:;_June_2011/29.pdf

Senaratne, Samanthi. “The role of ethics in accounting.” Chartered Institute of Management Accountants, 2016. Retrieved from:

Stiglitz, Joseph E. “Of the 1%, By the 1%, for the 1%.” Vanity Fair, May 2011. Retrieved from: