Academic Mind : Unpublished Papers : Business : Accounting : British Accounting
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Written by David Highfill
Kansas State University
This paper talks about British Accounting. The first part will talk about how the British were important in the development of accountancy. Within this part, large-scale organizations showed growth. Company legislation was important to the development of accounting laws in England. Limited liability companies were prone to insolvencies during the late nineteenth century. The income tax created demand for accountants during this period. The second part will talk about the differences between British and American accountants. The final part will talk about how British accountants were important to the development of the United States. Without the intuition of past British accountants like: Samuel Price, Edwin Waterhouse, William Welch Deloitte, and George A. Touche, this profession would not be in the same place as it is today.
Development of Accountancy
"Four aspects of the nineteenth century British economy were particularly important for the development of accountancy: the growth of large-scale organizations and, in particular, of the railways, company legislation, the high rate of insolvencies, and the introduction of income taxation" (Parker, 1986 p.5). The demand for auditing, bankruptcy, costing, and tax services rose due to these issues, and they were supplied by the accountancy profession (Parker, 1986 p.5).
Large-scale OrganizationsThe Accounting Profession in the United Kingdom
The United Kingdom differs from the United States in the Accounting Profession. The largest accounting organization is the Institute of Chartered Accountant in England and Wales (ICAEW), which was founded in 1880 and at the end of 2002 had 123,719 members (ICAEW.co.uk). Members of the ICAEW are called Charter Accountants. "Applicants for membership must pass the Institute's examinations covering a wide range of subjects and must complete a designated amount of time under a training contract with an authorized training office" (Arthur Andersen & Co., 1987 p.4). The ICAEW members are required to "obtain a minimum credit within a broad range of professional activities (such as audit, tax, company law, and so forth)" for their continuing professional education (Arthur Andersen & Co., 1987 p.5).
The United Stated version of the ICAEW is the American Institute of Certified Public Accountants (AICPA). The AICPA was formed in 1887 and today has 328,000 members (AICPA.org). The AICPA requires its members to acquire continuing educational credits to stay a member. "United Kingdom chartered accountants often engage in activities that are not customary for a CPA in the United States. For example, the chartered accountant may act as a liquidator, a receiver, or a trustee of a company in bankruptcy" (Arthur Andersen & Co., 1987 p.2). "The Auditing Practices Committee (APC) is a subcommittee of the Consultative Committee of Accountancy Bodies (CCAB), which represents all the major professional public accounting organizations in the United Kingdom" (Arthur Andersen & Co., 1987 p.2). In the United States, "the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting and reporting" (FASB.org). Accounting in the United Kingdom is different from accounting in the United States.
British Accountants in the United States
British accountants first came to the United States to protect the English investments. Many British accountants found work in the United States because the economy was booming the late nineteenth century (Parker, 1986 p.65). Many of the large accounting firms today came from England, which include: Price Waterhouse, Deloitte & Co., Ernst & Young, and KPMG.
The United Kingdom has been a major factor in many areas of accountancy. The British were instrumental in the development of accountancy, the accounting profession, and United States accounting. The ICAEW was active in the progress of the accounting profession. Without the British taking an innovative stance to the changing economy, the world of accounting would not be the way it is today.
Arthur Andersen & Co. The Accounting Profession in the United Kingdom. 1987.
Chatfield, Michael. Development of Basic Accounting Methods.
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"FASB: Facts - Mission."
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"ICAEW End of Year Membership Totals."
13 March 2004. http://www.icaew.co.uk/index.cfm?AUB=tb2i_2594,MNXI_11403.
O'Malley, Shaun F. Price Waterhouse. 1990.
13 March 2004. http://www.deloitte.com/dtt/section_node/0,2332,sid%253D2274,00.html.
Parker, R.H. The Development of the Accountancy Profession in Britain to the Early Twentieth Century. 1986.
"William Welch Deloitte."
13 March 2004. http://www.deloitte.com/dtt/executive_profile/0%2C2305%2Csid%25253D2275%252526cid%25253D3050%2C00.html.