Universal Technology for Accountability
As I explain in the Essence of Accounting, double entry bookkeeping is a universal technology used around the world by organizations, individuals, and communities. Regardless of the size of the organization, the location in the world, the activity of the organization, or the complexity of the organization; the double entry bookkeeping model works. Double entry bookkeeping will never become obsolete. Formally documented by Italian Luca Pacioli (pictured below) in 1494 and referred to as the Venetian Method, double entry bookkeeping is a global standard.
Accounting using the double entry bookkeeping method is about documentation and accountability using a proven, professional approach that detects errors and differentiates an unintentional error from an intentional error (i.e. fraud). Without accountability civilization cannot advance. Accountability advances civilization, economics, enterprises, environmental stewardship, personal property, governmental stewardship, etc.
Accounting is one of the most important technologies invented in the history of human civilization and has been around about 7,000 years. Accounting was invented before writing and before the invention of numbers. The global multinational organization simply could not exist without double entry bookkeeping and accounting.
The simple concepts that are used to build financial accounting and financial reporting yield an elegant result.
Orthodox is defined as conforming to what is generally or traditionally accepted as right or true; established and approved. Topology is the way in which constituent parts are logically interrelated or arranged. Orthodox topologies or logical schemas of financial reports that summarize some set of accounting transactions that result from some set of business events of an economic entity can be differentiated from the unorthodox given a clear and complete set of rules.
This universal technology of accountability is grounded, even ingrained, in medieval traditions. Yet this universal technology of accountability is going to be impacted by structured information, artificial intelligence, digital distributed ledgers, and other such technologies. And they should be. Those same technologies that are causing the ever increasing volume and complexity of information that is overwhelming us is also the solution to the information overload that is being experienced.
For more information:
- The Mathematics of Double Entry Bookkeeping
- Double Entry: How the Merchants of Venice Created Modern Finance
- The Accountant that Changed the World
- Accounting Timeline
- Accounting: Our First Communications Technology
Post a Comment