Consequences of Starting at the End of the Chain
Luca Pacioli (1445–1517) was a Renaissance polymath and a close friend of Leonardo da Vinci and widely regarded as the father of modern accounting. What might his recordkeeping methods have looked like if Luca Pacioli had access to modern information technologies? In their article, Pacioli in the Computer Age: Back to the Future of Accounting and Risk , Willi Brammertz and Allan I. Mendelowitz point out the consequences of starting at the end of the chain when you implement accounting processes. While Brammertz and Mendelowitz focus on banks in their article, the same ideas are true for all businesses, large and small. Current accounting systems tend to focus on generating a balance sheet and an income statement, the debits and the credits. By starting with the debit/credit problem first, entering financial transactions; when the IT world computerized accounting they basically started at the "end of the chain" rather than at the beginning of the chain where they r...