A history of accounting.

Author:Bennett, Doug

We didn't start the FIAR, it was always burning since the World's been turning--Billy Joel

The Army, Navy, and Air Force marked an important milestone in December 2014 when each Service began audit of its Schedule of Budgetary Activity (SBA). Many readers of this journal have been working towards this goal for years and are justifiably proud of this accomplishment. You may not realize, however, how long a journey this has been and the role and impact accounting and auditing have had on our history.

Accounting was first applied over 5,500 years ago in Iraq.

Back then, traders used clay ledgers to record the sale and purchase of crops and livestock (such as wheat and goats). While most traders were honest, there always were a few unscrupulous ones, and many of the internal controls we follow today can be traced back to those ancient businessmen. For example, the Hammurabi Code, written almost four thousand years ago, includes a law preventing a merchant from recording a transaction unless he has sealed and signed off on the receipt of money. (1)

Public audits of government accounts were first introduced in ancient Greece about 330 BC.

The Athenian Constitution established the role of auditors and charged them with conducting regular audits, centuries before our own Inspector General Act of 1978. States like Sparta and Athens relied on taxes to raise armies as well as provide for public services. These early auditors were vital to assure the public that their tax dollars were properly used and accounted for, thus ensuring the credibility of the government. Despite the Importance of this task, many of the accountants were Indentured servants not entitled to all freedoms enjoyed by the citizens of Athens. Because of this, early audit procedures often included torture. Despite these draconian processes, fraud remained widespread.

Early audits were aimed at both accountability and improvement in government operations.

Eventually, Rome eclipsed Greece and adapted many of Its customs including the predilection of leaders to engage In fraud.

In fact, Mark Antony, the Roman general famous for dating Cleopatra and avenging the murder of Caesar, also was known as an easily corruptible public official. One of his enemies, Cicero, accused him of "squandering countless sums of money"--a charge remarkably similar to language In our own Chief Financial Officers (CFO) Act, which justifies Itself by stating "Billions of dollars are lost each year through fraud, waste, abuse, and mismanagement among the hundreds of programs in the Federal Government." (2)

Unfortunately whistleblower laws were nonexistent In ancient Rome and Mark Antony had the hands of Cicero cut off and displayed In the coliseum for his part in bringing to light Antony's shady dealings and poor accounting practices. Even so, good government and accountability would not be denied.

The first public accounting of government expenditures occurred under the reign of Caesar Augustus. He succeeded Mark Antony and brought about a new approach toward government accountability and financial reporting. Without access to our modern day Internet or Department of the Treasury's Federal Agencies' Centralized Trial-Balance System, Augustus...

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