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PART C: ACCOUNTING AND REPORTING SYSTEMS, CONTROLS AND COMPLIANCE 
 
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1.2 The need for accounts 
Renaissance scholar Luca Pacioli wrote the first printed explanation of double-entry bookkeeping in 
1494. Double-entry bookkeeping involves entering every transaction as a 
debit
in one account and a 
corresponding 
credit
in another account, and ensuring that they 'balance'. Pacioli's description of the 
method was widely influential. 
The first English book on the subject was written in 1543. The practice of double entry bookkeeping has 
barely changed since then and is standard across the world, based upon the concept that every 
transaction has a dual effect that balances to zero. The original role of the accounting function was to 
record financial information and this is still its main focus.
Why do businesses need to produce accounts? If a business is being run efficiently, why should it have 
to go through all the bother of accounting procedures in order to produce financial information? 
A business should produce information about its activities because there are various groups of people 
who want or need to know that information. This sounds rather vague: to make it clearer, we should 
look more closely at the classes of people who might need information about a business. We need also 
to think about what information in particular is of interest to the members of each class. 
Large businesses are usually of interest to a greater variety of people than small businesses, so we will 
consider the case of a large public company whose shares can be purchased and sold on the Stock 
Exchange. 
1.3 Users of financial statements and accounting information
The people who might be interested in financial information about a large public company may be 
classified as follows. 
(a)