Uk accounting regulation: an historical perspective

Towards Accounting Theory

From 1844 to 1929, very little progress would appear to have been made in the

development of accounting through government led regulation. But what of accounting

theory and practice during this period? The profession had originally formed through the

setting up and the grant of a Royal Charter to the Society of Accountants in Edinburgh and

the Institute of Accountants and Actuaries in Glasgow between 1853 - 1855. Some twenty

years later, the first accountancy journal ‘The Accountant’ was published. In 1880, the

Institute of Chartered Accountants in England and Wales was formed and in 1885 the

Society of Incorporated Accountants and Auditors. (The latter Society being then

integrated with the English Institute in 1957).

The profession was not operating within any general theory of accounting or even a

coherent body of principles.  Auditing was their only task, and the first published

accounting treatise was on that subject in 1881.  This was followed by several books and

papers on depreciation but initially the authors tended to be engineers who saw this as a

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technical rather than an accounting matter.  It was not until the 1930’s that the first

publication in the UK of a book by Garnsey (1931) on consolidated accounts appeared,

although this had followed extensive publications on the subject in the United States.  Also

in the 1920’s accounting became a subject taught at Universities usually as part of a

commerce degree.  Many of the teachers at this time were employed by the Universities on

a part-time basis and were also practicing accountants.  Gradually as expertise in

accounting grew, so did a body of theory, especially at the London School of Economics

where a Research Association was set up in the 1930s with a driving force in Ronald

Edwards whose subsequent publications anticipated future theory and practice.