The accounting industry serves all sectors of the economy, including for-profit enterprises, nonprofit organizations, and local, state, and national governments. It compiles and interprets data to enable informed business decisions and coordinate business relationships. The industry has been crucial to the efficient management of American business, and accounting is sometimes called “the language of business.”
The demand for audited financial records in American business emerged as early as 1628, when the Massachusetts Bay Company was chartered as a joint-stock company to finance the Pilgrims bound for New England. Modern accounting can be traced back to around 1817 in the classrooms of the United States Military Academy at West Point, New York. The academy established the technique of measuring human performance in the context of grading students. This effort to measure human productivity then spread to the burgeoning railroad industry.
As part of the Progressive movement for government and business reform toward the end of the nineteenth century, accountants began to organize themselves as a public profession. Beginning with New York in 1897, state societies of public accountants formed to institute educational standards, licensing requirements, and codes of conduct to raise and regulate the quality of accountants auditing corporate financial statements. In addition, by the early twentieth century, university-based research contributed to the development of accounting theory as a framework for accounting practice.
The public accounting industry was put on a firm footing with the passage of the Federal Securities Acts of 1933 and 1934. These laws and others like them, including the Sarbanes-Oxley Act of 2002, are aimed at protecting investors by regulating the content and form of financial information about publicly traded corporations. By the early twenty-first century, the accounting industry had become an integral part of American business in general and American capital markets in particular. It assisted investors and enabled managers in running businesses more efficiently and profitably.
Edwards, John Richards, ed. The History of Accounting: Critical Perspectives on Business and Management. 4 vols. New York: Routledge, 2000. Eichenwald, Kurt. Conspiracy of Fools. New York: Broadway, 2005. Fleischman, Richard, ed. Accounting History. 3 vols. London: Sage, 2006.
Corporate income tax
Internal Revenue Code