Worldcom

MCI,

Inc. is

an American telecommunications subsidiary

of Verizon

Communications that is headquartered in Ashburn, unincorporated Loudoun County, Virginia. The corporation was originally formed as a result of the merger of WorldCom (formerly known as LDDS followed by LDDS WorldCom) and MCI Communications, and used the name MCI WorldCom followed by WorldCom before taking its final name on April 12, 2003 as part of the corporation's emergence from bankruptcy. The company formerly traded on NASDAQ under the symbols "WCOM" (pre-bankruptcy) and "MCIP" (post-bankruptcy). The corporation was purchased by Verizon Communications with the deal closing on January 6, 2006 and is now identified as that company's Business division with the local residential divisions slowly integrated into local Verizon subsidiaries. MCI's history, combined with the histories of companies it has acquired, echoes most of the trends that have swept American telecommunications in the past half-century: It was instrumental in pushing legal and regulatory changes that led to the breakup of the AT&T monopoly that dominated American telephony; its purchase by WorldCom and subsequent bankruptcy in the face of accounting scandals was symptomatic of the Internet excesses of the late 1990s. It accepted a proposed purchase by Verizon for US$7.6 billion. For a time, WorldCom was the United States's second largest long distance phone company (after AT&T). WorldCom grew largely by aggressively acquiring other telecommunications companies, most notably MCI Communications. It also owned the Tier 1 ISP UUNET, a major part of the Internet backbone. It was headquartered in Clinton, Mississippi, before being moved to Virginia.

CEO Bernard Ebbers became very wealthy from the rising price of his holdings in WorldCom common stock. However, in the year 2000, the telecommunications industry entered a downturn and WorldComs aggressive growth strategy suffered a serious setback when it was forced by the US Justice Department to abandon its proposed merger with Sprint in mid 2000. By that time, WorldComs stock was declining and Ebbers came under increasing pressure from banks to cover margin calls on his WorldCom stock that was used to finance his other businesses (timber and yachting,

among others). During 2001, Ebbers persuaded WorldComs board of directors to provide him corporate loans and guarantees in excess of $400 million to cover his margin calls. The board hoped that the loans would avert the need for Ebbers to sell substantial amounts of his WorldCom stock, as his doing so would put further downward pressure in the stock's price. However, this strategy ultimately failed and Ebbers was ousted as CEO in April 2002 and replaced by John Sidgmore, former CEO of UUNet Technologies, Inc. Beginning modestly in mid-year 1999 and continuing at an accelerated pace through May 2002, the company (under the direction of Ebbers, Scott Sullivan (CFO), David Myers (Comptroller) and Buford "Buddy" Yates (Director of General Accounting)) used fraudulent accounting methods to mask its declining earnings by painting a false picture of financial growth and profitability to prop up the price of WorldComs stock. The fraud was accomplished primarily in two ways: 1. Underreporting line costs (interconnection expenses with other telecommunication companies) by capitalizing these costs on the balance sheet rather than properly expensing them. 2. Inflating revenues with bogus accounting entries from "corporate unallocated revenue accounts". In 2002, a small team of internal auditors at WorldCom worked together, often at night and in secret, to investigate and unearth $3.8 billion in fraud. Shortly thereafter, the companys audit committee and board of directors were notified of the fraud and acted swiftly: Sullivan was fired, Myers resigned, Arthur Andersen withdrew its audit opinion for 2001, and the U.S. Securities and Exchange Commission (SEC) launched an investigation into these matters on June 26, 2002. By the end of 2003, it was estimated that the company's total assets had been inflated by around $11 billion.

Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000.[1] Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001, it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, known as the "Enron scandal".

Enron has since become a popular symbol of willful corporate fraud and corruption. The scandal also brought into question the accounting practices and activities of many corporations throughout the United States and was a factor in the creation of the SarbanesOxley Act of 2002. The scandal also affected the wider business world by causing the dissolution of the Arthur Andersen accounting firm.[2] Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as its bankruptcy counsel. It emerged from bankruptcy in November 2004, pursuant to a court-approved plan of reorganization, after one of the biggest and most complex bankruptcy cases in U.S. history. A new board of directors changed the name of Enron to Enron Creditors Recovery Corp., and focused on reorganizing and liquidating certain operations and assets of the pre-bankruptcy Enron.[3] On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining business, to Ashmore Energy International Ltd. (now AEI).[4]

Misleading financial accounts

In 1990, Enron Finance CEO Jeff Skilling hired Andrew Fastow, who was well acquainted with the burgeoning deregulated energy market Skilling wanted to exploit. In 1993, Fastow set to work establishing numerous limited liability special purpose entities (common business practice); however, it also allowed Enron to place liability so that it would not appear in its accounts, allowing it to maintain a robust and generally growing stock price and thus keeping its critical investment grade credit ratings. Enron was originally involved in transmitting and distributing electricity and natural gas throughout the United States. The company developed, built, and operated power plants and pipelines while dealing with rules of law and other infrastructures worldwide. Enron owned a large network of natural gas pipelines, which stretched ocean to ocean and border to border including Northern Natural Gas,Florida Gas Transmission, Transwestern Pipeline company and a partnership in Northern Border Pipeline from Canada. The states of California, New Hampshire and Rhode Island had already passed power deregulation laws by July 1996, the time of Enron's proposal to acquire Portland General Electric.[6] In 1998, Enron moved into the water sector, creating the Azurix Corporation, which it part-floated on the New York Stock Exchange in June 1999. Azurix failed to break into the water utility market, and one of its major concessions, in Buenos Aires, was a large-scale money-loser. After the move to Houston, many analysts[who?] criticized the Enron management as swimming in debt. The Enron management pursued aggressive retribution against its critics, setting the pattern for dealing with accountants, lawyers, and the financial media.

Enron grew wealthy due largely to marketing, promoting power, and its high stock price. Enron was named "America's Most Innovative Company" by Fortune for six consecutive years, from 1996 to 2001. It was on the Fortune's "100 Best Companies to Work for in America" list in 2000, and had offices that were stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers and extremely effective management until its exposure in corporate fraud. The first analyst to publicly disclose Enron's financial flaws was Daniel Scotto, who in August 2001 issued a report entitled "All Stressed up and no place to go", which encouraged investors to sell Enron stocks and bonds at any and all costs. As was later discovered, many of Enron's recorded assets and profits were inflated or even wholly fraudulent and nonexistent. Debts and losses were put into entities formed "offshore" that were not included in the firm's financial statements, and other sophisticated and arcane financial transactions between Enron and related companies were used to take unprofitable entities off the company's books. Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha, and is now a unit of Warren Buffett's MidAmerican Energy Holdings Corp. NNG was put up as collateral for a $2.5 billion capital infusion by Dynegy Corporation when Dynegy was planning to buy Enron. When Dynegy looked closely at Enron's books, they backed out of the deal and fired their CEO, Chuck Watson. The new chairman and head CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and an acquaintance of Warren Buffett. NNG continues to be profitable today.

Worldcom
Worldcom was a telecommunications company that underwent a merger with fellow telecommunications company MCI in 1997; subsequent to the merger of these 2 giants within the telecommunications industry, the conglomerate company was renamed MCI Worldcom . In 1999, the Sprint Telecommunications Company had planned to merge with the MCI Worldcom Company, yet in government regulation prohibited this merger from taking place due to presumable violations of antitrust statutes.However, upon mention of Worldcom, historians and economists alike agree that public focus is seldom drawn to the commercial development of this conglomerate in lieu of the accounting scandal in which it was involved in 2002; the Worldcom Company name may tend to draw more focus to the massive financial loss resulting from the presumed unraveling of the company due to the fraudulent operation of the company itself.

What is the Worldcom Accounting Scandal? The Worldcom accounting scandal was a financial scandal that involved the MCI Worldcom telecommunications company. Although the investigative reports provided by the Securities and Exchange Commission - as well as those belonging to private auditors who undertook additional investigation state that the Worldcom scandal began in the year 2000, there currently exists no specific date. However, these investigative reports successfully named and classified the nature of the accounting scandal, as well as succeeded with regard to its respective criminal indictments:

Worldcom Finances and Investments Bernard Ebbers was a Canadian Entrepreneur who not only gained notoriety for the founding of the Worldcom Company, but also acted as the company s Chief Operations Officer (CEO) both prior to and following - its merger with MCI, and subsequently Sprint. Following the merger, Ebbers earned a large amount of capital in addition to a vast amount of company stock; the merger resulted in the disbursement of stocks and assets resulting in Bernard Ebbers remaining a primary shareholder and CEO. Subsequent to the decline of the MCI Worldcom stock with regard to the commercial market, Bernard Ebbers had begun to lose a vast amount of capital; as a result, he found himself to be unable to provide sufficient maintenance to other investments that he had undertaken. Ebbers approached the board of MCI Worldcom and requested a loan of $400 million in order to provide his with the financial relief necessary to upkeep his peripheral expenses and investments; the executive board agreed to provide Ebbers with a loan in order to sway him from selling the entirety of his shares the board feared that the selling of Ebbers shares would not only promote a sense of panic with regard to other investors in MCI Worldcom, but would also present an opportunity for a hostile takeover.

The MCI Worldcom Accounting Scandal Subsequent to the release of the loan to Bernard Ebbers, the executive board witnessed the gradual insolubility of the company; both the $400 million given to Ebbers existing in tandem with the declining profits sustained by MCI Worldcom placed the company on the brink of bankruptcy. In lieu of informing MCI Worldcom investors of the true state of the company, a number of executives purposefully misrepresented the company s earnings and spending; this accounting fraud purportedly resulted in the fraudulent reporting of upwards of $11 billion that the company did not have.

Conclusion MCI Worldcom filed for Chapter 11 bankruptcy in 2004 and was acquired by the Verizon telecommunications company; Bernard Ebbers was both indicted and subsequently sentenced to a 25 year prison sentence. http://finance.laws.com/worldcom

ENRON Scandal Summary

An ENRON Scandal Summary The ENRON Scandal is considered to be one of the most notorious within American history; an ENRON scandalsummary of events is considered by many historians and economists alike to have been an unofficial blueprint for a case study on White Collar Crime White Collar Crime is defined as nonviolent, financially-based criminal activity typically undertaken within a setting in which its participants retain advanced education with regard to employment that is considered to be prestigious. The following took place in the midst of the ENRON Scandal: ENRON Scandal Summary: The Deregulation of ENRON While the term regulation within a commercial and corporate setting typically applied to the government s ability to regulate and authorize commercial activity and behavior with regard to individual businesses, the ENRON executives applied for and were subsequently granted government deregulation. As a result of this declaration of deregulation, ENRON executives were permitted to maintain agency over the earnings reports that were released to investors and employees alike; this agency allowed for ENRON s earning reports to be extremely skewed in nature losses were not illustrated in their entirety, prompting more and more investments on the part of investors wishing to partake in what seemed like a profitable company ENRON Scandal Summary: Misrepresentation By misrepresenting earnings reports while continuing to enjoy the revenue provided by the investors not privy to the true financial condition of ENRON, the executives of ENRON embezzled funds funneling in from investments while reporting fraudulent earnings to those investors; this not only proliferated more investments from current stockholders, but also attracted new investors desiring the enjoy the apparent financial gains enjoyed by the ENRON corporation. ENRON Scandal Summary: Fraudulent Energy Crisis In the year 2000, subsequent to the discovery of the crimes listed in the above ENRON Scandal Summary, ENRON had announced that there was a critical circumstance within California with regard to

the supply of Natural Gas. Due to the fact the ENRON was a then-widely respected corporation, the general populace were not wary about the validity of these statements; however, upon retroactive review, many historians and economists suspect that the ENRON executives manufactured this crisis in preparation of the discovery of the fraud they had committed although the executives of ENRON were enjoying the funds rendered from investments, the corporation itself was approaching bankruptcy. ENRON Scandal Summary: Embezzlement An ENRON Scandal Summary of the acts of Embezzlement undertaken by ENRON Executives may be defined as the criminal activity involving the unlawful and unethical attainment of monies and funding by employees; typically, funds that are embezzled are intended for company use in lieu of personal use. While the ENRON executives were pocketing the investment funds from unsuspecting investors, those funds were being stolen from the company, which resulted in the bankruptcy of the company.

ENRON Scandal Summary: Losses and Consequences Due to the actions of the ENRON executives, the ENRON Company went bankrupt. The loss sustained by investors exceeded $70 billion. Furthermore, these actions cost both trustees and employees upwards of $2 billion; this total is considered to be a result of misappropriated investments, pension funds, stock options, and savings plans as a result of the government regulation and the limited liability status of the ENRON Corporation, only a small amount of the money lost was ever returned.

http://finance.laws.com/enron-scandal-summary

Introduction Unlike most other modern professions, accounting has a history that is usually discussed in terms of one seminal event the invention and dissemination of the double entry bookkeeping processes. But a view of accounting history that begins with Luca Paciolis contributions overlooks a long evolution of accounting systems in ancient and medieval times. More fundamental is the question, why should we care about the history of accounting at all? Certainly a glimpse back into this period helps illuminate our past generally, and it is the sort of winding, twisted path that makes for an entertaining story. But perhaps the most compelling reason

is to help explain the phenomenal growth that the profession of accountancy has enjoyed worldwide since the first royal charters were granted to the Society of Accountants in Edinburgh less than 150 years ago. In 1904, 50 years after the emergence of the formal profession, about 6,000 practitioners carried the title of chartered accountant. In 1957, there were 38,690 chartered and incorporated accountants (Scottish, British and Irish). Today, the Institute of Chartered Accountants in England and Wales alone has a membership of over 120,000 worldwide. This is to say nothing of the many professionals in the other allied institutes in Canada, New Zealand, Ireland, Australia, Scotland and South Africa, along with American certified public accountants - comprising a vast, worldwide network of professional accountancy dominated by several, mammoth, worldwide accounting firms. How and why did this relatively new profession develop? Its history is that of human commerce, and even more fundamentally, of writing and the use of numbers and counting. Some argue that accounting developed purely in response to the needs of the time brought about by changes in the environment and societal demands. Others claim that the development of the science of accounting has itself driven the evolution of commerce since it was only through the use of more precise accounting methods that modern business was able to grow, flourish and respond to the needs of its owners and the public. Either way, the history of accounting throws a light on economic and business history generally, and may help us better predict what is on the horizon as the pace of global business evolution escalates. Obviously this presentation can only be an overview on a subject whose complete bibliography would itself be massive. We have included this on the ACAUS Web site because we were aware that there were so few online resources available on accounting history. It is intended only as a brief introduction, to whet the appetite for a more in-depth look that additional reading can provide. For a listing of some good books on this subject see the conclusion of this history or order directly from our history selection in our online ACAUS Bookstore. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Ancient Accounting: Dawn of Man through Luca Pacioli In attempting to explain why double entry bookkeeping developed in 14th century Italy instead of ancient Greece or Rome, accounting scholar A. C. Littleton describes seven "key ingredients" which ledto its creation: Private property: The power to change ownership, because bookkeeping is concerned with recording the facts about property and property rights. Capital: Wealth productively employed, because otherwise commerce would be trivial and credit would not exist.

 Commerce: The interchange of goods on a widespread level, because purely local trading in small volume would not create the sort of press of business needed to spur the creation of an organized system to replace the existing hodgepodge of record-keeping. Credit: The present use of future goods, because there would have been little impetus to record transactions completed on the spot. Writing: A mechanism for making a permanent record in a common language, given the limits of human memory. Money: The "common denominator" for exchanges, since there is no need for bookkeeping except as it reduces transactions to a set of monetary values. Arithmetic: A means of computing the monetary details of the deal. Many of these factors did exist in ancient times, but, until the Middle Ages, they were not found together in a form and strength necessary to push man to the innovation of double entry. Writing, for example, is as old as civilization itself, but arithmetic the systematic manipulation of number symbols was really not a tool possessed by the ancients. Rather, the persistent use of Roman numerals for financial transactions long after the introduction of Arabic numeration appears to have hindered the earlier creation of double-entry systems. Nevertheless, the problems encountered by the ancients with record keeping, control and verification of financial transactions were not entirely different from our current ones. Governments, in particular, had strong incentives to keep careful records of receipts and disbursements particularly concerning taxes. And in any society where individuals accumulated wealth, there was a desire by the rich to perform audits on the honesty and skill of slaves and employees entrusted with asset management. But the lack of the above-listed antecedents to double entry bookkeeping made the job of an ancient accountant extraordinarily difficult. In societies where nearly all were illiterate, writing materials costly, numeration difficult and money systems inconsistent, a transaction had to be extremely important to justify keeping an accounting record. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Accounting In Mesopotamia, circa 3500 B.C. Five thousand years before the appearance of double entry, the Assyrian, Chaldaean-Babylonian and Sumerian civilizations were flourishing in the Mesopotamian Valley, producing some of the

oldest known records of commerce. In this area between the Tigris and Euphrates Rivers, now mostly within the borders of Iraq, periodic floodings made the valley an especially rich area for agriculture. As farmers prospered, service businesses and small industries developed in the communities in and around the Mesopotamian Valley. The cities of Babylon and Ninevah became the centers for regional commerce, and Babylonian became the language of business and politics throughout the Near East. There was more than one banking firm in Mesopotamia, employing standard measures of gold and silver, and extending credit in some transactions. During this era (which lasted until 500 B.C.), Sumeria was a theocracy whose rulers held most land andanimals in trust for their gods, giving impetus to their record-keeping efforts. Moreover, the legal codes that evolved penalized the failure to memorialize transactions. The renowned Code of Hammurabi, handed down during the first dynasty of Babylonia (2285 - 2242 B.C.), for example, required that an agent selling goods for a merchant give the merchant a price quotation under seal or face invalidation of a questioned agreement. Thus it is believed that most transactions were recorded and subscribed by theparties during this period. The Mesopotamian equivalent of today's accountant was the scribe. His duties were similar, but even more extensive. In addition to writing up the transaction, he ensured that the agreements complied with the detailed code requirements for commercial transactions. Temples, palaces and private firms employed hundreds of scribes, and it was considered a prestigious profession. In a typical transaction of the time, the parties might seek out the scribe at the gates to the city. They would describe their agreement to the scribe, who would take from his supply a small quantity of specially prepared clay on which to record the transaction. Clay was plentiful in this area, while papyrus was scarce and expensive. The moist clay was molded into a size and shape adequate to contain the terms of the agreement. Using a wooden rod with a triangular end, the scribe recorded the names of the contracting parties, the goods and money exchanged and any other promises made. The parties then "signed" their names to the tablet by impressing their respective seals. In an age of mass illiteracy, men carried their signatures around their necks in the form of stone amulets engraved with the wearer's mark, and were buried with them at death. Often the seals included the owner's name and religious symbols, such as the picture and name of the gods worshipped by the owner. After these impressions from the amulets were made, the scribe would dry the tablet in the sun or in akiln for important transactions which needed a more permanent record. Sometimes a clay layer about as thick as a pie crust was fashioned and wrapped around the tablet like an envelope. For extra security, the whole transaction would be rewritten on this outer "crust," in effect making a carbon copy of the original. Attempted alterations of the envelope could be detected by comparing it with its contents, and the original could not be altered without cracking off and destroying the outer shell. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078

Accounting In Ancient Egypt, China, Greece and RomeGovernmental accounting in ancient Egypt developed in a fashion similar to the Mesopotamians. The use of papyrus rather than clay tablets allowed more detailed records to be made more easily. And extensive records were kept, particularly for the network of royal storehouses within which the "in kind" tax payments were kept. Egyptian bookkeepers associated with each storehouse kept meticulous records, which were checked by an elaborate internal verification system. These early accountants had good reason to be honest and accurate, because irregularities disclosed by royal audits were punishable by fine, mutilation or death. Although such records were important, ancient Egyptian accounting never progressed beyond simple list-making in its thousands of years of existence. Perhaps more than any other factors, illiteracy and the lack of coined money appear to have stymied its development. While the Egyptians tracked movements of commodities, they treated gold and silver not as units of fungible value, but rather as mere articles of exchange. The inability to describe all goods in terms of a single valuation measure made cumulation and summation difficult and the development of a cohesive accounting system all but impossible. Pre-Christian China used accounting chiefly as a means of evaluating the efficiency of governmental programs and the civil servants who administered them. A level of sophistication was achieved during the Chao Dynasty (1122 - 256 B.C.), which was not surpassed in China until after the introduction of double entry processes in the 19 century. In the 5th century B.C., Greece used "public accountants" to allow its citizenry to maintain real authority and control over their government's finances. Members of the Athens Popular Assembly legislated on financial matters and controlled receipt and expenditure of public monies through the oversight of 10 state accountants, chosen by lot. Perhaps the most important Greek contribution to accountancy was its introduction of coined money about 600 B.C. Widespread use of coinage took time, as did its impact on the evolution of accounting. Banking in ancient Greece appears to have been more developed than in prior societies. Bankers kept account books, changed and loaned money, and even arranged for cash transfers for citizens through affiliate banks in distant cities. Government and banking accounts in ancient Rome evolved from records traditionally kept by the heads of families, wherein daily entry of household receipts and payments were kept in an adversaria or daybook, and monthly postings were made to a cashbook known as a codex accepti et expensi. These household expenses were important in Rome because citizens were required to submit regular statements of assets and liabilities, used as a basis for taxation and even determination of civil rights. An elaborate system of checks and balances was maintained in Rome for governmental receipts and disbursements by the quaestors, who managed the treasury, paid the army and supervised governmental books. Public accounts were regularly examined by an audit

staff, and quaestors were required to account to their successors and the Roman senate upon leaving office. The transition from republic to empire was, at least in part, to control Roman fiscal operations and to raise more revenues for the ongoing wars of conquest. While the facade of republicanism was maintained, the empire concentrated real fiscal and political power in the emperor. Julius Caesar personally supervised the Roman treasury, and Augustus completely overhauled treasury operations during his reign. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 5 Among Roman accounting innovations was the use of an annual budget, which attempted to coordinate the Empire's diverse financial enterprises, limited expenditures to the amount of estimated revenues and levied taxes in a manner which took into consideration its citizens' ability to pay. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 6 Medieval Accounting The thousand years between the fall of the Roman Empire and the publication of Luca Pacioli's Summa are widely viewed as a period of accounting stagnation, and medieval practices outside Italy are often ignored in historical summaries. Yet, as historian Michael Chatfield has observed, medieval agency accounting, "laid the foundations for the doctrines of stewardship and conservatism, and the medieval era created the conditions for the rapid advance in accounting technology that occurred during the Renaissance." While accounting under the Roman Empire was prescribed by the centralized legal codes of the time, medieval bookkeeping was localized and centered on the specialized institutions of the feudal manor. The systems of exchequer and manor necessitated numerous delegations of authority over property from the owners to actual possessors and users. The central task of accounting during this era was to allow the government or property owners to monitor those in the lower portions of the socioeconomic "pyramid." When William the Conqueror invaded England, he took possession of all property in the name of the king. In 1086, he conducted a survey of all real estate and the taxes due on them, known as the Domesday Book. The oldest surviving accounting record in the English language is the Pipe Roll, or "Great Roll of the Exchequer," which provides an annual description of rents, fines and taxes due the King of England, from A.D. 1130 through 1830.

Compiled from valuations in the Domesday Book and from statements of sheriffs and others collecting for the royal treasury, the Pipe Roll was the final record on parchment of a "proffer" system which extensively used a wooden stick as a basis of account-keeping. Twice a year, at Easter and Michaelmas (September 29), the various county sheriffs were called before the Exchequer at Westminster. At Easter, a sheriff would pay about half of the total annual assessments his county owed. In accepting a sheriff's payment on account (the proffer), the treasurer would have a wooden tally stick prepared and cut as a record of the transaction. Used even before the introduction of the Pipe Roll, the tally stick was a nine-inch long, narrow, hazelwood stick, cut with notches of varying size to indicate the amount received. A cut the size of a human hand was 1,000 pounds; a thumb's width, 100 pounds; a cut the thickness of a "grain or ripe barley," one pound; and a shilling, just a notch. Chatfield describes the way in which the tally stick was used to make a receipt in an age when few could read or write: After the amount of the sheriff's proffer had been carved, a diagonal cross cut was made an inch or two from the thicker end of the tally, and the whole stick was split down the middle into two identically notched parts of unequal length. The flat sides of both pieces were inscribed in Latin to show that they related to the same debt, and as additional protection, the cross cuts were made at various angles on different tallies, so that no "foil" or shorter piece could possibly be fitted to any "stock" but its own. The sheriff then departed with the stock as his receipt for payments rendered, and the foil was kept by the treasurer for the Exchequer archives. At Michaelmas, each sheriff returns for the final accounting, at which he pays the whole year's revenues. The treasurer reads the amount due from the Pipe Roll, and the sheriff must justify any unusual expenses claimed. Final settlement occurs at a table covered by a checkered cloth, for which the Exchequer is named. "Counters" 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 7 are placed on the squares to visually represent the amount due the king from that county. Another row of counters represents the Easter payment, which is verified by fitting together the sheriff's tally stock with the Exchequer's foil to demonstrate that the notches and cuttings correspond. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 8

Italian Renaissance: Birth of Double Entry Bookkeeping The innovative Italians of the Renaissance (14th -16th century) are widely acknowledged to be the fathers of modern accounting. They elevated trade and commerce to new levels, and actively sought better methods of determining their profits. Although Arabic numerals were introduced long before, it was during this period that the Italians became the first to use them regularly in tracking business accounts an improvement over Roman numerals the importance of which cannot be overstated. They kept extensive business records, as the use of capital and credit on a large scale developed: The evolutionary trend toward double entry bookkeeping was underway. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 9 Luca Pacioli and The Summa Luca Pacioli was a true Renaissance man, with knowledge of literature, art, mathematics, business and the sciences, at a time when few could even read. Born about 1445 at Borgo San Sepulcro in Tuscany, Frater Luca Bartolomes Pacioli acquired an amazing knowledge of diverse technical subjects religion, business, military science, mathematics, medicine, art, music, law and language. He accepted the popular belief in the inter-relatedness of these widely varying disciplines and in the special importance of those, such as mathematics and accounting, which exhibit harmony and balance. His friend Leonardo da Vinci helped prepare the drawings for Pacioli's 1497 work, Divina Proportione; In turn, Pacioli is reputed to have calculated for da Vinci the quantity of bronze needed for the artist's huge statue of Duke Lidovico Sforza of Milan. Around 1482, after completing his third treatise on mathematics, Pacioli, who like many of his time sought preferment as a teacher, became a Franciscan friar. He traveled throughout Italy lecturing on mathematics, and, in 1486, completed his university education with the equivalent of a doctorate degree. Pacioli never claimed to have invented double entry bookkeeping. Thirty-six years before his monumental treatise on the subject, Benedetto Cotrugli wrote Delia Mercatura et del Mercante Perfetto (Of Trading and the Perfect Trader), which included a brief chapter describing many of the features of double entry. Although this work had not been published for more than a century, Pacioli was familiar with the manuscript and credited Cotrugli with originating the double entry method.

Pacioli was about 50 years old in 1494 just two years after Columbus discovered America when he returned to Venice for the publication of his fifth book, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (Everything About Arithmetic, Geometry and Proportion). It was written as a digest and guide to existing mathematical knowledge, and bookkeeping was only one of five topics covered. The Summa's 36 short chapters on bookkeeping, entitled "De Computis et Scripturis" ("Of Reckonings and Writings"), were added, "in order that the subjects of the most gracious Duke of Urbino may have complete instructions in the conduct of business," and to, "give the trader without delay information as to his assets and liabilities." (All quotes from the translation by J.B. Geijsbeek, "Ancient Double Entry Bookkeeping: Lucas Pacioli's Treatise," 1914). Perhaps the best proof that Pacioli's work was considered potentially significant, even at the time of publication, was the very fact that it was printed on November 10, 1494. Gutenberg had, just a quarter century earlier, invented metal type, and it was still an extremely expensive proposition to print a book. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 10 Pacioli's System: Memorandum, Journal and Ledger "De Computis" begins with some basic instruction for commerce. The successful merchant, declares Pacioli, needs three things: sufficient cash or credit, good bookkepers and an accounting system which allows him to view his finances at a glance. Before commencing business, one should prepare an inventory listing all business and personal assets and debts. This inventory must be completed within one day, and property should be appraised at current market values and arranged according to mobility and value, with cash and other valuables listed first since they are most easily lost. The memorandum, or memorial, was Paciolis equivalent of a daybook, for the recording, in chronological order, of business transactions as they occurred. The transaction could be entered in any of the various monetary units then in use in the Italian city-states of the time, with conversion to a common currency for double entry left for later. The journal was the merchant's private account book. Entries consisted of a narrative debit, credit and explanation in one continuous paragraph. The journal had only one column, which was not totaled. There were no compound entries.

Pacioli's ledger was, of his three books, the most like its modern equivalent. The money and date columns were almost identical to those in modern ledgers, with entries consisting of brief paragraphs, debits on the left side of a double page (deve dare) and credits on the right (deve avere). The bookkeeper posts "cash in hand" as a debit on page one of the ledger, just as it was entered first in the journal. As ledger postings are made, two diagonal lines are drawn through each journal entry, one from left to right when the debit is posted and the other from right to left when the credit is posted. The first 16 chapters of "De Computis" describe this basic system of books and accounts, while the remaining 20 are devoted to specialized accounting issues of merchants. These include bank deposits and withdrawals, brokered purchases, drafts, barter transactions, joint venture trading, expense disbursements and closing and balancing books. The trial balance (summa summarium) is the end of Pacioli's accounting cycle. Debit amounts from the old ledger are listed on the left side of the balance sheet and credits on the right. If the two totals are equal, the old ledger is considered balanced. If not, says Pacioli, "that would indicate a mistake in your Ledger, which mistake you will have to look for diligently with the industry and intelligence God gave you." 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 11 Significance of the Summa In the first century after its publication, the Summa was translated into five languages, and numerous books on double entry bookkeeping appeared in Dutch, German, English and Italian whose descriptions were obviously lifted from "De Computis." Many consider these works inferior explanations of the system so clearly articulated by Pacioli. One historian has described the works issued during this period as, "at the best, revisions of Pacioli, at the worst servile transcriptions without even the courtesy of referring to the original author." Nevertheless, they helped quickly spread the knowledge of the "Italian method" throughout Europe. Perhaps most surprising is how little bookkeeping methods have changed since Pacioli. Both the sequence of events in the accounting cycle and the special procedures he described in "De Computis" are familiar to modern accountants. In fact, the primary differences between current bookkeeping practices and the "Method of Venice" are additions and refinements brought about by the needs of a larger scale of business operation.

The small proprietorships of 15th century Italy had no need for specialized journals, subsidiary ledgers, controlling accounts, formal audit systems, cost accounting or budgeting. Some omissions, such as the failure to touch on accruals and deferrals, probably occurred because Pacioli felt they were too advanced for a beginners treatise. But numerous tiny details of bookkeeping techniques set forth by Pacioli were followed in texts and the profession for at least the next four centuries, as accounting historian Henry Rand Hatfield put it, "persisting like buttons on our coat sleeves, long after their significance had disappeared." 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 12 Scotland - Birthplace of the Modern Profession [Excerpts in this section from Richard Brown's 1905 Treatise, "A History of Accounting and Accountants," courtesy of the publisher.] It is not unfitting that when we come to deal with the modern profession of accountant, Scotland should occupy the place of priority. It is there that the Chartered Accountant originated, and in Scotland we find the oldest existing societies of public accountants. We are not unmindful of the claims of Italy, to which country we are indebted for so much in connection with the profession, but however important a position accountants occupied there during the seventeenth and eighteenth centuries, their influence undoubtedly diminished thereafter, and the old Gilds and Colleges became either dormant or extinct. *** In tracing the growth of the profession in Scotland as elsewhere one meets with many difficulties. In Edinburgh it was for long associated with the profession of law, so that we frequently find the designation of Writer applied in one place to the same individual who is in another designated Accountant. There are several instances of members of the Society of Writers to the Signet, the leading Solicitors' Society in Scotland, practising as accountants. Moreover, until comparatively recent times, much accountants work was done in solicitorts offices. Again, to a certain extent in Edinburgh, but to a greater extent in the more commercial city of Glasgow, the designation of accountant was, in early times, confounded with that of merchant, a term of much wider significance then than now. *** It may be of interest to quote here, as a very full compendium of the kind of work which a Glasgow accountant of the early part of the last century professed to undertake, the list of duties which Mr. James McClelland attached to the circular,

dated 12th March 1824, in which he announced that he had commenced business on his own account: Factor and trustee on sequestered estates. Trustee or factor for trustees of creditors acting under trust deeds. Factor for trustees acting for the heirs of persons deceased. For gentlemen residing in the country for the management of heritable or other property. Agent for houses in England and Scotland connected with bankruptcies in Glasgow. The winding up of dissolved partnership concerns and the adjusting of partners' accounts. The keeping and balancing of all account-books belonging to merchants, manufacturers, shopkeepers, &c. The examining and adjusting of all disputed accounts and account-books. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 100122417 (212) 334-2078 Page 13 The making up of statements, reports, and memorials on account-books or disputed accounts and claims for the purpose of laying before arbiters, courts, or counsel. The looking after and recovering old debts and dividends from bankrupt estates. And all other departments of the accountant business. *** On 6th July 1854 [The Institute of Accountants in Glasgow petitioned Queen Victoria] for the grant of a Royal Charter. The Petition, which was signed by fortynine accountants in the City of Glasgow, set forth: That the profession of an Accountant has long existed in Scotland as a distinct profession of great respectability; that originally the number of those practising it was few but that, for many years back, the number has been rapidly increasing, and the profession in Glasgow now embraces a numerous as well as highly respectable body of persons; that the business of an Accountant requires, for the proper prosecution of it, considerable and varied attainments; that it is not confined to the department of the Actuary, which forms indeed only a branch of it, but that, while it comprehends all matters connected with arithmetical calculation, or involving investigation into figures, it also ranges over a much wider field, in which a considerable acquaintance with the general principles of law, and a knowledge in particular of the Law of Scotland, is quite indispensable; that Accountants are frequently

employed by Courts of Law . . . to aid those Courts in their investigation of matters of Accounting, which involve, to a greater or less extent, points of law of more or less difficulty; that they act under such remits very much as the Masters in Chancery are understood to act in England, and . . . that it is obvious that to the due performance of a profession such as this a liberal education is essential . . . . Directly after its formation the Edinburgh Society deliberated upon a distinctive title for its members, and resolved to adopt the name of "Chartered Accountant," indicated by the letters "C.A." The same course was followed by the Glasgow Institute as well as by the Aberdeen Society when they were incorporated later. It naturally took some time before the new name became familiar to the public or even in the mouths of the members themselves, but ere long it acquired a definite signification throughout Scotland, and when in 1880 the same designation was adopted by the English Institute, incorporated in that year, it soon became a recognised term wherever the English language is spoken. [End of excerpt from Brown, "A History of Accounting and Accountants"] 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 100122417 (212) 334-2078 Page 14 Professional Accountancy Travels Across the Globe George Watson (1645-1723), one of the early Scottish accountants, trained in Holland and passed along instructional materials used by his fellow professionals. By the middle of the19th century, England was in the midst of prosperous times brought on by the Industrial Revolution. It was the leading producer of coal, iron and cotton textiles, and was the financial center of the world. With this financial surge came a demand for accountants, both for the healthy concerns and those companies declaring bankruptcy in the midst of the competition. In 1880, the newly formed Institute of Chartered Accountants in England and Wales brought together all the accountancy organizations in those countries. In addition to the 587 members initially enrolled, an additional 606 members were soon admitted on the basis of their experience. Standards of conduct and examinations for admission to the Institute were drawn up, and members began using the professional designations "FCA" (Fellow Chartered Accountant, for a firm partner or proprietor in practice) and "ACA" (Associate Chartered Accountant, signifying a qualified member of an accountant's staff, or a member

not in practice). In the late 1800s, large amounts of British capital were flowing to the rapidly growing industries in the United States. Scottish and British accountants traveled to the U.S. to audit these investments, and a number of them stayed on and set up practice in America. Several existing American accounting firms trace their origins to one or more of these visiting Scottish or British chartered accountants. City directories from the year 1850 list 14 accountants in public practice in New York, four in Philadelphia and one in Chicago. By 1886, there were 115 listed in New York, 87 in Philadelphia and 31 in Chicago. Groups of accountants joined together to form professional societies in cities across America. In 1887, the first national accounting society was formed - the American Association of Public Accountants, predecessor to the American Institute of Certified Public Accountants. 2002 Association of Chartered Accountants in the United States 341 Lafayette St., Ste. 4246 New York, NY 10012-2417 (212) 334-2078 Page 15 Into The Twentieth Century and Beyond However prosperous, the United States was still an infant nation when the American Institute of Certified Public Accountants was formed. The Civil War ended with the U.S. still a predominantly farming-based economy. It was only the year before that the Apache chief Geronimo had surrendered to the federal authorities. The ensuing decades saw enormous economic growth as industry began to overtake agriculture in financial importance. This period of growth also saw its share of financial scandals. Over-capitalization and stock speculation caused financial panics in 1873 and 1893. Watered railroad stocks were in the headlines, along with concerns about growing monopolies in several industries. Labor unions developed in response to corporate exploitation of workers. Congress responded by passing the first Interstate Commerce Act and the Sherman Antitrust Act, marking the beginnings of federal regulation of business. When Theodore Roosevelt became President after the 1901 assassination of William McKinley, he supported the use of governmental power to control the growing industrial monopolies and the price increases they caused. The Roosevelt administration helped persuade Congress to establish the Department of Commerce and Labor to gather the facts needed to enforce antitrust laws. The Interstate Commerce Commission's powers over transportation were broadened, and the ICC established a uniform system of accounting -

the first instance of accounting used as an instrument of federal regulation. Unlike the British, who used the balance sheet in an effort to monitor management's use of stockholders' monies, American corporations of the early 20th century had no comparable history of losses from stock speculation. Rather, American balance sheets were drafted mainly with bankers in mind, and bankers of the era cared more about a company's liquidity than earning power. Beginning in 1920, business practices began changing drastically as the U.S. went through an inventory depression in which wholesale prices fell 40 percent. Cash flow slowed, loans defaulted and credit became less available to corporations. In response, businesses sought financing from sources less tied to their current cash flow. The offering of corporate stock issues became a leading method of financing expansion. As stockholders, rather than bankers, became the primary audience of financial statements, the income statement began to take center stage over the balance sheet. Other factors, such as the rise of income taxation and cost accounting, also shifted the focus to revenues and expenses. At the turn of the century, there were at least four types of funds statements in use - those that summarized changes in cash, in current assets, in working capital and overall financial activities. Accountant H. A. Finney led the movement for use of a funds statement that focused on liquidity by tracking the sources of changes in working capital. He used a worksheet approach to highlight meaningful balance sheet changes by aggregating most of the fluctuations that affect working capital, and offered a standardized method for calculating them. In the 1940s, the accounting profession increasingly used the funds statement to measure the actual flow of monies, rather than simply the sum of working capital changes between balance sheet dates. The funds statement increasingly became a staple for the financial statement and, in 1971, the American Institute of Certified Public Accountants began requiring its inclusion in stockholders' annual reports. Nowadays, with more than 330,000 members, the AICPA is the premier national professional association for CPAs in the United States. Their web site is full of useful resources, including the latest American accounting news, along with organization-specific mater

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A BRIEF HISTORY OF ACCOUNTING: FROM PREHISTORY TO THE INFORMATION AGE

By James deSantis

Premise
In the Summer of 1995 I enrolled in courses sponsored by both the Society of Management Accountants of Saskatchewan and Athabasca University. In particular, I remember taking two classes, the first was an introduction to financial accounting and the other course was in microcomputer business applications. It was during this time that my father became by academic mentor. My father introduced me to the management philosophy of the Learning Organization; I remember his comments and laughs when in studying accounting we realized that even professional accountants and authors would not provide the needed ethical guidance for young business students(1) . I also remember that when studying the accounting component of the microcomputer business applications course he mentioned that accounting and computerized accounting should take a new direction altogether. He emphasized this new direction by pointing out how the Quicken(2) financial package doesn't require the closing of accounts/categories for reporting the financial statements. Later, he showed me how another accounting package, Pacioli 2000 for Windows(3) , would treat all the accounts, be balance sheet or income statement accounts, as registers. These experiences and my appreciation for new technologies have motivated the writing of this paper.

Origin of accounting and bookkeeping

In her notes compiled in 1979, Professor Linda Plunkett(4) of the College of Charleston S.C., calls accounting the "oldest profession"; in fact, since prehistoric times families had to account for food and clothing to face the cold seasons. Later, as man began to trade, we established the concept of value and developed a monetary system. Evidence of accounting records can be found in the Babylonian Empire (4500 B.C.), in pharaohs' Egypt and in the Code of Hammurabi (2250 B.C.). Eventually, with the advent of taxation, record keeping became a necessity for governments to sustain social orders. The Italian Renaissance brought the artistic accomplishments of man to new heights. At this time, Venice was the business cradle of Europe, and it was here among merchants that double entry accounting was invented and practised. During this period Fra Luca Pacioli wrote his "Summa" dealing with record keeping and double-entry

accounting, one of the very first published books of the time that would become the accounting "textbook" for the next 500 years.

Pacioli
Fra Luca Pacioli(5) was born during 1445 in Sansepolcro, Tuscany. He was a mathematician and friend of Leonardo da Vinci. He wrote and taught in many fields including mathematics, theology, architecture, games, military strategy and commerce. In 1494, Pacioli published his famous book "Summa de Arithmetica, Geometria, Proportioni et Proportionalita" (The Collected Knowledge of Arithmetic, Geometry, Proportion and Proportionality(6) ). One section of this book was dedicated to the description of double-entry accounting. The Summa was one of the first books published on the Gutenberg press, became an instant success and was translated into German, Russian, Dutch, and English. The Summa made Pacioli a celebrity and insured him a place in history, as "The Father of Accounting."(7) Fra Luca did not invent double-entry accounting, instead, he superbly described a method used by merchants in Venice during the Italian Renaissance. His system included most of today's accounting routines such as the use of memorandums, journals and ledgers. His ledger included assets--receivables and inventories-liabilities, capital, income, and expense accounts. He described the year-end closing entries and proposed that a trial balance be used to prove a balanced ledger. In addition, his Summa made reference to the certification of books, ethics and cost accounting. There would be little modification to Pacioli's system for the next 500 years. The present day trial balance sheet did not get its form until 1868 and the income statement was developed before WWII(8). In the 1980s, statements of financial position were developed with the purpose to provide relevant "information about the operating, financing, and investing activities of an enterprise and the effects of those activities on cash resources" (CICA 1540).

The Information Age

The cost of today's products is mostly made up of R&D, intellectual assets and services(9). Pacioli's accounting system has not changed practically for the last 500 years, and as long as our wealth was physical and our costs included mostly material

and labour, this system was adequate. The double-entry accounting system relied on historical information and has traditionally provided financial reports and statements two weeks after the month-end closing period(10). Businesses today, require information not two weeks after month-end but immediately; accounting information, activities and indices of performance must be available at the push of a button/key. The trends in the information age is to conceptualize and implement accounting as a data base information system gathering all the quantitative and qualitative events of all the areas of a company. Oracle(11), PeopleSoft(12), and SAP(13) are world players in this re-conceptualization of accounting as a data base information system, and they provide services to large corporations There are also excellent accounting software packages which are available in the market place. Examples of these packages are Pacioli 2000 for Windows, Peachtree Complete Accounting(14), andQuickbooks Pro(15). The power of such software can be appreciated by making reference to the web site listing the features of Pacioli 2000 for Windows(16), and to my father's paper "Pacioli 2000 for Windows: An Accounting Software Solution to Address the problems of Accountability of Saskatchewan District Health Boards"(17), June 1996.

Conclusion
The knowledge economy along with the ongoing information technology changes are affecting the way we are doing business. We are becoming customers of each other, and the economic value chain is integrating our businesses with our suppliers, customers, and governments. As accounting is concerned, these peculiar changes are being reflected in the present trends of shifting our attention from an obsolete quantitative approach to a qualitative obsession where quality, customer satisfaction, and innovation become the most important components.
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The Florentine vs. the Venetian approach to reporting: Florentine commerce also flourished in the 13th and 14th centuries, giving rise to double-entry accounting there as well. A major achievement in Florence was the development of large associations and compagnie (partnerships that pooled capital initially within family groups and then from outside the family groups). Until the influence of the Venetians, Florentine accounts listed debits above credits rather that on separate pages. Separate columns for transactions were needed to record which monetary value was used. However, the key influence on double-entry accounting, not so much for its development as its spread, came from Venice. Venice was the key commercial city of the Renaissance because of its commercial empire and advantages as a port. The Venetians may not have developed double-entry accounting before the Genoese and Florentines, but Venice developed it, perfected it, and made it her own, and it was under the name of the Venetian method that it became known the world over. The earliest Venetian records show an accounting system that it was highly developed, including the first true journal used in Renaissance bookkeeping.

The Origins: Chronology of the French Chart of Accounts The concept of chart of a standard accounts format was proposed by many 19th and 20th century authors, but it was not until 1911 that Johan Friedrich Schr had the idea of the role of standardization and practical value of a Chart of accounts. This idea became crucial after the First World War. In 1921, the Germans created the Reich committee for productivity, associated with a working group for the administration of the businesses. Eugen Schmalenbach (18731955) who will be the father of all the European Charts of accounts was named president of sub group in charge of accounting. This group was ineffective and Schmalenbach published alone its own chart of accounts in 1927. Persecuted and pursued by the Gestapo because his wife was Jewish, Schmalenbach still inspired the official German charts of accounts whose principle was adopted by a decree signed by Hjalmar Schacht on July 7, 1936. The Schmalenbach plan then called Goering plan was born in 1937. At the beginning of the war, in France, December 6, 1940, Jacques Chezleprtre presented a preliminary report intended for the Standard Committee of accountancies in which it insisted on the need for accounting for serving the interests of the private companies and the Government. This report was used as a basis for work of the Governmental Commission established by the decree of April 22, 1941 and which proposed a report of 153 pages accompanied by detailed appendices, December 31, 1941, which became after its official approval on March 21, 1942 the Master Chart of accounts. It was published in 1943, but the hazards of war had it was never applied.

NAPOLEON COMMERCIAL CODE Fair Value Method in accounting y Napoleon Bonapartes codification of the Frances Civil Law named Code of Napoleon was enforced on March 21,1804. yThree years later (1807), the Code of Commerce was enacted as supplement to Code of Napoleon. It regulated commercial transactions, laws of business, bankruptcies and the courts jurisdiction and procedures dealing with this subjects

AVARY COMMERCIAL CODE COMMERCIAL CODE (Historical Cost Method ofAccounting yJacques Savary, (1622-1690) belong to a noble French Family devoted to trade and to publication of works on commercial matters. yHe is known as the chief architect of the Commercial Code of France in1673 (called Code of Savary)which generally uses historical cost as the basis of valuation.