The History of Accounting

How Accounting Has Been Changed Over Time By Technology

Luca Pacioli (1494) the first to describe the systems of debits, credits, journals and ledgers. Pacioli's writings are the basis of modern accounting. Summa de Arithmetica, Geometria, Proportioni et Proportionalita ("Review of Arithmetic, Geometry, Ratio and Proportion"), a twenty-seven page treatise on double-entry accounting, was one of the first items to be published on the Gutenberg printing press. Leonardo da Vinci was one of Pacioli's students in Milan.

The Modern Accountant

Before accounting computer programs:

• Entries were done manually
• Eistakes could mean hours of recalculation and "missing" money
• Einding errors was tedious work
• Stereotypical introverted/glasses-wearing/math nerd/pocket-protector image is perpetuated

After accounting programs:

• Eliminated calculators, paper ledgers, and pencils
• Lowered the margin for error
• Made mistakes easy to find and correct
• Got the job done faster

2010 saw 1,216,900 employed accountants.

Computers have changed the nature of accounting, turning it into a fast-paced and dynamic profession.
The beginning of the shift in accounting technology came in the form of simple spreadsheet programs.

VisiCalc - 1978

• Upgraded companies from manually calculated spreadsheets.
• VisiCalc pioneered automatically updating cells

Quickbooks - 1998

• Quickly dominated the market for day-to-day bookkeeping
• Over 80% of bookkeeping using Quickbooks
• 4.5 million companies use QuickBooks
• The most popular accounting program in the US

SaaS (software as a service) Accounting

• Web-based
• Examples such as Kashflow and Xero.
• Secure hosting locations
• Clients and accountants collaborate on the same information
• For most companies, moving to the Cloud reduces IT expenses from between 30% and 70%

People skills have become just as important as keeping the numbers in check. Because of these automated programs, accountants have more time to:

• Interpret data
• Give good financial advice
• Suggest smart business decisions
• Be more involved in their client's business

Now accountants are expected to recommend best-practices to management and suggest ways to reduce costs while improving profit. The stereotypical "task-oriented" accountant is outdated as is the the "shoe box full of receipts". The accountant has become a business consultant rather than a mathematical tool.

Athlete Award Changes

It has come to our attention that more and more Athletes are having their APA's taken away from them.

Having just spoken to Amy Lowe at UK Sport and she has clarrified the situation as follows:

"An Athletes income and APA added together cannot be higher than the threshold of £64,200 (2011-12), therefore is their other income pushes them above the threshold their APA will be reduced pound for pound.

Examples:

1. An A level athlete can earn up to £36872 and still receive a full APA of £27,328 = £64,200

2.An A level athlete receiving £36873will have their APA reduced to £27,327 = £64,200

3.An A level athlete receiving income of £64,200 will have their APA means tested out to £0.

At present if an athlete is running a company, we would take into account their net profit and/or their personal drawings from the business as income. "

Clearly this is a slight change from everyone's previous understanding. However, it is something that all Athletes need to take into consideration.

For our clients affected by this change, we will be having conversations with you over the next few months. For others that may need advice, or have concerns about how this will affect them, then please give me a call.

Chris

GMS World

It has certainly been a month and a half for GMS World.
And the World is the operative word.

As well as the hang over from the tax return season which seemed to drag on right through January, it has been international season, with all of our overseas clients being very active:

• It started with some accounts for a Swiss company engineering company;
• some more accounts for a Russian oil company;
• some accounts for an Indian based healthcare business;
• some negotiations on the sale of some pharmaceutical products for another Indian client;
• a flying workshop for one of our Dubai based clients, who had me working my socks off in a hotel room for two days (not what you are thinking - those with dirty minds);
• the negotiation for some land in India;
• a small piece of tax work for a UK client who deals with the US; and finally
• a trip to Indonesia for one of our oil clients (which is where I am writing this blog !)

It all sounds very exotic, but one hotel is much like any other, and long haul travel is never fun. (Even on the new airbus 380 !!)

The work though has been very interesting and varied. And that is what makes what we do so enjoyable.

We have also been developing a number of web based products which we are launching very soon.

Amanda and I are working with a new client to help revamp our website. We have learnt so much in relation to the web, marketing on the web and the benefits that a correctly structured website can bring. It has been really interesting.

Business across our clients has been steady, but slow. UK businesses are very clearly still suffering. Construction, Insurance, Recruitment, Manufacturing, Print.... I could go on. All are finding it a slog, and in some ways there is no surprise. The UK economy still has some corrections to make. Only last week the threat of a fall in UK Plc's credit rating has hit the exchange rate and therefore the attractiveness of the UK as an investment.

More cuts in public sector spending and the very real possibility of tax rises are all things that we expect to hear about in the budget in a few weeks time. With a May election looming, this one needs to be a vote winner but not at the risk of unsettling the climb back up the curve.

I wouldn't want Alistair Darlings job right now.

Chris

Here we go again

Happy New Year.

I hope you all had a good festive break.

The Christmas break is always a good time to recharge the batteries, and reflect on the past year and the future.

2009 was a very tough year and I think many of us in business are very glad to see the back of it. Who really knows what 2010 holds for us? I'd welcome your thoughts.

We have started the year in our usual style: Overweight from Christmas and overworked from the high volume of tax returns that we have to complete.

I hope that 2010 brings you all that you desire.

Best wishes

Chris

A frustrating time

A bit of rant I'm afraid.

In our line of work, we spend a proportion of our time keeping up to date and learning new rules and guidance, particularly tax. The knowledge that we develop, we provide as services to our clients, for which we get paid.
We really don't expect to get paid, if we don't do what the client has asked us.

This week I have had two scenarios where we have been called to meetings to advise, and in both cases our advice has provided very significant tax savings. However in both meetings, the potential clients decided to have a go themselves.

Now normally, not a problem. This happens. However in both of these cases, I travelled hundreds of miles, at our expense and had meetings where I was under the impression that we were going to be undertaking the work.

Not only did we incurr cost, but I also wasted a whole lot of time that could have been spent on other clients. Now, this is rare that this happens, because, as with these two cases, I usually have phone conversations with the potential clients first. The problem is that for every one like this, our propensity to be as open and up front with all potential clients diminishes.

I wish the two ladies, and the two gents well in their businesses. I will be keeping a very close eye on them from a distance. If you do need my help in the future, you'll be paying in advance next time.

Rant over.

Chris

Activity

Apologies for not posting anything for over a month. A week's holiday and then a frantic few weeks back, have just not left much time for the blog.

Activity seems to be high at the moment as we move closer towards tax return season. We have grown our business significantly this year, especially on the personal tax side of things, and the workload is now starting to flow.

Most of the team are now fully booked for the remainder of the year with planned work, and as usual January will enevitably be a write off, as we deal with all the late self assessment returns. Dean and Vinny this year decided to impose some time limits on when we receive tax returns. This means that only tax returns received by the 31st October will be guaranteed to have completed returns by Christmas. This has helped to bring many in earlier than normal.

We have also been busy with several large audits. For us this is audit season.

Our other focus this last month has been on Enterprise Investment Schemes and Venture Capital Trusts. These schemes provide significant tax advantages to businesses and investors provided they are set-up correctly. The rules and process for forming them are rigourous, but the potential advantages far outweigh the process hassle. We have several clients who have been the focus of our attention in this area. If you would like to know more then please let me know. We may even be running a seminar soon on this.

I'll try to post another blog soon, but for now, I must get to my 3.30 meeting.

Chris

The beginning of the end or W?

Things certainly seem to be picking up. As accountants we are quite a good barometer, we speak to a lot of client's and can see the activity. And activity seems to be going up.

Our established clients are doing OK, and even the ones that have been suffering, seem to be getting back onto an even keel. There are still a few that are struggling, but things are looking up. We have tried hard to support as many as we can by connecting clients, but it is not easy to be able to add sales and support in some of the niche industries.

I had a meeting with a local radio station this week. The finance director was a very experienced media accountant and it was good to get a feel for their progress. They sell media space direct to local businesses. Radio and media advertising is usually the first to go when businesses are struggling. He confirmed that although spending had slowed dramatically, business owners were now looking to ramp up again. He was cautiously upbeat.

I also met a potentail new engineering client. A fantastic high end engineering business that goes from design right that way through to finished product. They again had been suffering, but were beginning to see their sales pipeline pick up, as new orders and requests had started to come in.

This all sounds good. Could this be the beginning of the end of the current economic crisis?
According to our dear friends at the financial institutions: "No".

They are saying that the recovery does seem to be kicking in, but that they are expecting a W shape recovery. They think that we are in the middle of the W. If that's the case, then perhaps it's not wise to go into any investments in a big way. Product development and innovation have been long-term success stories in the past, so let's keep innovating, but at the same time, proceed with caution.

We have all learnt many lessons over the last few years. Some painful ones in some cases. Let's hope we all act responsibly and sensibly over the next few and well into the future.

I'm seeing some great clients next week, and have the inaugral meeting of an innovation group, so I'll let you know how they go next week.

Chris