Technology in Accounting History

The CPA Journal, November 2015 | Go to article overview

Technology in Accounting History


Data computing is a far older practice than most people realize, and it has always been linked to accounting. The Mesopotamians claimed the earliest use of an adding machine-the wire-and-bead abacus-2000 years ago. More recently, in 1890, Herman Hollerith and Janies Powers invented the punch card, a computing technology that may be familiar to older readers. Punch cards read information that is mechanically stamped into paper, easing the need for handwritten accounts and timesheets and increasing access to data. Articles evaluating accountants use of technology appear from the very beginning of the CPA Journal archives. Although decades-old mechanical technologies may pale in comparison to today's global digital networks, the CPAs of the past likewise grappled with the still-relevant themes of innovation, evolution, and obsolescence. Every advance in technology has been met by professionals reassessing their skills and adapting to a new environment. Here, we take a look at some of the most compelling technology-driven Journal articles from our archives.

Mechanization of Tax Assessments and Collections

"There is probably no other field of governmental effort that lends itself to mechanization any more than that of taxes and assessments and the ultimate collection of taxes," wrote Chas. J. Maxcy in the October 1935 Journal (p. 3). In the article, Maxcy presents himself as an advocate of early tax assessment technology-which, at that time, included field cards, assessment rolls, tax rolls, and lot ledgers, all prepared using electrical typing machinery. Maxcy wrote that "The multiplicity of transactions, the necessity of speed, the demand for accuracy and the limitation of time are all factors contributing to the necessity of modernizing this branch of government." Not only does government benefit from the adoption of technology, but it is obligated to embrace the improved precision it can provide. The article predicted that poor technology could lead to societal breakdown: "When metropolitan communities do not adopt a systematic and orderly method of ascertaining what is the actual valuation of the various properties assessed, opportunities for many irregularities are opened. Property may be under- or overassessed and favoritism may creep in. This results in unrest and dissatisfaction on the part of the taxpayers and in many instances has led to tax strikes with the attendant curtailment of those vital government functions such as education and protection."

Electrical Operation of Card Files

Manually filing, sorting, and retrieving data were integral skills for CPAs in the 1940s. A desktop machine called a "selector," sold under the Electrofile brand name, assisted CPAs in carrying out such tasks, and author Raymond L. Collett described how they woiked in the October 1940 issue (p. 24). A card was placed on the selector, and, by depressing keys on a keyboard and moving the operating bar, the typist would choose the selected card. The machine could hold up to 1,000 cards, identified with a series of alphanumeric symbols. Collett's long description of the operating steps to mastering card filing systems makes one grateful for computer keyboards-even if they pose a risk for carpal tunnel syndrome.

The Application and Use of Machines and Electronics in Accounting.

In October 1955, author Kermit M. Pennington lamented that machine accounting still required the "limitation" of step-by-step human direction (p. 582). Pennington thought it was high time that CPAs directed the "computers ... developed for scientific and mathematical calculations" for their own use. He takes readers on a timeline of computing technology, from the ancient Romans' use of the abacus, to its adoption in China and Korea, and the development of abacus-like tools in Egypt, Greece, Russia, Armenia, and Turkey. …

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