The Handoff, Episode 5 | A 500-Year Accounting Journey: Demystifying Debits & Credits with Dr. Alli
Nov 28, 2023 ·
36m 59s
Host Jason Freeman interviews accounting professor Kris D. Alli, Ph.D., to unpack the extensive 500-year history of double-entry accounting and the emerging conceptual framework underlying modern standards. Kris explains how...
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Host Jason Freeman interviews accounting professor Kris D. Alli, Ph.D., to unpack the extensive 500-year history of double-entry accounting and the emerging conceptual framework underlying modern standards. Kris explains how 15th century Italian mathematician Luca Pacioli pioneered debits and credits with his double-entry system that underpins financial reporting today. They discuss the impetus for developing GAAP amid 1930s economic turmoil to communicate company health and value. Kris details Enron’s creative abuse of gray areas in accounting rules despite auditing by the now-defunct Arthur Andersen, spurring increased regulation like Sarbanes-Oxley. He notes the constant interplay between rule gaps, evolving technology, and corporate incentives that compel regulators to continually modify standards. Kris argues that few accountants grasp the full conceptual framework that grounds specific accounting guidelines. He plugs a free FASB-published book elucidating the development of accounting concepts and standards for inquisitive listeners seeking deeper perspective. Overall, this illuminating exploration of accounting’s rich history provides context to modern complexity and demystifies how today’s financial reporting intricacy has evolved over centuries.
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