Accountancy in America: Meeting the moment for 250 years

“Information about money has become almost as important as money itself.”

Walter Wriston wrote those words after serving as chairman and CEO of Citicorp from 1970 until 1984. That observation, made by the leading banking figure of his generation, says a lot about the need for an accountancy profession and its domain: information about the activities involved in investments and the performance of investments.

Ways to track trade and account for wealth have been around the Americas for more than a thousand years. But while accounting has a long history — quipu, for example, were knotted cotton or animal fibers used in South America for numerical recordkeeping as far back as the ninth century — the profession of accountancy emerged from European double-entry bookkeeping as a newly independent, rapidly expanding United States industrialized in the mid-1800s.

Since then, the profession has matured and become fundamental to how the U.S. economy functions. Services CPAs and CGMA professionals provide — from ensuring the reliability of financial data to preparing taxes and month-end reports to advising businesses, governments, and nonprofits on strategy and risk management — are essential to support economic health worldwide.

This retrospective revisits milestones of the profession as the United States celebrates its 250th birthday and is a follow-up to the bicentennial overview I wrote for the JofA 50 years ago.

Presented in roughly chronological order, the essay highlights accomplishments and tells the story of a profession that has earned a unique position of trust in American society. A companion timeline at the end of this article lays out key events, including many that could not be covered in an article of this length. No single article and timeline could contain all of the key moments in the history of accounting in this country, but this essay strives to show through successes and setbacks how our profession has consistently met the moment for 250 years.

KEEPING TRACK OF CREDITS AND DEBITS

During the Antebellum period, from after the Revolutionary War until the Civil War, bookkeeping was the main form of accounting.

As Harper’s Weekly stated in 1857, “It is very important then, for us to sustain a good commercial name; and to do this, we must take care that the debit does not overbalance the credit account in our ledger.”

Generally, early instruction in debits and credits emphasized rote over reason, that is, practical mastery — training bookkeepers to record transactions accurately and consistently in a fast-growing economy — even as more formal conceptual frameworks and theory developed over time.

As the nation expanded west following the Louisiana Purchase in 1803 and the end of the Mexican-American War in 1848, transportation and communication technology advanced, and the nature of capital markets transformed from individual and regional to national. Printed commercial publications such as Hunt’s Merchants’ Magazine, which started publishing stock and bond tables and commercial, industrial, transportation, and agricultural news in 1839, enjoyed large subscription bases.

CORPORATE ACCOUNTING TAKES ROOT

In 1827, the Baltimore & Ohio Railroad became the first railroad chartered for passengers and freight. In its analysis of operations, B&O management identified what we now describe as fixed and variable operating costs — an early step toward modern cost and performance measurement for capital-intensive businesses. Practices for allocating long-lived asset costs (including depreciation) continued to evolve over the decades that followed, as the profession refined concepts that are foundational today.

While canals and waterways remained the highways of transport — the Erie Canal became fully operational in 1825 — railroads picked up steam.

Within a few decades, inventions, such as the telegraph and a new process to mass produce steel at half the cost, and a rapidly expanding textile industry forced transformations of capital sourcing and the need for measures of productivity, while each state attempted to employ its constitutional 10th Amendment powers to regulate burgeoning corporations. In New York, Cornelius Vanderbilt and Daniel Drew started building what would become massive railroad and shipping empires after the Civil War.

Elsewhere, John D. Rockefeller learned bookkeeping and mercantile skills at Folsom’s Commercial College in Cleveland in 1855 before making his name and fortune in the oil business in western Pennsylvania. In 1870, Rockefeller formed the Standard Oil Company in Cleveland, and his application of accounting efficiency measures to outperform (and often acquire) the competition helped him become the nation’s first billionaire and led to his adversaries calling him “bloodless.”

Railroads that expanded westward fueled a post-Civil War steel boom and produced engineering knowledge to continue the increased capacity of engines to pull lengthier trains at higher speeds, demonstrating the need for information about throughput efficiencies. Most communities identified themselves with the need to be part of a railroad system to ensure trade development.

But overbuilding and lack of regulation led to the so-called “Railroad Problem.” During the financial panic of 1873, the debt railroads had taken on by selling bonds led to the bankruptcy of one of the biggest New York banks. A decade later, railroads often operated with limited transparency and inconsistent practices — conditions that underscored the growing need for reliable reporting, independent assurance, and the professional standards that would soon define modern accountancy.

Wall Street investment banks, particularly J.P. Morgan & Co., which had guided the flourishing life insurance industry to invest in the transportation sector, began to cull capital from railroads to encourage consolidations that would bring scaling and volume efficiencies and rein in high fixed-cost operations. Rating agencies using metrics designed from reportable information also appeared, with Henry Varnum Poor being a pioneering financial analyst and railroad editor who founded a company that would later become the foundation for Standard & Poor’s.

American accounting theory development was advanced by Charles Ezra Sprague’s “The Algebra of Accounts,” published as a series in 1880 in The Book-Keeper and American Counting-Room. It provides the basis for the accounting equation: assets = liabilities + proprietorship and extensions thereof.

ESTABLISHING THE VALUE OF INDEPENDENCE

In the decade before the Civil War, about a dozen individuals identified themselves as public accountants in a New York City directory. By 1895, following the end of the Gilded Age, there were nearly 150 such listings. During that period, in 1887, the American Association of Public Accountants was formed. Seventy years later, the organization would adopt the name the American Institute of Certified Public Accountants, or the AICPA.

As the Gilded Age came to an end, the accountancy profession was becoming recognized, and public accounting firms went national. One of them was Barrow, Wade, Guthrie & Co. (BWG), which was founded in 1883, operated until 1950, and became a part of what is now KPMG.

Prior to 1900, it was most common for accountants to work for private enterprises such as railroads, manufacturers, retailers, and banks, not as external public auditors. But the Gilded Age had created a U.S. capital market that attracted European investors, who turned to accountants specializing in auditing for assurance about information.

On Dec. 31, 1902, U.S. Steel, the first billion-dollar company, received a certificate from Price, Waterhouse & Co. that the statements in its first 40-page annual report showed “the true financial position” of the company in “a fair and correct” manner. This accomplishment represented the leadership and efforts of Arthur Lowes Dickinson and George O. May, senior partners at Price Waterhouse and future members of the U.S. Accounting Hall of Fame. U.S. Steel’s disclosures became a proven example of proper disclosure to be followed by major industrials.

In 1917, three state accounting boards started offering the same exam for general licensure, which was written and scored by an AICPA forerunner. By the late 1920s, all 48 states had established CPA licensure.

On Oct. 29, 1929, the day known as “Black Tuesday,” the U.S. stock market crashed. Catastrophic losses destroyed the public view of market investing’s values. Trust in market institutions collapsed, but the accountancy profession soon played a key role in building back what was lost.

In the depths of the Great Depression, former New York Gov. Franklin D. Roosevelt was overwhelmingly elected to the presidency and took office in March 1933. He would remain in office until his death on April 12, 1945. As part of Roosevelt’s New Deal, Congress passed securities acts in 1933 and 1934 and the Investment Company Act in 1940, which include mandates that investors receive accurate disclosures.

Arthur Carter, then-president of the New York State Society of CPAs and a partner at Haskin & Sells (now Deloitte), testified before the U.S. Senate Committee on Banking and Currency on April 1, 1933, in support of mandatory audits by independent public accountants to restore investor confidence, according to the New York State Society of CPAs’ CPA Journal. When the chair of the Senate committee asked Carter, “And who audits you?” Carter responded: “Our conscience.”

U.S. capital markets in 1933 had become public, with individual investors providing the major stream of capital. But the resources were largely controlled by the “visible” hand of the professional managerial class, which had evolved as corporations became a dominant form of business in the globally developing economy. The audit mandate served by independent CPAs responded to the need to balance the roles of owners and managers. It was a testament to the value of a licensed community performing a public service in a private setting of the market that gave foundation to the claim of professionalism for accountancy.

The search for authoritative guidance, which had been addressed indirectly in the April 1917 Federal Reserve Bulletin under the heading “Uniform Accounts,” now began in earnest. The 1938 McKesson & Robbins financial scandal, a $20 million fraud involving fabricated assets and fictitious sales, accelerated the profession’s work to strengthen audit procedures, clarify responsibilities, and advance authoritative guidance.

In 1939, the American Institute of Accountants, a forerunner of the AICPA, formed the Committee on Accounting Procedure (CAP), retaining in the private sector the duty to direct corporate information content. The establishment of independent auditing of public company financials played a key role in restoring investor confidence in the capital markets and setting the stage for the incredible growth of the U.S. economy during and after World War II.

The academic community contributed a 1940 monograph by Hall of Fame members William A. Paton and A. C. Littleton, published by the American Accounting Association, titled An Introduction to Corporate Accounting Standards. It set out the matching concept for income and historical cost basis for assets.

ACCOUNTANCY DURING POSTWAR EXPANSION

Periods of rapid economic growth and disruption following the post-World War II boom tested the U.S. capital markets and, in turn, the accountancy profession. Those moments became catalysts for lasting improvements in standard setting, oversight, and practice quality.

In 1965, Hall of Fame member Paul Grady published AICPA research study No. 7, Inventory of Generally Accepted Accounting Principles. It had a distribution of over 300,000. These were useful and available overseas.

The Continental Vending case at the U.S. Supreme Court in 1969 highlighted the consequences when professional responsibilities are abandoned — and it reinforced the profession’s commitment to independence, ethics, and enforceable standards. The AICPA and the profession supported independent standard setting via the creation of the Financial Accounting Standards Board (FASB) in 1973.

In 1987, the AICPA helped create the Center for Audit Quality (CAQ), an organization affiliated with the Institute but operationally independent and dedicated to improving audit quality.

Subsequent decades tested the resilience of U.S. capital markets and heightened expectations for transparency and assurance. Episodes such as the Savings & Loan Crisis, ZZZZ Best, and the Enron and WorldCom failures helped drive major reforms — strengthening auditing standards, governance, and public oversight. The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB) to reinforce audit quality and investor confidence through firm oversight and inspection.

The economy suffered shocks with the Great Recession starting in 2008 and again with the COVID-19 pandemic in 2020, but with the AICPA spearheading advocacy efforts on Capitol Hill and spurring quality improvements in audit, including the introduction of new quality management standards in 2025, investor confidence has steadily rebounded. In the CAQ’s 2026 institutional investor survey, 91% of respondents said they trust the accuracy of audited financial statements.

BIG CHANGES IN STOCK OWNERSHIP AND RETIREMENT

Also in the 1980s, pension accounting standards changed. In 1985, FASB, under the leadership of Dennis Beresford, required a comprehensive accrual basis of accounting for pensions. This made defined benefit plan costs more apparent, leading in turn to the prominence of defined contribution plans and the rise of the institutional mechanisms through Fidelity, Vanguard, and others to manage individual 401(k) wealth accumulations via market participation over time.

Federal Reserve data shows how these institutional mechanisms have changed stock ownership. In 1945, the first year the data was collected, 93% of stocks were held by individuals; the remainder was institutional. By 2025, the equity market capitalization total had multiplied by many times while the individual share had dropped to about 40%, with mutual funds and other institutional investors and insurance companies comprising the remainder. As a result, individuals have become price takers and not price makers; institutions now fill that role.

During the 1990s, Edmund Jenkins, senior technical partner of Arthur Andersen, provided leadership for the AICPA Special Committee on Financial Reporting. In a research-intensive effort to shape future disclosure content, Jenkins’ group combed databases and employed academically trained researchers to seek the major components of information being used by the analyst community to meet the user needs of a broad community of investors.

The 1994 report of that special committee identified five broad groups of information to comprise a model for business reporting to include: financial and nonfinancial data, including KPIs; reasons for changes in reported data; forward-looking information; information about the management and shareholders and company; and broad information about the company’s objectives, strategies, business scope, and industry structure.

The Jenkins initiative laid the groundwork to modernize financial reporting, as U.S. markets for equity investing via 401(k) accounts became an ever more important part of American workers’ lives.

In 2009, in the area of authoritative materials, FASB adopted its Accounting Standards Codification under the leadership of Hall of Fame member Robert Herz, chair of the FASB board. This organization of subject matter aided in the research and application of GAAP.

TECHNOLOGICAL ADVANCES CREATE NEW OPPORTUNITIES

Over the past 20 to 25 years, technological advances have significantly changed how accountants earn the CPA license, what services they provide, and where and how they work.

Olivia Kirtley, CPA, CGMA, former chair of the AICPA board of directors, recognized the benefits of digital technology early on. In 2004, she led a successful effort to move the CPA examination from a pencil-and-paper exercise to a computer-based test center operation.

Cloud computing made it possible for accountants to work anytime from anywhere, breaking down geographic barriers in staff and client acquisition and powering the profession’s swift shift to remote work during the COVID-19 pandemic. The cloud and technologies such as robotic process automation fueled the rise of client advisory services (CAS).

Today, rapid advances in generative and agentic artificial intelligence are quickly automating large swaths of traditional entry-level tasks, opening doors to transformed business models but also raising questions for accountant training and skill development that the AICPA is addressing with its new Profession Ready Initiative (see “How Will Accountants Learn New Skills When AI Does the Work?” JofA, March 1, 2026).

MEETING A NEW REPORTING REQUIREMENT

Recently, the CPA’s scope of services began to address the importance of creating “tailored reports.” The reports, mandated in 2022 by the SEC for mutual funds and exchange-traded funds, took effect in 2024, and investment companies complied with a variety of disclosure styles, much as operating companies did a century before.

The unaudited data array is now beginning to gain some study for best practice content, and the work of defining widely accepted disclosure principles remains an active area of development — one where CPAs, standard setters, and regulators continue to lead efforts to make information more decision-useful.

As the future reveals itself with new technologies including AI and capital formations from private equity, it will be useful to recall that the mandated role of CPAs in our society is that of providing the attest function. The challenge is to provide the vital content of timely, relevant, and reliable information to capital markets.

Across 250 years, the accountancy profession has repeatedly met the moment — advancing standards, strengthening trust, and delivering the reliable information that capital markets require.

This essay highlights events, personalities, topics, and activities representative of the challenges and progress of the accountancy profession in the United States over the decades since 1776, providing examples of adaptation to the continuing challenges of service to the public interest.

It’s up to us to carry that legacy forward and maintain high standards as we enter a rapidly changing future.

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About the author

Gary John Previts, CPA, CGMA, Ph.D., is a distinguished university professor emeritus at Case Western Reserve University’s Weatherhead School of Management in Cleveland and co-author of A History of Accountancy in the United States. He served as editor of the Research in Accounting Regulation journal for 30 years and received the AICPA gold medal and the 2018 Lifetime Achievement Award from the American Accounting Association. To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.

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