Accounting Ethics Education

Teaching Virtues and Values

Margarida Pinheiro, Alberto Costa, Margarida M. Pinheiro, Alberto J. Costa

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000220513
• Edition: 1
• Topic: Business
• Subtopic: Accounting
• Index: Business

Accounting Ethics Education: Teaching Virtues and Values gathers a diversity of contributions from invited, well-known experts. It promotes a comprehensive reflection around how ethics can and should be taught to accounting students, discussing and highlighting the most updated research on accounting ethics education, and it is an essential reference in the field.

The subject of accounting ethics education is critical to foster ethical awareness that may prevent the way in which one acts or behaves, especially towards others. The point is that accounting education cannot exist without ethical education and accountants must be technically proficient and ethically sensible since ethical behavior is vital to the status and credibility of the accountancy profession. And this sensibility must be developed while the future professional is still cultivating his or her moral and intellectual structure within the school learning environment: character and practical reasoning are crucial because they include not only knowledge of rules and principles, and their correct application but also values and virtues.

Examining multiple perspectives, Accounting Ethics Education: Teaching Virtues and Values advances the scholarly debate by providing cuttingedge and insightful research vital for all those interested and immersed in these matters. It begins with a historical perspective of accounting ethics education and continues by exploring challenges, opportunities and developments in the area. It will be of great value to academics, students, researchers and professionals in the fields of accounting, accounting education and ethics.

Part 1
Accounting Ethics Education’s Odyssey

1
Accounting Education and Ethics in the 15th Century

Alan Sangster

1. Introduction

The 15th century marked the last century of medieval Europe. With its ending came the beginnings of the modern era, a shift in the balance of power, both in trade and in finance, and the beginnings of the spread of double entry bookkeeping across Europe made possible by the method being available in print. But, if bookkeeping was to become increasingly important, were the bookkeepers to be trusted? Did they know what they were doing? Did the journals and ledgers they maintained represent a true and fair view of the transactions they purported to reflect? To understand the answers to these questions, we need to look to the society in which they lived, the culture surrounding their work, who they were, how they were educated and to the work ethic of their craft. We begin by looking at the late medieval world of commerce.

2. Background

In the 13th century, Italian wholesale firms switched from a focus on international trade led by itinerant merchants to a business model based on sedentary merchants. They engaged in international trade through a network of permanent branches and a web of temporary agents spread across much of the continent and beyond, to London, Constantinople, Africa and the East. Banking was part of their activities and this change in business model resulted in a parallel international European banking network operated by Italian firms.

Economically, Italy was far ahead of the rest of Europe and the merchants had political control of Italy’s towns and cities. With their sophisticated double entry bookkeeping supporting their control of credit and debt, Italians acted as virtually the only providers of banking services in Europe until the mid-15th century (Barnard, 1972), controlling the banking services at the international fairs of Flanders, Champagne and in the major centers of trade, including London, Paris and Bruges; and Italian merchants dominated both European trade with the East and trade within Europe (Spufford, 2006).

Double entry bookkeeping had first emerged in Italian banks no later than the early 13th century (Sangster, 2016). As a shortage of cash and bullion (Cipolla, 1956) created a need for a sound and reliable method of recording debt, its use spread to Italian merchants (Martinelli, 1974), primarily the larger international wholesale merchants, with their businesses heavily dependent on credit and relatively high volume of activity and transaction values. Because many of the international merchants also acted as agents for other merchants, this stimulated the need for “the comprehensiveness and orderliness which double entry did in a sense compel” (Lane, 1977, p. 191).

By the mid-15th century, the double entry system had standardized in each of the principal commercial regions of Italy: Lombardy, Genoa, Tuscany (including Florence) and Venice. However, whereas the basic concepts of double entry were clear and defined the method—in the ledger, make one debit entry and one equal credit entry for each transaction, include in each entry an indicator showing the location of the contra entry and record every entry in the same money of account—the construction of each entry, the accounts used, the manner in which each account was organized, how accounts were balanced and the ways in which books of account were organized was not standardized. Each firm did it differently. At a regional level, the double entry account books in use, the layout of the ledger accounts and the language used in entries varied between Lombardy, Genoa, Tuscany and Venice.¹ Small Italian businesses based on low-volume-low-transaction-value trade had little need for anything beyond a simple record of debt to survive. Many contented themselves with their own forms of single entry bookkeeping, such as can be seen in the surviving records of merchants in the Tuscan town of Prato in the 14th century (Marshall, 1999).

Whereas Italian merchants and bankers used double entry, they did not spread knowledge of the method to non-Italians. As a result, until the late 15th century, double entry was only used by Italians; their foreign agents; a few southern Germans who had been trained in Italy; and Catalans—the only region other than Italy that had established its own banks; and it had also copied the business methods of the Italians (de Roover, 1963; Edler, 1934).

2.1 Education

The Italians were considerably more advanced than the rest of Europe, not only in their development and use of double entry, but also in their Florentine-driven system of formal mercantile education: the abaco schools that began to emerge in the mid-13th century. This was the second stage in school education. It lasted approximately two years, depending on the student and was attended by boys, typically when they were 11–14 years of age (Cherubini, 1996; Goldthwaite, 1972; Grendler, 1989, 1990, 2002; Black, 2007).

Many, if not the majority of those who attended abaco school were sons of merchants or craftsmen who used the practical mathematics taught in these schools in their trade. As a result, they were taught the math they needed for business in school and either applied it in their fathers’ work, or could be coached in its use by them. Male literacy levels in 14th- and 15th-century Florence, which was where the majority of these schools were located, were extremely high—at least 69 percent (Black, 2007)—making it by far the most highly educated region in Europe. Not surprisingly, Florence controlled the international financial markets of Europe from the mid-14th century (Mueller, 1997; Spufford, 2006). Venice, which controlled much of Mediterranean trade with the East was the dominant center of trade, importing spices and silk that was shipped across Europe in exchange for cloths, timber and a wide variety of staples and luxury goods (Postan, 1973; Braudel, 2002; Marino, 2002).

2.2 Bookkeepers and Bookkeeping

This was the environment in which bookkeepers worked between the 13th and late 15th century. During that period, most merchants were their own bookkeepers, even those operating internationally, many of whom acted as agents for other merchants in addition to buying and selling on their own behalf. However, there were some specialist bookkeepers in the larger firms. The earliest known double entry bookkeeper was Amatino Manucci, bookkeeper for the Florentine Farolfi company branch in Sabon, France in 1299–1300 (Lee, 1977; Smith, 2008). Another was Simone Bellandi, the bookkeeper of the international merchant, Francesco di Marco Datini in Pisa (1392–1394). He then moved to Datini’s Barcelona branch as a partner and, although now a merchant, he continued to perform the bookkeeping in Barcelona (1394–1399) (Kuter, Gurskaya, Andreenkova & Bagdasaryan, 2018).

Italy’s merchants and bankers who used double entry, not only did not disseminate double entry to non-Italians with whom they traded and banked, they did not teach other Italian merchants how to use it. This placed those who knew how to use double entry in a powerful position. Their double entry account books were considered legal documents and, because they were much better organized than single entry records, they created a potential problem for other merchants whenever debts were disputed.²

Any other merchants wishing to learn how to use double entry could not restart their careers by serving an apprenticeship. They had to find a different route to acquire the ability to use double entry.

3. Medieval Accounting Education

For many years, it was believed that accounting or, more appropriately at this stage of its development, bookkeeping, that is, double entry bookkeeping,³ was first taught in the north-Italian medieval abaco schools of practical business mathematics. These schools were first founded in the mid-13th century to train future merchants in the mathematics they needed for their trade. A cursory glance at the literature confirms that this remains the dominant view among accounting historians and economic historians.

Evidence, if any, to support this conclusion is counterfactual: bookkeepers could do double entry in the late 13th century—all other things remaining equal, if they had not been taught double entry, they would not have been able to use it. It is also present-minded: double entry is taught in classrooms today—without classrooms where double entry was taught, merchants could not have learnt how to do it. And, it ignores the fact that until at least the mid-20th century, in the UK and many other parts of the world, bookkeepers in small businesses were typically self-taught, or ‘learned with Nelly’ by sitting beside an expert and watching how to do it. Others disagree. They point to the absence of instruction in bookkeeping from all of the c. 200 surviving abaco classroom manuals dating from before 1500 (Van Egmond, 1981): there is no evidence that any bookkeeping, double entry or single entry, was taught in an abaco classroom (Goldthwaite, 2009).

One aspect of some of those abaco manuals does, however, tell us that students in the abaco schools knew something about bookkeeping: several of the manuals contain examples of mathematical calculations that use accounting terms. Some even contain examples of bookkeeping entries that are used to present the data to which some mathematical calculation is to be applied, typically relating to annuities, loans, discounts and investments (Goldthwaite, 2015). It is as if bookkeeping has already been learned before stepping into the classroom at the age of 11–14. Perhaps that is not as fanciful as it appears.

According to the 15th-century international merchant, Benedetto Cotrugli, the only route to mastery of a trade or craft was through an apprenticeship (Carraro & Favero, 2017). In Venice, merchant apprenticeships started at age 12, but family members could begin their apprenticeship earlier (Molmenti, 1880). An...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication Page
• Contents
• List of Contributors
• Acknowledgments
• Foreword
• Preface
• Part 1 Accounting Ethics Education’s Odyssey
• Part 2 Challenges, Opportunities and Developments
• Index