7
"which would
indicate an error
in
the Ledger, which
mistake
you should seek diligently
with industry and intelligence God gave you."(WartaWarga, 2009).
The method that Pacioli discovered was so simple and met the business needs
until The Great Depression era. The Great Depression shook the integrity of the
accounting profession. The British Steamship Company was just one big giant company
that
went
bankrupt
just
after
the
announcement
of
huge
profits.
The
court
showed
that
the
company
wasn’t
profitable
at
all
even though
the
investors
questioned
why
the
profitable company can go bankrupt. The profit
that
company
made
was
just
a
book
keeping
tricks.
In
addition
the
existing
reserve
funds
in
the
books
did
not
exist.
This
event could be considered as
individual’s
fraud and
handled through
the
normal course
of
justice.
Then,
people
had
some
assumption
that
if the
basic
rules
of
accounting
give
false information, then there is something wrong with the basic rules of accounting.
It could be worse, because there were no rules in accounting. There were just
some
principles
that
were
accepted because
most
of
the
accountants
did certain
things.
So,
things
had
to
change.
American
Institute
of
Certified
Public
Accountant
(AICPA)
created the Committee on Accounting Procedure as a rule maker.
They
had
government
license. Most importantly, financial audit statements were limited to CPA’s and those
made
personally
responsible
for
their
audit reports.
The
new
Securities and
Exchange
Commission (SEC) is required to all public company audit reports. With these steps,
accountants contribute to restoring public confidence in the stock market and the
economy
during
the
depression
years.
After
that,
50
countries
have
created
their
own
 |