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Accounting

Accounting

Accountancy (British English) or accounting (American English) is the measurement, disclosure or provision of assurance about information that helps managers and other decision makers make resource allocation decisions. Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated. Auditing, a related but separate discipline, is the process whereby an independent auditor examines an organization's financial statements in order to express an opinion -- that conveys reasonable but not absolute assurance -- as to the fairness and adherence to generally accepted accounting principles, in all material respects. Practitioners of accountancy are known as accountants. Officially licensed accountants are recognized by titles such as Chartered Accountant (UK, Canada), Certified Public Accountant (US), Certified Management Accountant (Canada). or Certified General Accountant (Canada). The majority of "public" accountants in Canada are Chartered Accountants; however, Certified General Accountants are also authorized by legislations to practise public accounting and auditing in all Canadian provinces, except Quebec as of 2005. Accountancy attempts to create accurate financial reports that are useful to managers, regulators, and other stakeholders such as shareholders, creditors, or owners. The day-to-day record-keeping involved in this process is known as bookkeeping. At the heart of modern financial accounting is the double-entry book-keeping system. This system involves making at least two entries for every transaction: a debit in one account, and a corresponding credit in another account. The sum of all debits should always equal the sum of all credits. This provides an easy way to check for errors. This system was first used in medieval Europe, although claims have been made that the system dates back to Ancient Greece. According to critics of standard accounting practices, it has changed little since. Accounting reform measures of some kind have been taken in each generation to attempt to keep bookkeeping relevant to capital assets or production capacity. However, these have not changed the basic principles, which are supposed to be independent of economics as such.

History

The art of accountancy on a scientific principle must certainly have been understood in Italy before 1495, when Luca Pacioli (1445 - 1517), also known as Friar Luca dal Borgo, published at Venice his treatise on book-keeping. The first known English book on the science was published in London by John Gouge or Gough in 1543. It is described as A Profitable Treatyce called the Instrument or Boke to learn to knowe the good order of the kepyng of the famouse reconynge, called in Latin, Dare and Habere, and, in English, Debitor and Creditor. A short book of instructions were also published in 1588 by John Mellis of Southwark, in which he says, "I am but the renuer and reviver of an ancient old copie printed here in London the 14 of August 1543: collected, published, made, and set forth by one Hugh Oldcastle, Scholemaster, who, as appeareth by his treatise, then taught Arithmetics, and this booke in Saint Ollaves parish in Marko Lane." John Mellis refers to the fact that the principle of accounts he explains (which is a simple system of double entry) is "after the forme of Venice". The very interesting and able book described as The Merchants Mirrour, or directions for the perfect ordering and keeping of his accounts formed by way of Debitor and Creditor, after the (so termed) Italian manner, by Richard Dafforne, accountant, published in 1635, contains many references to early books on the science of accountancy. In a chapter in this book, headed "Opinion of Book-keeping's Antiquity," the author states, on the authority of another writer, that the form of book-keeping referred to had then been in use in Italy about two hundred years, "but that the same, or one in many parts very like this, was used in the time of Julius Caesar, and in Rome long before." He gives quotations of Latin book-keeping terms in use in ancient times, and refers to "ex Oratione Ciceronis pro Roscio Comaedo"; and he adds: :"That the one side of their booke was used for Debitor, the other for Creditor, is manifest in a certain place, Naturalis Historiae Plinii, lib. 2, cap. 7, where hee, speaking of Fortune, saith thus: : Huic Omnia Expensa. : Huic Omnia Feruntur accepta et in tota Ratione mortalium sola : Utramque Paginam facit." An early Dutch writer appears to have suggested that double-entry book-keeping was even in existence among the Greeks, pointing to scientific accountancy having been invented in remote times. There were several editions of Richard Dafforne's book printed---the second edition having been published in 1636, the third in 1656, and another was issued in 1684. The book is a very complete treatise on scientific accountancy, it was beautifully prepared and contains elaborate explanations; the numerous editions tend to prove that the science was highly appreciated in the 17th century. From this time there has been a continuous supply of literature on the subject, many of the authors styling themselves accountants and teachers of the art, and thus proving that the professional accountant was then known and employed. Very early in the 18th century, the services of an accountant practising in the city of London were made use of in the course of an investigation into the transactions of a director of the South Sea Company, who had been dealing in the company's stock. During this investigation the accountant appears to have examined the books of at least two firms of merchants. His report is described Observations made upon examining the books of Sawbridge and Company, by Charles Snell, Writing Master and Accountant in Foster Lane, London. The United States owes the concept of the Certified Public Accountant designation to England which had coined the Chartered Accountant designation in the 19th century.

Accountancy qualifications and regulation

The requirements for entry in the profession of accounting vary from country to country.

British Commonwealth

In the United Kingdom, Canada, Australia and several other Commonwealth countries, the equivalents of Certified Public Accountant (CPA) include Chartered Accountant (CA - in UK, British Commonwealth and former British states), Chartered Certified Accountant (ACCA - United Kingdom), International Accountant (AIA - United Kingdom), Certified Public Accountant (CPA - Ireland and CPA - Hong Kong), Certified General Accountant (CGA - Canada), and Certified Practising Accountant (CPA - Australia). Please refer to the latest statutory auditing rights of above accounting bodies in individual jurisdictions and distinction from non-audit bodies for various consumers. In UK, only 3 chartered accountants (England & Wales, Scottish and Irish)and their equivalents (AIA and ACCA) are "Registered Auditors" under Companies Act. ACA is the best known and most respected qualification in the UK, equivalent of a CA but handled by a different board ICAEW.

Canada

In Canada, there are three recognized accounting bodies: the Canadian Institute of Chartered Accountants (CA), the Certified General Accountants Association of Canada (CGA), and the Society of Management Accountants of Canada (CMA). CA and CGA were created by Acts of Parliament in 1902 and 1913 respectively and CMA was established in 1920. The CA program focuses in public accounting and candidates must obtain auditing experience from public accounting firms; the CGA program takes a general approach allowing candidates to focus in their own financial career choices; the CMA program focuses in management accounting. All three programs require a candidate to obtain a degree and practical accounting experience before certification. Auditing and Public Accounting are regulated by the provinces. Historically, only CAs can perform audits in Ontario. After the corporate accounting scandals including the Enron scandal, the provincial government of Ontario passed a new Public Accounting Act allowing qualified CAs, CGAs and CMAs to audit. In Quebec, CAs still have monopoly in the audit of public companies; In British Columbia and Prince Edward Island, CAs and CGAs have equal status regarding public accounting and auditing; In the rest of Canada, CAs, CGAs, and CMAs are considered equivalents pursuant to provincial and territorial legislations. A recent attempt between the CAs and CMAs (in 2005) to join forces to form a new unified body failed as the respective organisations could not reach consensus on a number of important issues. This failure represented a factual indicator of the continued and strong resentment of the infringement of other accounting designations' influence and opinion upon others, as well as a possible measure of the degree of pride that still remained within each of Canada's three recognised accounting bodies. The recent measure (2004) of opening Ontario's public practice to all three bodies may actually have exacerbated the competition between these organisations, especially in light of the historic monopoly conferred to the CA association.

United States of America

In the United States, practicing accountants include Certified Public Accountants (CPAs), Certified Internal Auditors (CIAs), Certified Management Accountants (CMAs) and Accredited Business Accountants (ABAs). The difference between these certifications is primarily the types of services provided, although individuals may earn more than one certification. Additionally, much accounting work is performed by uncertified individuals, who may be working under the supervision of a certified accountant. A CPA is licensed by the state of his/her residence to provide auditing services to the public, although most CPA firms also offer accounting, tax, litigation support, and other financial advisory services. The requirements for receiving the CPA license varies from state to state, although the passage of the Uniform Certified Public Accountant examination is required by all states. This examination is designed and graded by the American Institute of Certified Public Accountants. A CIA is granted a certificate from the Institute of Internal Auditors (IIA), provided that the candidate passed a rigorous examination of four parts. A CIA mostly provides his/her services directly to their employers rather than the public. A CMA is granted a certificate from the Institute of Management Accountants (IMA), provided that the candidate passed a rigorous examination of four parts and meet the practical experience requirement from the IMA. A CMA mostly provides his/her services directly to his/her employers rather than the public. A CMA can also provide his services to the public, but to an extent much lesser than that of a CPA. An ABA is granted accreditation from the Accreditation Council for Accountancy and Taxation (ACAT), provided that the candidate passed the eight-hour Comprehensive Examination for Accreditation in Accounting which tests proficiency in financial accounting, reporting, statement preparation, taxation, business consulting services, business law, and ethics. An ABA specializes in the needs of small-to-mid-size businesses and in financial services to individuals and families. In states where use of the word "accountant” is not permitted, the practitioner may use Accredited Business Advisor. The United States Department of Labor's Bureau of Labor Statistics estimates that there are about one million persons [http://www.bls.gov/oes/current/oes132011.htm] employed as accountants and auditors in the U.S. U.S. tax law grants accountants a limited form of accountant-client privilege.

Accounting scholarship

Refer Accounting scholarship for professorship.

The "Big Four" accountancy firms

The "Big Four auditors" are the largest multinational accountancy firms.
- PricewaterhouseCoopers
- Deloitte Touche Tohmatsu
- Ernst & Young
- KPMG The Big 4 accountancy firms can all trace their history back to firms in Europe, from which they have descended through a long line of mergers. Many of the originating firms were from the United Kingdom. As British trade interests expanded, correspondent firms were established throughout the world by the organisations. These firms are associations of the partnerships in each country rather than having the classical structure of holding company and subsidiaries, but each has an international 'umbrella' organisation for co-ordination. However, due to the dominant size of the United States' economy, the offices of the Big 4 accountancy firms based in the United States have always generated more revenue than the rest of the Big 4 accountancy firms' offices in the world combined. Before the Enron and other accounting scandals, there were five large firms and were called the Big Five. Since Arthur Andersen's assurance practice split, with a plurality joining KPMG in the US and Deloitte & Touche outside of the US, Arthur Andersen left from the group. Previous to this there were also groupings referred to as the "Big Six" and the "Big Eight". Enron turned out to be only the first of a series of accounting scandals that enveloped the accounting industry in 2002. This is likely to have far-reaching consequences for the U.S. accounting industry. Application of International Accounting Standards originating in International Accounting Standards Board headquartered in London and bearing more resemblance to UK than current US practices is often advocated by those who note the relative stability of the U.K. accounting system (which reformed itself after scandals in the late 1980s and early 1990s). Accounting reform of a far more comprehensive sort is advocated by those who see issues with capitalism or economics, and seek ecological or social accountability.

Topics in accounting

See list of accounting topics for complete listing.

Auditing

- Assurance services
- Audit
- Information technology audit

Types of accountancy

- Cost accounting
- Cash-basis and accrual-basis
- Financial accountancy
- internal and external accountancy
- Management accounting
- Project accounting
- Positive accounting
- Environmental accounting

Accountancy Principles

Accounting principles, rules of conduct and action are described by various terms such as concepts, conventions, tenets, assumption, axioms, postulates.

Accounting concepts

- Entity concept
- Dual aspect concept
- Going concern concept
- Accounting period concept
- Money measurement concept
- Historical Cost concept
- Periodic matching of cost and revenue concept
- Verifiable objective evidence concept
- Realization concept
- Accrual concept

Accounting conventions

- convention of disclosure
- convention of materiality
- convention of consistency
- convention of conservatism

Finding related topics

- List of accounting topics
- List of finance topics
- List of management topics
- List of human resource management topics
- List of marketing topics
- List of economics topics
- List of production topics
- List of information technology management topics
- List of business law topics
- List of business ethics, political economy, and philosophy of business topics
- List of business theorists
- List of economists
- List of corporate leaders
- List of companies

External links

-
- [http://www-groups.dcs.st-andrews.ac.uk/~history/Mathematicians/Pacioli.html Luca Pacioli]
- [http://accounting.rutgers.edu/raw/rtest1.html List of accounting sites]
- [http://www.theaccounting.org/ Accounting]
- [http://www.icaew.co.uk/library/index.cfm?AUB=TB2I_7258 Accounting history links]
- [http://www.acaus.org/history/hs_pac.html Accounting, a Virtual History]
- [http://www.responsive.co.nz/theory.html Accounting Theory]
- [http://www.responsive.co.nz/tutorial.html Accounting Tutorial]
- [http://www.duncanwil.co.uk Duncan Williamson's Accounting Site]
- [http://www.maap.co.uk/checklist.php?choice=checklist MAAP's UK Accountancy Checklist The Next Year]
- [http://www.quickmanagement.com/a/account-management.asp Accounting Management] — Brief view on accounting.
- [http://www.buzzbusiness.com/directory/accounting/ Accounting Directory] — A listing of accounting sites.
- [http://www.trinity.edu/rjensen Bob Jensen's Accounting Site]
- [http://www.columbia.edu/~kky2001/pubs.html Accounting and Valuation Research page]
- [http://www.HavenWorks.com/accounting Accounting News]
- [http://www.greekshares.com/account12.asp The Basics of Accounting]
- [http://www.insidesarbanesoxley.com inside Sarbanes Oxley] - Resources for accountants
- [http://www.insidesarbanesoxley.com inside Sarbanes Oxley] - Resources for accountants concerning the Sarbanes-Oxley Act of 2002, including Sarbanes Oxley books, articles, and discussion
- [http://www.becompta.be/ Accounting in french]
- [http://business.fullerton.edu/centers/ccrg The Center for Corporate Reporting & Governance at California State University, Fullerton]
- [http://www.hkicpa.org.hk Hong Kong Institute of Certified Public Accountants (formerly Hong Kong Society of Accountants)]
- [http://www.bookkeeping-course.com free bookkeeping course]
- [http://www.tgiltd.com Free Accounting Software Selection Assistance] Category:Accounting Accountant ja:会計

British English

British English (BrE) is a term used to differentiate the form of the written English language in the United Kingdom from other forms of the English language. It is also used by some, particularly Americans, to describe the spoken versions of English used within England. The term is rarely heard within the United Kingdom. British people say that they speak English - but never British - and that others speak English with an accent, such as a 'South African accent'. When speaking, they will often drop the word "accent" and simply say Canadian, American, Jamaican and so on. A less ambiguous term is English English. Although British English can describe the formal written English used in the United Kingdom, the forms of spoken English used in the United Kingdom vary considerably more than in most other areas of the world where English is spoken. Dialects and accents vary not only within regions of the UK, for example in Scotland, Northern Ireland and Wales, but also within England. The written form of the language, as taught in schools, is universally Commonwealth English with a slight emphasis on a few words that might be more common in some areas than in others. For example, although the words "wee" and "small" are interchangeable, one is more likely to see "wee" written by a Scot than by a Londoner. For historical reasons dating back to the rise of London in the 9th century, the variety of language spoken in London and the East Midlands became the standard English within the Court and thus the form of language generally accepted for use in the law, government, literature and education of the British Isles. Like other forms of languages, the English used in Britain changes over time. Although British English is often used in the United States to denote the English spelling and lexicon used outside the US, the term Commonwealth English is more accurate for this purpose. The British spellings were most famously recorded in Samuel Johnson's A Dictionary of the English Language (1755). Historically, the widespread usage of English across the world is attributed to the power once held by the British Empire, and hence the most common form of English used by the British ruling class was the English used in south-east England (in the area around the capital city London, and the main English university towns of Oxford and Cambridge). This form of the language is associated with Received Pronunciation (RP), which is still regarded by many people outside the UK (especially in the United States) as "the British accent". From the second half of the 20th century to the present day, the preeminence of the English language has largely been linked to the economic, military and political dominance of the United States in world affairs, and American English is often regarded as the most prominent form of English in the world today, especially with the large amount of U.S. cultural products (such as films, books, and music) around the world, which is not matched in volume by those from other English-speaking nations. The form of English spoken and particularly written in the United Kingdom still has a major cultural influence on the English used in many Commonwealth countries, including Australia, South Africa, and India, as well as in the European Union. Although British English is taught and used in the former British colonies of Hong Kong, Singapore and Malaysia, American English is often taught in Chinese and Japanese schools, and in other schools throughout Asia.

-ise versus -ize

Words of the sort organize/organise and their derivatives can be spelt with either s or z in British English. The -ize forms are promoted by the Oxford English Dictionary. British English with -ize is sometimes known as OED spelling, and may be marked by the registered IANA language tag 'en-GB-oed'. It is the spelling used by the Encyclopaedia Britannica, by the United Nations, and by many international organizations and academic publications. The -ize forms were used by the London Times until the mid-1980s. The -ise forms are now generally used by the British government, by the European Union and mostly taught in the British school system. They are far more prevalent in common usage. Pam Peters (2004, -ize/-ise) relates that British National Corpus data indicates the ratio of popularity for -ise forms to -ize forms in Britain is 3:2.

Financial accountancy

Financial accountancy (or financial accounting) is the branch of accountancy concerned with the preparation of financial statements for external decision makers, such as stockholders, suppliers, banks and government agencies. The fundamental need for financial accounting is to reduce principal-agent problem by measuring and monitoring agent's performance. The accounting equation (Assets = Liabilities + Owners' Equity) and financial statements are the main topics of financial accounting. A financial accountant must equal assets with liabilities and owner’s equity. The balance sheet (or the statement of financial position) is the financial statement that summarizes the assets, liabilities, and owners’ equity of the company.

Meaning of the accounting equation

The value of a company can be understood simply as the useful assets that ownership of a company entitles one to claim. This value is known as Owners' Equity. Some assets of a company, however, cannot be claimed as equity by the owners of a company because other people have legal claim to them - for example if the company has borrowed money from the bank. The value of a resource claimable by a non-owner is called a liability. All of the Assets of a company can be claimed by someone, whether owner or not, so the sum of a company's equity and its liabilities must equal the value of its Assets. Thus the accounting equation describes what portion of a company's assets can by claimed by the owners. Various account types are classified as 'credit' or 'debit' depending on the role they play in the accounting equation. Assets = Liabilities + Equity (move assets to the right) 0 = −Assets + Liabilities + Equity or 0 = (−) Assets + Owners' Equity (+) Liabilities . _____________________________/\____________________________ . . / + Retained Earnings (+) Common Stock \ . . _________________/\_______________________________ . . . / (−) Expenses (+) Beginning Retained Earnings \ . . . (−) Dividends (+) Revenue . . \________________________/ \___________________________________________________/ (−)increased by debits (+)increased by credits simple mapping: subtracting from a negative absolute value Thus ---------------- ---------- account increases its -------------- debiting a debit balance

External links

- [http://www.fasb.org Financial Accounting Standards Board]
- [http://www.aicpa.org American Institute of Certified Public Accountants]
- [http://www.iasc.org.uk International Accounting Standards Board] Category:Accounting

Financial audit

A financial audit is the examination of financial records and reports of a company or organisation, in order to verify that the figures in the financial reports are relevant, accurate, and complete. The general focus is to ensure the reported financial statements fairly represent a company's stated condition for the firm's stakeholders. These stakeholders will be interested parties, such as stockholders, employees, regulators, and the like. Doing a financial audit is called the "attest" function. The general purpose is for an independent party (the CPA firm) to provide written assurance (the audit report) that financial reports are "fairly presented in conformity with generally accepted accounting principles." Because of major accounting scandals (failure by CPA firms to detect widespread fraud), assessing internal control procedures has increased in magnitude as a part of financial audits. Financial audits are typically done by external auditors (accountancy firms). Many organizations, including most very large organizations, also employ or hire internal auditors, who do not attest to financial reports. Internal auditors often assist external auditors, and, in theory, since both do internal control work, their efforts should be coordinated.

History

The earliest surviving mention of a public official charged with auditing government expenditure is a reference to the Auditor of the Exchequer in 1314. The Auditors of the Imprest were established under Queen Elizabeth I in 1559 with formal responsibility for auditing Exchequer payments. This system gradually lapsed and in 1780, Commissioners for Auditing the Public Accounts were appointed by statute. From 1834, the Commissioners worked in tandem with the Comptroller of the Exchequer, who was charged with controlling the issue of funds to the government. As Chancellor, Gladstone initiated major reforms of public finance and Parliamentary accountability. His 1866 Exchequer and Audit Departments Act required all departments, for the first time, to produce annual accounts, known as appropriation accounts. The Act also established the position of Comptroller and Auditor General (C&AG) and an Exchequer and Audit Department (E&AD) to provide supporting staff from within the civil service. The C&AG was given two main functions – to authorise the issue of public money to government from the Bank of England, having satisfied himself that this was within the limits Parliament had voted – and to audit the accounts of all Government departments and report to Parliament accordingly. Prior to the 1930s, corporations were required neither to submit annual reports to government agencies or shareholders nor to have such reports audited. In the United States, the Securities Exchange Act of 1934 required all publicly traded companies to disclose certain financial information, and that financial information be audited. The establishment of the Securities and Exchange Commission (SEC) created a body to enforce the audit requirements. In the United States, the SEC has generally deferred to the accounting industry (acting through various organizations throughout the years) as to the accounting standards for finanical reporting, and the U.S. Congress has deferred to the SEC. Accordingly, financial auditing standards (and what financial audits accomplish) have tended to change (and increase) only after auditing failures. The most recent and familiar case is that of Enron. The company succeeded in hiding some important facts, such as off-book liabilities, from banks and shareholders. Eventually, Enron filed for bankruptcy, and (as of 2005) is in the process of being dissolved. One result of this scandal was that Arthur Andersen, then one of the five largest CPA firms, worldwide, lost their ability to audit public companies, essentially killing off the firm.

Process of audit

Arthur Andersen A financial audit is usually done annually through 3 main steps.

Interim review

This is the first approach to the company. It usually covers the first half of the financial year. For instance, if a company closes its accounts yearly on December 31, the interim review will cover January to June. The purpose is
- to understand the business of the company, the environment in which it operates (this includes aspects such as competition, legal requirements, economy, etc), what its main issues are
- to figure out what audit risks are from an audit point of view. This means, auditors will have to find what kind of mistake (on purpose or not) could be done in this company. For instance, if the income of sales representatives is directly linked to the sales they generate (it's of course never the case), they could try to overstate their figures, leading to an abnormally high income.
- to assess the internal control procedures (checks on the firms internal processes, such as inventory) actually in place. This is an important step as it will allow later to determine if one should carry out basic or advanced investigations. Indeed, if the internal control procedures seem to be reliable, this means there is no need to check accounts further.

Hard Close

This audit precedes the closing date. For a company closing on December 31, the Hard Close would typically occur using numbers as of November 30. Note: some hard closes are performed using the numbers as of the preceding quarter end (i.e. in the above example as of September 30). The purpose is to audit all movements year to date. This audit step is not on the audit during Final.

Final

This is the latest step of the audit, usually some weeks after the closing. Thanks to the work already done during the Hard Close, only the remaining range between the date of the Hard Close and the closing has to be audited.

Main tests for each process

- Cash
- Bank reconciliation : Analysis of the amounts that are written in the books but not in the bank statements and conversely. The purpose is to be able to explain each difference between books and bank statements. Usually, as the audit occurs some months or weeks after the closing date, auditors get the last bank statements to check that discrepancies have disappeared. Above all the purpose is to check that revenues written only in the books are now in bank statements (which could mean that receivables have been indeed collected).
- Circularization : To ensure that the amount for each bank account specified in the trial balance are right, auditors send a request to every bank of the company to get the current balance at the closing date. Banks usually mention the debts incurred by the company, current guarantees and people who have the power to transfer fund to and from the bank accounts.
- Financial interests : The purpose is to endorse the amount of financial interest charges and revenues. Usually, auditors perform a global test by calculating the average interest rate and the credit and debit balance throughout the year.
- Marketable securities : Auditors calculate that the gains and losses from purchase and sale of marketable securities are relevant.
- Petty cash inventory : Auditors just count the petty cash.
- Equity
- Table of the variation of equities : This means explaining the variation of the equity, reserve and retained earnings mainly.
- Legal documents : Check that the legal documentation reflects properly changes in equity.
- Receivables
- Debtors Circularisation : Auditors select a sample of the largest debtors and send letters to those debtors requesting that they agree or disagree the balance, with an explanation. Due to some customers being disinclined to respond to such letters, especially where elements of balances are in dispute, this testing is generally combined with a review of cash receipts after the balance sheet date - in order to provide more substantive evidence that the balance sheet debtors figure is accurate.
- Review of the Bad Debt Provision : Auditors review the provision made by the customer against debtors for amounts unlikely to be recoverable, and discuss any significant balances with accounting staff. This is combined with a review of an aged version of the accounts receivable ledger to identify accounts/invoices which are significantly overdue. Where overdue amounts are not included in the bad and doubtful debt provision, the auditors will seek evidence that those debts are recoverable.
- Payables
- Supplier Statement Reconciliation : Auditors select a sample of suppliers and request a statement of the outstanding invoices and credit notes from each. These statements are then reconciled to the accounts payable ledgers maintained by the firm being audited, and any reconciling items investigated.
- Debts
- Overheads
- Fixed assets
- Taxes
- Intercompany operations
- Payroll
- Provision for risks and charges
- Stock
- Financial results
- Exceptional items
- Other
- Margin
- Balance sheet review
- Consolidation

Rationale for auditing

Audit has different specific manifestations throughout the world, but each kind has some main components in common.

Commercial relationships versus objectivity

One of the main problems in audit is the conflict between the need to control a company and the business relationship between the company and its auditors. On one hand, the audit company has to thoroughly check the books, but on the other hand, it has to satisfy its customers, who are its source of revenue. In practical terms, this means that the audit company will try to protect itself by carrying out the minimum checks, but sometimes if there are doubts or grey areas, it won't push things further, particularly if the client is a bit reluctant to give out information. The power of the auditor is limited by its need to maintain revenues.

Significant audit companies

These firms are the larger multinational accountancy firms, and in addition to providing audits, they also provide other services like consultations.
- KPMG
- PricewaterhouseCoopers
- Ernst & Young
- Deloitte

Differences in terminology - US GAAP vs UK GAAP

Whilst the format of financial statements is roughly the same in the US and Europe, there are some differences in the accounting terms used. The table below highlights some of the common ones: Category:Accounting

Generally accepted accounting principles

GAAP is an acronym for Generally Accepted Accounting Principles. Various countries such as the United States and the United Kingdom have their own set of GAAP.
- US generally accepted accounting principles
- UK generally accepted accounting principles

License

: Licence is also a state of liberty, and is sometimes used as a synonym for licentiousness. A license (American English) or licence (Commonwealth English) is a document or agreement giving permission to do something. In law, the document is the evidence of a license to be distinguished from the underlying license which is the actual permission to an act in a way that would be otherwise unlawful. Originally in reference to property, a license was the right of an individual to enter upon the property of another to do an act that would have otherwise been considered illegal as a trespass, such as walking in the woods, hunting game or swimming in the lake. To be distinguished from a license coupled with an interest which is an irrevocable license that granted some interest in land or in a chattel. Such a license could be enforced with an injunction. Licenses can be gratuitous, revokable at will (sometimes called a bare license) or a type of bailment.

Occupational

Licensing (or Registration) is required of a number of occupations and professions where maintenance of standards is required to protect public safety, for example physicians, psychologists, electricians are licensed in many countries.

Copyright

The holder of a copyright, trademark, or patent may (and often does) require that a license be accepted as a condition of being allowed to use, reproduce, or create an instance of the licensed work. Computer users may think of licenses as in reference to end user licence agreements (EULA), which are claimed by vendors to encumber the user with extra restrictions besides the copyright, as a condition of granting permission under copyright law to use the work. The person who purchases a book normally owns the atoms and the right to resell or lend, but not the copyright to the text. In the United States this right to resell is part of the first-sale doctrine. Software licenses are often highly restrictive, and most software users do not read them in full. So-called "shrink-wrap" licenses and "click-through" licenses are common. Most limit the number of computers the software can be installed on, the number of users that can use the software, and apply other limitations that are not inherent in the technology. As a result, huge fortunes have been made by selling goods that have a minimal cost of reproduction on a per-item basis. In the U.S., the first-sale doctrine, Softman v. Adobe [http://www.linuxjournal.com/modules.php?op=modload&name=NS-articles/briefs&file=softman-v-adobe] and Novell, Inc. v. CPU Distrib., Inc. rule that software sales are purchases, not licenses, and resale, including unbundling, is lawful regardless of a contractual prohibition. So-called free software licenses and open source licenses are a reaction to what many see as the unfair restrictions of proprietary software licenses.

Academia

open source license A license is an academic degree in many European universities which is sort of equivalent to the master's degree. Originally, in order to teach at a university, one needed this degree which, according to its title, gave you a license to teach. The name survived despite the fact that nowadays one really needs a doctorate in order to teach at a university. A person who holds a license is called a licentiate. Currently, licenciate degree is a sort of middle-level degree between a master's degree and a doctorate.

External links

- [http://www.theregister.co.uk/content/4/24131.html Danish local government rebels against MS license terms]
- [http://www.hmso.gov.uk/acts/acts2003/20030017.htm Licensing Act 2003] - England & Wales
- ja:ライセンス simple:License

Chartered accountant

Chartered accountant (CA) is a brand originated from British Royal Charter and widely spread in British Commonwealth since its inception in 19th century. The standard for UK CAs is said to be equivalent to a British degree. In the accounting profession, there is no competitive league table similar to Master of Business Administration. As such, no accounting body can ethically claim to be the best in the world or equivalent to an MBA in the absence of a fair comparison. For non-British nations, Certified Public Accountant brands are the most popular. In the 21st century, CPAs or non-Chartered Accountants (even in United Kingdom and Australia) have become the largest bodies in terms of global membership. e.g. ACCA & CPA-Australia. As CAs can now freely merge with or reciprocate with non-CAs or non-audit bodies, equal treatment is given to all stakeholders. All auditing bodies recognized under statutes should have acceptable quality.

CA in United Kingdom

In the United Kingdom, there are five accounting bodies authorized by the Department of Trade and Industry under the Companies Acts to audit the accounts of a business as Registered Auditors. A member of these bodies will generally be known as a graduate member after passing all the necessary exams and then become an Affiliate, Associate or fellow. Their counterpart in U.S.A is called American CPA or CPA of individual state board of accountancy (without mutual recognition agreement at Federal level). He or she should have been trained by a recognized qualifying body (RQB) such as the Association of International Accountants (AIA), Institute of Chartered Accountants of Scotland (ICAS),the Institute of Chartered Accountants in England & Wales (ICAEW), Institute of Chartered Accountants in Ireland or Institute of Chartered Certified Accountants. The primary authority is the Companies Act while the traditional authority is a Royal Charter granted by Her Majesty the Queen. Apart from brand preference, all five registered auditors are with equal status under law, particularly by reference to EU directives for mutual recognition with auditors of all twenty-five EU member states. In Britain, ICAS is the oldest and smallest of these organisations. The AIA is the youngest with just around 76 years. In terms of number of members, ICAEW is the largest in England and EU while ACCA is the British largest global accounting body. All five British registered auditors are recognized to be a member of the Hong Kong Institute of Certified Public Accountants (HKICPA) subject to certain requirements. As such, "English Chartered Accountant equivalents" in UK are AIA and ACCA, recognised by the DTI, and by mutual recognition agreement with HKICPA, China (as Hong Kong was formerly a British state pre-1997).HKICPA is the only accounting body which gained exemptions from China Institute of Certified Public Accountants, Beijing (CICPA)and with reciprocal with six chartered accountants. Consumers or employers may be confused by the standing of Chartered Accountants (CA) in various jurisdictions. Three CAs in UK and those in British Commonwealth may not be interchangeable or be regarded as equivalent standards. Many jurisdictions have their own accreditation programs for admission of foreign or out of state accountants for quality assurance. Similarly in the Republic of Ireland, there are five audit bodies under the Irish Companies Act: the Institute of Certified Public Accountant in Ireland, Institute of Incorporated Public Accountants, Institute of Chartered Accountants in Ireland, ACCA, and ICAEW, three of which are the same in the UK. "Irish Chartered Accountant equivalents" in the Republic of Ireland are the CPA (Ireland) and IIPA. In United Kingdom and Ireland, there are other accounting bodies which have received the Royal charter or Royal Coat of Arms such as CIPFA,CIMA and ICEA but which are not yet authorised by the DTI to be Registered Auditors. It seems that such bodies will merge with other Registered Auditors in coming years.

EU accountants

Irrespective of brand preference or any traditional constraints, statutory auditors of all 25 EU nations are obliged for absolute mutual recognition under EU Directives. For nations outside EU, EU auditors should receive equitable recognition in line with its status throughout EU.

Canadian accounting bodies

In Canada, there are three recognized accounting bodies. CA (Canadian Institute of Chartered Accountants) is the oldest and the largest, followed by CGA (Certified General Accountants Association of Canada), and CMA (Society of Management Accountants of Canada). CA and CGA were established by Act of Parliament; CMA was established by the Company Act. The CA designation issued by the Institutes of Chartered Accountants of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, and Ontario is recognized as a CPA (chartered Public Accountant) designation in the USA. Auditing rights are regulated by provincial governments. In British Columbia, the Company Act provides that only CAs, CGAs, or anyone who has been granted an accounting licence by the provincial regulatory body may audit public companies. In Prince Edward Island, only qualified CAs and CGAs can perform public accounting and auditing in accordance with the Public Accounting and Auditing Act. In all other provinces, except Quebec, only qualified CAs, CGAs, and CMAs may audit public companies. Due to political reasons, historically Quebec and Ontario only allowed CAs to audit public companies. However, CGAs and CMAs can audit a selected list of public bodies in Quebec. In 2004, Ontario government authorized qualified CAs, CGAs, and CMAs to audit public companies, subject to improved professional standards to be applied equally to all three accounting bodies. In Quebec, the situation is currently under review and challenge based on the Agreement of Internal Trade (AIT). In August 2005, the AIT issued a report recommending Quebec to change its legislation by opening public auditing to qualified accountants who are not CAs. The size of the accounting bodies varies across Canada. In Ontario and Quebec, CA is substantially bigger than CGA or CMA. In Manitoba, CGA is the largest accounting body, whereas in British Columbia, CA and CGA are about the same size. In the federal level, all statutes provide equal recognition of all three accounting bodies. Given that most Canadian provinces and statutes provide equitable treatments to CAs, CGAs, and CMAs, the "Canadian Chartered Accountant equivalents" are CGA and CMA.

South Africa

In South Africa only one accounting body manages the designation CA(SA) (Chartered Accountant (South Africa) namely SAICA (South African Institute of Chartered Accountants). A separate registration is needed for Chartered Accountants whishing to act as Auditors, namely RAA (Registered Accountant and Auditor). The RAA Designation are controlled by PAAB (Public Accountants and Auditors Board.). The public are often mistaken by thinking that all Chartered Accountants may act as Auditors. Since TOPP (Training outside Public Practice) a great number of members earned the designation Chartered Accountant whith no knowledge or experience in Auditing. These Chartered Accountants specialise in financial management and almost exclusively act as financial directors or managers for large corporations. Various other accounting bodies play a role in South Africa. Of these the CFA and CPA designations are the best known. These accountants mainly act as accounting officers for close corporations (A legal entity much like a company, but with less regalatory measures). no person other than a person holding both the CA(SA) & RAA designations may act as a auditor for companies.

External links

- [http://www.icaew.co.uk/ Institute of Chartered Accountants of England and Wales] Category:accounting Category:Professional qualifications Institute of Chartered Accountants of Nepal

Certified Management Accountant

In the United States, the profession of accounting includes Certified Management Accountants (CMAs). A CMA is granted a certificate from the Institute of Management Accountants (IMA), provided that the candidate passed a rigorous examination of four parts and met practical experience requirements. A CMA generally provides their services directly to their employers rather than to the public. A CMA may also provide services to the public, but to a much lesser extent than a Certified Public Accountant (CPA). The CMA credentials differ significantly from the CPA designation, and the decision to pursue one over the other depends entirely on one’s career goals. More than 80% of accounting professionals in the U.S. work within organizations, building quality financial practices into the organization through decision support, planning, and control over the organization’s value-creating operations. For these managerial finance and accounting professionals, the CMA is more appropriate as a best selection. Also in Canada, the profession of accounting includes Certified Management Accountants (CMAs). In order to earn CMA designation, an accountant must have mastered a comprehensive body of knowledge by demonstrating six key skill levels -- knowledge, comprehension, application, analysis, synthesis, and evaluation -- in the following areas: - Business Analysis (econmics, internal controls, quantitative methods, financial statement analysis) - Management Accounting and Reporting (budget preparation, cost management, performance measurement, external financial reporting) - Strategic Management (stragegic planning, corporate finance, decision analysis, investment decision analysis) - Business Applications (all of the above, plus organization management, behavioral issues, ethical considerations)

External links

[http://www.imanet.org/ima/sec.asp?TRACKID=&CID=5&DID=5 Institute of Management Accountants Certification Page] Category:Accounting

Certified general accountant

Certified General Accountants (CGAs) are professional accountants and members of the Certified General Accountants Association of Canada (CGA-Canada), which was founded in 1908 and was officially established by an Act of Parliament on June 6 1913. Having over 40,000 certified members and 23,000 students in 2004, CGA-Canada is the second largest and fastest growing professional accounting association in Canada. Canada’s CGAs are represented by CGA-Canada and by their local CGA association. In order to become a CGA, one must successfully complete the CGA professional studies program, which consists of 15 foundation and advanced courses, four professional admission certification examination (PACE) courses, and two business cases. A candidate must also hold a post-secondary bachelor degree and satisfy practical experience requirements before certification. Taking a general approach to accounting, CGA is the only professional accounting program in Canada that provides students the opportunities to complete their entire accounting education within the accounting body. CGA is also the only Canadian accounting body, which has partnership agreements with post-secondary institutions that assist students to earn bachelor degrees concurrently with the professional accounting program. The CGA program of professional studies is currently being offered in Canada, in Bermuda, in several Caribbean countries, and in a number of universities throughout China and Hong Kong. CGA currently has about 2,000 international members. CGAs are employed by businesses of all sizes and from all sectors. A number of them are partners in public practice firms; others work in government, industry, commerce, or non-profit sector. As of 2005, CGAs are authorized by provincial legislations to perform audits of public companies in every province and territory in Canada, except Quebec. Judicial rulings have granted CGAs the rights to audit a selected list of public bodies in Quebec. Pursuant to the terms of the Agreement of Internal Trade (AIT), CGA-Canada has commenced challenges to the audit restrictions in Quebec. Free Tax Returns

External link

- [http://www.cga-online.org CGA Online] Category:accounting Category:Professional qualifications

Financial statement

Financial statements (or financial reports) are a record of a business' financial flows and levels. Typically they will include:
- a balance sheet setting out the net asset position of a business
- an income statement, income and expenditure statement or profit and loss statement
- a cash flow statement
- a statement of other recognised gains and losses or other comprehensive income statement setting out movements in equity that do not go through the income statement or profit and loss account (eg a revaluation of the value of head office of a manufacturing company)
- statement of retained earnings
- supplementary notes and management discussion Today most governments require publicly-traded companies to issue, and issue in a certain way, annual financial statements. Some governments, such as the United Kingdom government, require all companies to publish annual financial statements, although smaller companies only need publish them in abbreviated form.

History

Financial statements and records have been produced for as far back as there has been human writing. The people in the old Mesopotamian societies operated both insurance and credit (see interest) corporations, and had the obvious need of record keeping.

Financial condition

Each statement presents financial data relating to a company's or a group's current financial health, business results for the previous period, and other indicators that are used by the company's stakeholders to assess the health of a company. Typically a company's stakeholders will include existing and prospective shareholders, employees and trades unions, the taxation authorities, banks, suppliers and customers. Usually the most broad requirement is that financial statements should be true and fair. This has not always been the case in the past: for instance, in the UK the requirement used to be true and correct.

Promotion

To entice new investors, most public companies assemble their financial statements on fine paper with pleasing graphics and photos, attempting to capture the excitement and culture of the organisation in a "marketing brochure" of sorts.

Audit

Although the rules differ between jurisdictions, usually larger companies, and all publicly-quoted companies must have their financial statements independently audited. Note that the auditors do not certify financial statements, that is done by the company's directors. All an auditor does is examine the financial statements and records of a company and opines on whether they do indeed show a "true and fair" view (or meet other particular requirements that the auditor is engaged to opine on). There has been much legal debate over who an auditor is liable to. Since audit reports tend to be addressed to the current shareholders, there is little doubt that they owe a legal duty of care to them. In the UK, they have been held liable to potential investors when the auditor was aware of the potential investor and how they would use the information in the financial statements. Nowadays auditors tend to include in their report liability restricting language, discouraging anyone other than the addressees of their report from relying on it. Liability is an important issue: in the UK, for example, auditors have unlimited liability.

System

Financial statements can also be representations of business structures as recorded in a double-entry book-keeping system, and are used to support internal record-keeping and decision-making. While businesses are not obligated to use this format internally, most do keep its basic structure because it is well-understood by employees and well-supported by information systems. In this format, businesses view their financial condition in terms of assets, liabilities, and equity. Transactions consist of debits and credits.

Standards and regulation

To ensure that financial statements prepared by different companies can be adequately compared, they must be prepared according to certain rules. Countries under the common law legal system usually follow guidelines set in generally accepted accounting principles ("GAAP"). National accounting bodies in each country have developed their own specific sets of accounting principles. The most common internationally GAAP are U.S. generally accepted accounting principles and UK generally accepted accounting principles. Different countries have developed their own accounting principles over time, making international comparisons of companies difficult. Recently there has been a push towards standardising accounting rules made by the International Accounting Standards Board ("IASB"). IASB develops International Financial Reporting Standards that have been adopted by Australia and the European Union (for publicly-quoted companies only), are under consideration in South Africa and other countries. The United States Federal Accounting Standards Board has made a commitment to converge the US GAAP and IFRS over time [http://www.iasb.org/news/iasb.asp?showPageContent=no&xml=10_19_29_15122003.htm].

External Links

- [http://www.greekshares.com/finesta.asp Annual Reports and Financial Statements]

Shareholder

A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. The shareholders are the owners of a corporation. Companies listed at the stock market strive to enhance shareholder value. The shareholder concept is the theory that a company only has responsibilities to its shareholders and owners, and should work solely to benefit these people. Stockholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, stockholder's rights to a company's assets are subordinate to the rights of the company's creditors. This means that stockholders typically receive nothing if a company is liquidated after bankruptcy (if the company had had enough to pay its creditors, it would not have entered bankruptcy), although a stock may have value after a bankruptcy if there is the possibility that the debts of the company will be restructured. Stockholders or shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other. However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders. See Jones v. H. F. Ahmanson & Co., 1 Cal. 3d 93 (1969) [http://online.ceb.com/calcases/C3/1C3d93.htm]. The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and especially passively managed exchange-traded funds.

Double-entry book-keeping

Double-entry book-keeping is the standard accounting practice for recording financial transactions. Its origins have been traced as far back as the 12th century, and by the end of the 15th century, it was widely used by the merchant venturers of Venice. It was codified for the first time by Luca Pacioli, a close friend of Leonardo da Vinci, in a 1494 mathematics textbook [http://acct.tamu.edu/smith/ethics/pacioli.htm]. The system is based on the concept that a business can be described by a number of different variables or accounts, each describing an aspect of the business in monetary terms. Every transaction has a 'dual effect'. This is illustrated below.

Examples

Buying an asset: # The amount of fixed assets in the business increases. # The amount of cash is reduced. Selling merchandise on credit: # The amount of trade receivables for the business increases. # The sales revenue for the business increases. Paying a trade creditor: # The amount of trade payables for the business decreases. # The amount of cash in the business is reduced.

Debits and credits

Double-entry book-keeping is governed by the accounting equation. At any point in time, the following equation must be true: :assets = liabilities + equity For a particular time period, the equation becomes: :assets = liabilities + equity + (revenue − expenses) Finally, this equation may be rearranged algebraically as follows: :assets + expenses = liabilities + equity + revenue This equation must be true, for any time period. If it is, then the accounts are said to be in balance. If the accounts are not in balance, an error has occurred. For the accounts to remain in balance, a change in one account must be matched with a change in another account. These changes are known as debits and credits. Note that the usage of these terms in accounting is not identical to their everyday usage. Whether one uses a debit or credit to increase or decrease an account depends on the normal balance of the account. Asset and expense accounts (on the left side of the equation) have a normal balance of debit; liability, equity, and revenue accounts (on the right side of the equation) have a normal balance of credit. On a general ledger, debits are recorded on the left side and credits on the right side for each account. Since the accounts must always balance, for each transaction there will be a debit and a matching credit, and the sum of all debits for all accounts must equal the sum of all credits. Credits and debits are then defined as follows:
- debit: an increase in one of the accounts with a normal balance of debit or a decrease in one of the accounts with a normal balance of credit.
- credit: an increase in one of the accounts with a normal balance of credit or a decrease in one of the accounts with a normal balance of debit. The following accounts have a normal balance of debit:
- Assets
- Accounts receivable: debts promised by other entities but not yet paid
- Drawings by the owners on equity
- Expenses
- Losses (that is, when expenses exceed revenue) The following accounts have a normal balance of credit:
- Liabilities
- Accounts payable and taxes, notes or loans payable: debts promised to outsiders but not yet paid
- Revenue (note that since it is a credit, revenue is recorded as a negative number)
- Profit (that is, when revenue exceeds expenses) Credit and debit items are summarised at the end of a recording period in a trial balance which is a list of all the debit and credit balances. The trial balance acts as a self checking mechanism for the correctness of entries in the individual accounts and also as a starting point for the preparation of the balance sheet and a profit and loss account. The following table summarizes the basic accounts. A "+" indicates an increase; a "−" indicates a decrease.

Ledger example

XYZ Company is closing its books for the end of the month. Each of the daily journals has been summarized and the amounts are ready to be transferred to the general ledger. The amounts to be transferred are:
- Purchase raw materials by using line of credit: $500,000
- Pay workers from cash in bank to make goods: $1,500,000
- Pay sales force from cash in bank to sell goods: $1,000,000
- Sell goods for cash: $3,500,000 To close the books for the month, we will adjust expenses and revenue to be zero by appropriately crediting and debiting the income summary and then closing the income summary to retained earnings (part of equity). These items are entered in the ledger below; each matching credit and debit have been numbered to make finding them in the ledger easier. The amount in equity (in the form of retained earnings) has changed with a net credit of $500,000. Since equity has a normal balance of credit, this means there is now $500,000 more in equity than at the beginning of the month.

External links

- [http://www.linuxdevcenter.com/pub/a/linux/2004/10/07/gnucash_double_entry.html A double entry GnuCash How-to]
- [http://www.responsive.co.nz/theory.html More accounting theory]
- [http://www.responsive.co.nz/tutorial.html An accounting tutorial]
- [http://www.gnucash.org/docs/C/gnucash-guide/entry1.html GnuCash data entry concepts] Category:Accounting ja:複式簿記

Ancient Greece

Ancient Greece is the term used to describe the Greek-speaking world in ancient times. It refers not only to the geographical peninsula of modern Greece, but also to areas of Hellenic culture that were settled in ancient times by Greeks: Cyprus, the Aegean coast of Turkey (then known as Ionia), Sicily and southern Italy (known as Magna Graecia), and the scattered Greek settlements on the coasts of what are now Albania, Bulgaria, Egypt, Libya, southern France, southern Spain, Catalonia, Georgia, Romania, and Ukraine. There are no fixed or universally agreed upon dates for the beginning or the end of the Ancient Greek period. In common usage it refers to all Greek history before the Roman Empire, but historians use the term more precisely. Some writers include the periods of the Greek-speaking Mycenaean civilization that collapsed about 1100 BC, though most would argue that the influential Minoan was so different from later Greek cultures that it should be classed separately. In the modern Greek school-books, "ancient times" is a period of about 1000 years (from the catastrophe of Mycenae until the conquest of the country by the Romans) that is divided in four periods, based on styles of art as much as culture and politics. The historical line starts with Greek Dark Ages (1100–800 BC). In this period artists use geometrical schemes such as squares, circles, lines to decorate amphoras and other pottery. The archaic period (800–500 BC) represents those years when the artists made larger free-standing sculptures in stiff, hieratic poses with the dreamlike "archaic smile". In the classical years (500–323 BC) artists perfected the style that since has been taken as exemplary: "classical", such as the (Parthenon). In the Hellenistic years that followed the conquests of Alexander (323–146 BC), also known as Alexandrian, aspects of Hellenic civilization expanded to Egypt and Bactria. Traditionally, the Ancient Greek period was taken to begin with the date of the first Olympic Games in 776 BC, but many historians now extend the term back to about 1000 BC. The traditional date for the end of the Ancient Greek period is the death of Alexander the Great in 323 BC (The following period is classed Hellenistic) or the integration of Greece into the Roman Republic in 146 BC. These dates are historians' conventions and some writers treat the Ancient Greek civilization as a continuum running until the advent of Christianity in the third century AD. Ancient Greece is considered by most historians to be the foundational culture of Western Civilization. Greek culture was a powerful influence in the Roman Empire, which carried a version of it to many parts of Europe. Ancient Greek civilization has been immensely influential on the language, politics, educational systems, philosophy, art and architecture of the modern world, particularly during the Renaissance in Western Europe and again during various neo-Classical revivals in 18th and 19th century Europe and The Americas.

Origins

The Americas The Greeks are believed to have migrated southward into the Greek peninsula in several waves beginning in the late 3rd millennium BC, the last being the Dorian invasion. The period from 1600 BC to about 1100 BC is described in History of Mycenaean Greece known for the reign of King Agamemnon and the wars against Troy as narrated in the epics of Homer. The period from 1100 BC to the 8th century BC is a "dark age" from which no primary texts survive, and only scant archaeological evidence remains. Secondary and tertiary texts such as Herodotus' Histories, Pausanias' Description of Greece, Diodorus' Bibliotheca and Jerome's Chronicon, contain brief chronologies and king lists for this period. The history of Ancient Greece is often taken to end with the reign of Alexander the Great, who died in 323 BC. Subsequent events are described in Hellenistic Greece. Any history of Ancient Greece requires a cautionary note on sources. Those Greek historians and political writers whose works have survived, notably Herodotus, Thucydides, Xenophon, Demosthenes, Plato and Aristotle, were mostly either Athenian or pro-Athenian. That is why we know far more about the history and politics of Athens than of any other city, and why we know almost nothing about some cities' histories. These writers, furthermore, concentrate almost wholly on political, military and diplomatic history, and ignore economic and social history. All histories of Ancient Greece have to contend with these limits in their sources.

The rise of Hellas

In the 8th century BC Greece began to emerge from the Dark Ages which followed the fall of the Mycenaean civilization. Literacy had been lost and the Mycenaean script forgotten, but the Greeks adapted the Phoenician alphabet to Greek and from about 800 BC written records begin to appear. Greece was divided into many small self-governing communities, a pattern dictated by Greek geography, where every island, valley and plain is cut off from its neighbors by the sea or mountain ranges. 800 BC. It was the greatest architectural statement of 5th century BC Greece]] As Greece recovered economically, its population grew beyond the capacity of its limited arable land, and from about 750 BC the Greeks began 250 years of expansion, settling colonies in all directions. To the east, the Aegean coast of Asia Minor was colonized first, followed by Cyprus and the coasts of Thrace, the Sea of Marmara and south coast of the Black Sea. Eventually Greek colonization reached as far north-east as present day Ukraine. To the west the coasts of Albania, Sicily and southern Italy were settled, followed by the south coast of France, Corsica, and even northeastern Spain. Greek colonies were also founded in Egypt and Libya. Modern Syracuse, Naples, Marseille and Istanbul had their beginnings as the Greek colonies Syracusa, Neapolis, Massilia and Byzantium. By the 6th century BC Hellas had become a cultural and linguistic area much larger than the geographical area of Greece. Greek colonies were not politically controlled by their founding cities, although they often retained religious and commercial links with them. The Greeks both at home and abroad organised themselves into independent communities, and the city (polis) became the basic unit of Greek government. First Crete, then in short order the other Greek city-states, adopted the formal practice of pederasty. From its ritual roots in Indo-European prehistory, the practice was elevated to prominence, influencing pedagogy, warfare and social life, and becoming a central feature of Hellenic culture for the next thousand years.

Social and political conflict

The Greek cities were originally monarchies, although many of them were very small and the term "King" (basileus) for their rulers is misleadingly grand. In a country always short of farmland, power rested with a small class of landowners, who formed a warrior aristocracy fighting frequent petty inter-city wars over land and rapidly ousting the monarchy. About this time the rise of a mercantile class (shown by the introduction of coinage in about 680 BC) introduced class conflict into the larger cities. From 650 BC onwards, the aristocracies had to fight not to be overthrown and replaced by populist leaders called tyrants (tyrranoi), a word which did not necessarily have the modern meaning of oppressive dictators. By the 6th century BC several cities had emerged as dominant in Greek affairs: Athens, Sparta, Corinth, and Thebes. Each of them had brought the surrounding rural areas and smaller towns under their control, and Athens and Corinth had become major maritime and mercantile powers as well. Athens and Sparta developed a rivalry that dominated Greek politics for generations. In Sparta, the landed aristocracy retained their power, and the constitution of Lycurgus (about 650 BC) entrenched their power and gave Sparta a permanent militarist regime under a dual monarchy. Sparta dominated the other cities of the Peloponnese, with the sole exceptions of Argus and Achaia. In Athens, by contrast, the monarchy was abolished in 683 BC, and reforms of Solon established a moderate system of aristocratic government. The aristocrats were followed by the tyranny of Pisistratus and his sons, who made the city a great naval and commercial power. When the Pisistratids were overthrown, Cleisthenes established the world's first democracy (500 BC), with power being held by an assembly of all the male citizens. But it must be remembered that only a minority of the male inhabitants were citizens, excluding slaves, freedmen and non-Athenians.

The Persian Wars

In Ionia (the modern Aegean coast of Turkey) the Greek cities, which included great centres such as Miletus and Halicarnassus, were unable to maintain their independence and came under the rule of the Persian Empire in the mid 6th century BC. In 499 BC the Greeks rose in the Ionian Revolt, and Athens and some other Greek cities went to their aid. In 490 BC the Persian Great King, Darius I, having suppressed the Ionian cities, sent a fleet to punish the Greeks. The Persians landed in Attica, but were defeated at the Battle of Marathon by a Greek army led by the Athenian general Miltiades. The burial mound of the Athenian dead can still be seen at Marathon. Ten years later Darius's successor, Xerxes I, sent a much more powerful force by land. After being delayed by the Spartan King Leonidas I at Thermopylae, Xerxes advanced into Attica, where he captured and burned Athens. But the Athenians had evacuated the city by sea, and under Themistocles they defeated the Persian fleet at the Battle of Salamis. A year later, the Greeks, under the Spartan Pausanius, defeated the Persian army at Plataea. The Athenian fleet then turned to chasing the Persians out of the Aegean Sea, and in 478 BC they captured Byzantium. In the course of doing so Athens enrolled all the island states and some mainland allies into an alliance, called the Delian League because its treasury was kept on the sacred island of Delos. The Spartans, although they had taken part in the war, withdrew into isolation after it, allowing Athens to establish unchallenged naval and commercial power.

The dominance of Athens

Delos The Persian Wars ushered in a century of Athenian dominance of Greek affairs. Athens was the unchallenged master of the sea, and also the leading commercial power, although Corinth remained a serious rival. The leading statesman of this time was Pericles, who used the tribute paid by the members of the Delian League to build the Parthenon and other great monuments of classical Athens. By the mid 5th century the League had become an Athenian Empire, symbolised by the transfer of the League's treasury from Delos to the Parthenon in 454 BC. The wealth of Athens attracted talented people from all over Greece, and also created a wealthy leisured class who became patrons of the arts. The Athenian state also sponsored learning and the arts, particularly architecture. Athens became the centre of Greek literature, philosophy (see Greek philosophy) and the arts (see Greek theatre). Some of the greatest names of Western cultural and intellectual history lived in Athens during this period: the dramatists Aeschylus, Aristophanes, Euripides, and Sophocles, the philosophers Aristotle, Plato, and Socrates, the historians Herodotus, Thucydides, and Xenophon, the poet Simonides and the sculptor Pheidias. The city became, in Pericles's words, "the school of Hellas." The other Greek states at first accepted Athenian leadership in the continuing war against the Persians, but after the fall of the conservative politician Cimon in 461 BC, Athens became an increasingly open imperialist power. After the Greek victory at the Battle of the Eurymedon in 466 BC, the Persians were no longer a threat, and some states, such as Naxos, tried to secede from the League, but were forced to submit. The new Athenian leaders, Pericles and Ephialtes, let relations between Athens and Sparta deteriorate, and in 458 BC war broke out. After some years of inconclusive war a 30-year peace was signed between the Delian League and the Peloponnesian League (Sparta and her allies). This coincided with the last battle between the Greeks and the Persians, a sea battle off Salamis in Cyprus, followed by the Peace of Callias (450 BC) between the Greeks and Persians.

The Peloponnesian War

450 BC In 431 BC war broke out again between Athens and Sparta and its allies. The proximate cause was a dispute between Corinth and one of its colonies, Corcyra (modern-day Corfu), in which Athens intervened. The obviate cause was the growing resentment of Sparta and its allies at the dominance of Athens over Greek affairs. The war lasted 27 years, partly because Athens (a naval power) and Sparta (a land-based military power) found it difficult to come to grips with each other. Sparta's initial strategy was to invade Attica, but the Athenians were able to retreat behind their walls. An outbreak of plague in the city during the siege caused heavy losses, including Pericles. At the same time the Athenian fleet landed troops in the Peloponnese, winning battles at Naupactus (429 BC) and Pylos (425 BC). But these tactics could bring neither side a decisive victory. After several years of inconclusive campaigning, the moderate Athenian leader Nicias concluded the Peace of Nicias (421 BC). In 418 BC, however, hostility between Sparta and the Athenian ally Argos led to a resumption of fighting. At Mantinea Sparta defeated the combined armies of Athens and her allies. The resumption of fighting brought the war party, led by Alcibiades, back to power in Athens. In 415 BC Alcibiades persuaded the Athenian Assembly to launch a major expedition against Syracuse, a Peloponnesian ally in Sicily. Though Nicias was a skeptic about the Sicilian Expedition he was appointed along Alcibiades to lead the expedition. Due to accusations against him, Alcibiades fled to Sparta where he persuaded Sparta to send aid to Syracuse. As a result, the expedition was a complete disaster and the whole expeditionary force was lost. Nicias was executed by his captors. Sparta had now built a fleet to challenge Athenian naval supremacy, and had found a brilliant military leader in Lysander, who seized the strategic initiative by occupying the Hellespont, the source of Athens' grain imports. Threatened with starvation, Athens sent its last remaining fleet to confront Lysander, who decisively defeated them at Aegospotami (405 BC). The loss of her fleet threatened Athens with bankruptcy. In 404 BC Athens sued for peace, and Sparta dictated a predictably stern settlement: Athens lost her city walls, her fleet, and all of her overseas possessions. The anti-democratic party took power in Athens with Spartan support.

Spartan and Theban dominance

The end of the Peloponnesian War left Sparta the master of Greece, but the narrow outlook of the Spartan warrior elite did not suit them to this role. Within a few years the democratic party regained power in Athens and other cities. In 395 BC the Spartan rulers removed Lysander from office, and Sparta lost her naval supremacy. Athens, Argos, Thebes, and Corinth, the latter two formerly Spartan allies, challenged Spartan dominance in the Corinthian War, which ended inconclusively in 387 BC. That same year Sparta shocked Greek opinion by concluding the Treaty of Antalcidas with Persia by which they surrendered the Greek cities of Ionia and Cyprus, thus reversing a hundred years of Greek victories against Persia. Sparta then tried to further weaken the power of Thebes, which led to a war in which Thebes allied herself with the old enemy, Athens. The Theban generals Epaminondas and Pelopidas won a decisive victory at Leuctra (371 BC). The result of this battle was the end of Spartan supremacy and the establishment of Theban dominance, but Athens also recovered much of her former power. The supremacy of Thebes was short-lived. With the death of Epaminondas at Mantinea (362 BC) the city lost its greatest leader, and his successors blundered into an unsuccessful ten-year war with Phocis. In 346 BC the Thebans appealed to Philip II of Macedon to help them against the Phocians, thus drawing Macedon into Greek affairs for the first time.

The rise of Macedon

The Kingdom of Macedon was formed in the 7th century BC out of northern Greek tribes. They played little part in Greek politics before the beginning of the 4th century, but Philip was an ambitious man who had been educated in Thebes and wanted to play a larger role. In particular, he wanted to be accepted as the new leader of Greece in recovering the freedom of the Greek cities of Asia from Persian rule. By seizing the Greek cities of Amphipolis, Methone and Potidaea, he gained control of the gold and silver mines of Macedonia. This gave him the resources to realize his ambitions. Philip established Macedonian dominance over Thessaly (352 BC) and Thrace, and by 348 BC he controlled everything north of Thermopylae. He used his great wealth to bribe Greek politicians and create a "Macedonian party" in every Greek city. His intervention

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