Luca Pacioli, was a Franciscan friar born around 1446, in Borgo San Sepolcro in what is now Northern Italy. It is believed that he died in the same town on 19 June 1517. He is best remembered for his 615-page mathematical compendium, Summa de Arithmetica Geometria Proportioni et Proportionalita, published in 1494 and for his friendship with Leonardo da Vinci.
Many accountants perceive his greatest contribution as being the 27-page treatise on double-entry bookkeeping and business contained within his Summa. Today, we still teach double-entry bookkeeping following the principles set down by Pacioli, and all manual and computerised accounting systems owe much of their processing logic to the principles and processes he described.
Now you ask Pacioli? Insolvency?
Insolvency owes much to its foundations to Pacioli as every insolvency accountant would know with daily work in Insolvency entrenched in debits and credits, journals and ledgers. However, Pacioli would never have been able to envision how entrenched the area of Insolvency Accounting is in various areas of law whether it be the Corporations Act, the Bankruptcy Act, Common Law, or even the Family Law Act.
However, every accountant (worth his/her salt) whether working in Insolvency, Financial Accounting, Management Accounting or Tax Accounting to name just a few of the vast areas of Accounting, would know that contemporary accounting owes much to the double-entry bookkeeping practice that Pacioli first devised.
I know from my own daily work as an Insolvency Accountant that everything that I do in an accounting software package such as MYOB, every day, I will enter journals to record financial transactions. I use ledgers for an overview of multiple journal entries, and use functions such as bank reconciliations, and cash book listings to provide a summarised overview of transactions all grouped from journals.
The only thing that has changed since the days of Pacioli is the methods that we now use to group and summarise data. Contemporary accountants use information technology to help summarise and automate the process, rather than use pen and paper as Pacioli would have. Although, the underlying elements remain the same, and to this day all accountants can thank him for what we now enjoy.
Insolvency accountants have much to thank Pacioli for, along with all of the other areas of accounting. The main difference in modern insolvency accounting to that of 500 years ago, is the application of law to the practice of insolvency.