Accounting has been defined as recording, measuring and reporting the financial aspects of an organisation’s activities. Rules on how to do this are determined by the accounting profession. They have changed over time. The modern accounting profession first arose in 19th-century Britain, mainly to deal with cases of bankruptcy and insolvency, when people or companies were unable to pay their debts.
More recently accountants have focused more on auditing, preparing financial statements and taxation, as well as providing general business advice. Auditing does not involve checking every transaction, but rather looking for misstatements. Accountants working in taxation services help their clients prepare returns to make sure they pay the right amount of tax to the government. They also advise their clients on how to legally pay a minimal amount of tax. Technological advances such as calculators, computers and specialised software mean much accounting work takes much less time and effort than in the past.
New Zealand’s first accountants
For most of the 19th century there was little demand for professional accountancy services in New Zealand. Only a few people could earn a living entirely from accountancy, mostly working for large institutions such as banks. Others combined accountancy work with work in related fields, such as clerical work, law or real estate.
The first New Zealand accounting firms were small private practices with up to three partners serving a single city or town. One of these, Dunedin’s Thompson, Lang and Associates, was established in 1900 by T. H. Thompson, whose grandson Kevin Thompson was one of the partners in 2008. It claimed to be the oldest accounting practice in the world with the founding family still involved.
The profession of accountant was well known in early colonial New Zealand, and in 1851 Auckland listed one accountant among its professionals and tradespeople. In 1852 the Hokianga chief Āperahama Taonui was teaching the young boys in his village to read, write, use figures and speak English. A Pākehā settler described him as ‘a good accountant’ who wished to ‘devote his time to the benefit of the rising generation and at the same time gain an honest subsistence for his family’.1
By the end of the 19th century many New Zealand businesses and industries needed full-time professionals to manage their finances. In 1901 the government required all private companies to be independently audited, and this caused the accountancy profession to develop rapidly.
Professional accountants’ organisations
The first professional accounting body in New Zealand, the Incorporated Institute of Accountants (IIA), was formed in 1894 with the aim of raising the standard and profile of the profession. The auditor-general, J. E. FitzGerald, was elected president, and within two months it had more than 100 members. The IIA admitted as members only accountants who had passed an entrance examination similar to that used in Australia, partly to enable its members to work in either country. Until the First World War no women were allowed to join the IIA.
Some experienced but unqualified accountants disagreed with the IIA’s admission policy, and in 1898 they set up a rival Accountants’ and Auditors’ Association (AAA). In 1902 this became the first accounting body in the British Empire to admit women as members, when Eveline Pickles of Christchurch and Winifred Hill of Nelson were admitted. Within a few years the AAA also required prospective members to pass an entrance exam.
New Zealand Society of Accountants
The number of trainee accountants passing the qualifying exams was so low that an alternative qualifying process was looked for. In 1908 the New Zealand Society of Accountants Act was passed, resulting in the legal recognition of qualified accountants. The New Zealand Society of Accountants (NZSA) was set up, admitting members who belonged to either of the two earlier organisations, or to any other recognised British accountancy organisation, and admitting any accountant with three years’ professional experience. From its formation the NZSA accepted women as members. Nineteen women were among its more than 2,000 founding members.
The AAA wound up in 1950 and the IIA followed suit in 1972, leaving the NZSA as the only New Zealand-based professional accounting body. It changed its name to the Institute of Chartered Accounting of New Zealand in 1996 and became the New Zealand Institute of Chartered Accountants (NZICA) in 2006. In 2008 the NZICA celebrated its centenary. It had 30,000 members, with a total of more than 46,000 members over its first 100 years.
In the early 2000s qualifying as a chartered accountant required four years of university-level study, including specified accounting and business courses, at an institution recognised by the NZICA. The successful graduate was then entitled to a period of provisional NZICA membership, including three years’ supervised practical experience and professional exams, before qualifying for full membership.