Creative accounting

Luca Pacioli was a Franciscan monk, a mathematician and the teacher of Leonardo da Vinci. A famous portrait of the man exists. He also wrote the immensely boring technical treatise “The Rules of Double-Entry Bookkeeping”. It's significant mostly because it’s the first preserved guide to this particular system of accounting. Pacioli's treatise was published in 1494 and was originally part of a larger work on mathematics. Double-entry bookkeeping itself is at least two centuries older. I admit that I only read half of this little book. Apparently, there are *some* subjects even I found immensely unexciting!

But sure, even Pacioli says a few interesting things. As a good monk, he obviously wants merchants to start the day with prayer and meditation, and mark their accounting books with the sign of the cross. He calls on the astute merchant to meticulously write down all details about transactions with banks and the government trade office, since their clerks are notoriously unreliable. Despite being a mendicant friar, Pacioli advises the merchant to overstate the value of his goods, so he can more easily make a profit. Surely, that's “creative” accounting! An entirely different ledger, yes? Pacioli instructs the good merchant to put the date and the location of the writer on top of all letters, otherwise you will be mocked and laughed at. It's good to know that this kind of formal, super-boring stuff plagued even the Venetians of old. Placing a seal on the letter, showing it's from a merchant and not just anybody, is also important, since merchants are important people. Such a letter will surely be read promptly by the addressee, almost like a letter from a cardinal!

Something tells me Leonardo learned other things from Luca Pacioli than the debits and credits of Italian bookkeeping, but Max Weber was probably right that this (together with the domed arch and the Protestant work-ethic) was what made the West best compared to the rest. Besides, it works even without oil and nuclear power…