Category Archives: Masayoshi Noguchi

Business and Accounting History of Religious Organizations

Awareness to Accounting and Role of Accounting at Religious Organizations: The Case of Brotherhoods of Seville at the Last Decade of 16th Century

Jesus Damian Lopez-Manjon (, Juan Baños Sanchez-Matamoros ( & Maria Concepcion Alvarez-Dardet Espejo ( (all at Universidad Pablo de Olavide)



This work questions if religious organizations with common shared beliefs and sacred objectives, but which members had a different level of awareness to accounting, should show a different behaviour concerning: a) the status of accounting in their internal organisations; and b) the permeability of such organizations to new accounting techniques. To reach our aim, we have analysed the content of 6 rules of brotherhoods located in the city of Seville (Spain), and enacted at the last decade of the 16th century. We have split the brotherhoods depending on its link or not with a guild or professional group. We can conclude that the awareness to accounting of its members and the perception of the belief system are explanations to cover the dissimilar behaviour of the brotherhoods in relation to accounting.

Review by Masayoshi Noguchi

This paper is a new instalment of the most interesting work on accounting of religious orders that is emanating from Seville and was distributed by NEP-HIS on 2012-05-22. As the authors point out, the analysis of accounting function in religious organisations is currently one of the most important topics in accounting history research. It has successfully provided a reinterpretation of the past whether at monasteries or cathedrals. Institution that came to dominate everyday life in Europe during the middle ages.

Brootherhood of the Holy Cross – Seville

The basic research question of the paper is: ‘if religious organizations with common shared beliefs and sacred objectives, but which [sic] members had a diverse level of awareness to accounting, should show a different behaviour concerning: a) the status of accounting in their internal organisations; and b) the permeability of such organizations to new accounting techniques’ (p. 3). Through the analysis, the authors argue how the combination of the ledger control system; the context in which the organisations were placed; and, more importantly, the awareness of the members to accounting techniques, all came together to forge a unique link between professional guilds. This link could play an important role in explaining why accounting in religious organisations adopted specific features (p.9). As a result, they argue, a categorisation of accounting between sacred and profane over simplifies the operational context of religious organisations.

As the analytical object the authors choose the rules of six brotherhoods located in the city of Seville and which established in the second half of the 16th century. An important element of this study is the relation of the brotherhoods with closed craft groups called ‘guilds’. Specifically, the authors argue that the guilds exercised significant influence on accounting procedures prescribed in the rules adopted by some of the brotherhoods. Seville was the most active city in terms of the activities of the guilds, because of the recognized monopoly of the commerce with the Spanish American colonies (p. 4). Also the location within the city played an important part in the story: ‘Traders and craftsmen dedicated to the same profession used to live in the same neighbourhood and, therefore, attend to same parish or convent’ (p. 12). So, guild members would normally belong to the same brotherhood (p.12)

Processions are typical of Holy Week in Seville

The main conclusion of this paper is as follows: the three brotherhoods linked to guilds tended to use more advanced accounting devices and terminology than those not linked. Those most closely connected with specific guilds (i.e. the Santiago and the Buen Viaje), their rules contained more advanced technical terms and accounting jargon than the others. However, the categorization based on the linkage with the guilds could explain difference in the rules concerning the submission of accounts to a body of members for approval.

This study has some limitation, as the authors themselves recognise. Namely, it only analyzed the rules but not the practices of the brotherhoods. So it is not clear the extent to which they actually adopted accounting practices. Indeed, as has been documented by Bátiz-Lazo and others, a common shortcoming of Spanish accounting historiography has been its inference based on text books and rule books. Nothing definite can be said about the technical level of accounting adopted unless actual practices are analysed. It is quite normal that every day practice is carried out in completely different way from that prescribed in rules or regulations. Probably, establishing this link between rules and actual practices in the religious orders explored is the next research task.

Although there are issues, this paper is quite enjoyable to read but as noted, further development is expected.

The Pure Logic of Accounting

The Pure Logic of Accounting: A Critique of the Fair Value Revolution

Yuri Biondi (



When international accounting standards were renamed to become international financial reporting standards, this seemed to imply that accounting no longer needed to exist, but rather had to be reconsidered as a part of financial communication and advertising. Does traditional accountability no longer matter? Betrayed investors and globalized stakeholders would dissent. A difference of nature continues to exist between fair values disclosed by managers and certified by auditors, and the actual performance generated by the enterprise entity through time, space, and interaction. In a world shaped by complex organizations facing unfolding changes, hazard and limited knowledge, the quest for fundamental principles of accounting is not academic. Accounting principles constitute a primary way that the creation and allocation of business incomes is governed; that is, fairly managed and regulated in the public interest, having respect to “other people interests.” This article adopts a dualistic posture that opposes the accounting conceptual frameworks based on fair value (market basis) and historical cost and revenue (process basis). The fundamental premises about the underlying economics of the enterprise entity are discussed, including the representation of the business and the concepts of asset and liability. References are made to the case of accounting for intangibles, and to the distinction between equities and liabilities. The cost and revenue accounting perspective is then defended in terms of accountability, but also from the informational viewpoint: historical accounting information plays a special role as a lighthouse in the dynamic and strategic setting of the Share Exchange. In particular, two refinements of the historical cost (and revenue) accounting model are suggested. The first one regards the treatment of earned revenues from continuing operations, and the second, the recognition of shareholders’ equity interest computed on the actual funds provided in the past, coupled with the distinction between shareholders’ equity and entity equity.

Review by: Masayoshi Noguchi

This is an interesting piece of work distributed by NEP-HIS on 2011-02-19. Historians commonly use certain indications when they specify objects, organisations or periods to be analysed. Accounting income is one such indicator in accounting, business and economic history. But it is often assumed that firms gained their income through its main business activities. However, this is not always the case. More and more so, firms diversify and generate profitability from non-core activities (such as financial transactions). In the not so distant future, historians will have to face this and therefore, pay greater attention to the accounting assumption made by specific enterprises.

Yuri Biondi

This paper is not an historical study but makes timely comments on fair value accounting as represented by International Financial Reporting Standards (IFRS), under which an accounting income is assumed to be measured though changes in the market price of net assets. The author’s attempt is in fact a rehabilitation of cost-based accounting. An approach which builds on transaction-based measurements. This paper thus adopts the so-called ‘a dualistic approach’ (p. 3) or one that contrasts results from cost-based and fair value-based approaches. It is certain that papers like this will serve as a useful frame of reference for historical research.

Bondi criticises fair value accounting which, according to him, adopts ‘a market view’:

‘The underlying economics of the business firm is not considered by measuring the entrusted wealth and related (quasi-)rents (i.e., changes of value), but instead by representing its economic and monetary process as an enterprise entity’ (p. 7).

This view assumes that ‘the business entity is framed in a world of market forces capable of addressing and solving its accounting issues’ (p. 7). Bondi adds that ‘[t]he preference for fair value is motivated by this piecemeal valuation which does not consider the whole entity and the overall representation of business capital and income to the firm’ (p. 14). Furthermore that ‘[t]he fair value perspective appears to be at odds with the nature and role of enterprise entities that actually are socio-economic systems involving continuing relationships among interested parties and which raise public interest concerns’ (p. 10).For Bondi there main problem of fair value accounting is that it might lead to ‘inconsistencies'(p. 34).

At the same time, however, the advocates of fair value accounting are not so naïve and do recognise some of its limitations. And to be fair, assume a form of market behaviour much more complex than that Bondi has represented. In a way Bondi oversimplifies assumptions of market behaviour by stating that ‘[f]air value relies on perfect and complete financial markets’ (p. 33).

Bondi insists on the rehabilitation of cost-based accounting by stating that ‘the classic accounting principles fit a broader “accountability” framework that recognises the socio-economic nature of business entities’ (p. 10). From this perspective, ‘[a]ccounting is then understood as a mode of representing, organising and regulating these socio-economic systems and their institutional, organisational, and cognitive patterns and interactions’ (p.10).

However, the criticism to fair value accounting and the support for cost-based accounting do not necessarily mean that the latter comes out as the best choice. Bondi acknowledges that cost-based accounting is in need of reform. Specifically in the areas of intangibles and shareholders’ equity.

Bondi’s ultimate goal is to contribute to the ‘ongoing effort of conceptual clarification by drawing upon theoretical debates that have been going on for at least a century with respect to fair (current) value versus historical cost accounting’ (p. 3). But as of today it is far from clear there has been substantial progress on this debate.

Financial Reporting and Consolidation in the French Interwar Aluminium Industry

Beginnings of financial reporting and premises of consolidation of accounts in the French aluminium industry, 1921-1939

by Didier Bensadon (
Associate Professor in Financial Accounting, University Paris-Dauphine, DRM


The expansion of groups of companies during the inter-war years is one of the most profound transformations in the structure of French capitalism. Studies in economic history have shown the importance of the subsidiary creation phenomenon in relation to Compagnie Générale d’Electricité, Energie industrielle or Schneider. By contrast, these studies are less interested in the specific arrangements for auditing subsidiaries and managing Company Groups. This article seeks to show how and why the directors of Alais, Froges et Camargue – The largest French company in the aluminum sector- established specific audit measures from the 1920s onwards. This research is essentially based on the company’s archives (annual reports, general organisation chart and memoranda from the general secretariat). Even if the results published in the annual reports should be treated with the utmost caution, in particular owing to the absence of accounting regulation in France in the inter-war years, they remain essential for assessing the important position of subsidiaries and main shareholdings in assets. The scope of the subsidiary creation phenomenon, which is behind the establishment of specific controls, is highlighted. This trend, far from being linear, is strongly influenced by the economic and political situation. The size of the Group’s growth gave rise to two types of requirements for the directors of Alais, Froges et Camargue, namely to audit the subsidiaries and to measure the group’s net cash flow. The response to the need for auditing the subsidiaries was provided by the introduction of financial reporting from 1921. Faced with the increasing number of subsidiaries and main shareholdings held by Alais, Froges et Camargue, this control mechanism was to be strengthened in 1931. Furthermore, the necessity of measuring the Group’s net cash flow led the directors in 1927 to draw up a financial statement whose conceptual foundations were based on those of the consolidation of accounts.

Review by Masayoshi Noguchi

This is an interesting piece of work distributed by NEP-HIS on 2011-11-03. Its analytical method is the traditional archival research and the object of the analysis is ‘the company’s archives (annual reports, general organisation chart and memoranda from the general secretariat)’ of Alais, Froges et Camargue. Citing Bouvier (2005) on Compagnie Générale d’Electricité, Vuillermont (2001) on Energie industrielle and d’Angio (2000) on Schneider, the author assesses the prior research as being less interested in specific arrangement for controlling subsidiaries and managing a group of business enterprises. To rectify the deficiency, Bensadon exemplifies the case of Alais, Froges et Camargue, born out of the merger in 1921 of the Produits Chimiques Alais et Camargue Company (PCAC) and Société électrométallurgique française (SEMF) engaging in energy and electrochemistry related activities along with activities in the production of aluminium. Recognizing the importance of the subsidiary creation phenomenon during the inter-war years for transforming the structure of French capitalism, the research proposes to explore how and why the directors of Alais, Froges et Camargue established a new management structure from the 1920s onwards.


To answer the question of ‘why’, Didier Bensadon argues that ‘[t]he size of the Group’s growth gave rise to two types of requirements for the directors…namely to audit the subsidiaries and to measure the group’s net cash flow’, preceding the legal framework under which ‘corporate confidentiality’ to protect the business interest of private enterprises was still stressed, the same pattern more or less recognized in the experience of Great Britain during the period from the late nineteenth to the early twentieth centuries (see for example Dick Edward’s A History of Financial Accounting).

For the ‘how’ question, the Bensandon forwards the idea that ‘the necessity of measuring the Group’s net cash flow led the directors in 1927 to draw up a financial statement whose conceptual foundations were based on those of the consolidation of accounts’. Specifically, the author’s indication is intriguing that a prototype of consolidated statement of cash flows came out spontaneously as a management tool to control the group’s financial strategies, rather than the means for external reporting. In fact, it has been pointed out, from the viewpoint of group formation of businesses, that greater importance may be attached to the consolidated statement of cash flows rather than to the balance sheet or income statement (for example see Heath, 1978; Heath and Rosenfield, 1979). Bensadon’s research on the Alais, Froges et Camargue helps to support the case, though unclear to what extent the findings would be generalized in French industrial society during the interwar period. Probably, his future research agenda will include the issue of how the argument for preceding origination of consolidated cash flow statement could be applied to other companies.

Bensadon’s analysis on the attributes of subsidiaries and the relationships with the required frequency of reporting will provide a useful guide for future research. However, he arrives at important conclusions in some places but without showing sufficient evidence. Sorting out of associated companies classified in ‘shareholdings’ category which became the subject of ‘close monitoring’ in relation to his Table 4 is a typical case. The reference system is also coarse.

In contrast, there is persuasive power in the author’s analysis on the shareholdings of Alais, Froges et Camargue for its subsidiary network created in accordance with the business strategy of the parent company making heavy investments on several strategic sectors, i.e. energy supply and chemical production. The archives utilized also vastly extends covering the company’s articles of incorporation, the notice of meetings and the minutes of ordinary and extraordinary general meetings, balance sheets and profit and loss accounts, minutes of board meetings, copies of large contracts, the complete set of annual reports and various other reports (especially those affecting financial programmes) for the subsidiaries. Effectively utilizing these materials, this piece of work has attained its objective.


Edwards J R (1989) A History of Financial Accounting, London: Routledge.

Heath L C (1978) Financial Reporting and the Evaluation of Solvency, Accounting Research Monograph No.3, AICPA.

Heath L C and Rosenfield P (1979) Solvency: Forgotten Half of Financial Reporting, Journal of Accountancy, January, pp.48-54.