Antecedents of double-entry bookkeeping and Buddhist Temple Accounting

Abstract

This article extends Liyanarachchi (2009) by tracing evidence of Littleton’s (1927) seven antecedents of bookkeeping that may have supported the development of Buddhist Temple Accounting (BTA) in ancient Sri Lanka. The article contextualizes the seven antecedents within the socio-economic activities of the time, including the economic significance of Indian Ocean trade. This shows that although Littleton’s (1927) antecedents and a vibrant socio-economic setting were present in Sri Lanka, these supported the development of a simple accounting method which did not use double-entry bookkeeping. To explain this anomaly, the article discusses BTA vis-à-vis three other medieval developments of accounting: English manorial accounting, and early partnership and agency accounting in Italy. This shows that when societies experienced a need for accountability they successfully harnessed various capabilities of accounting to meet that need. However, the resulting accounting methods were as divergent as the socio-economic needs that motivated them. The findings support claims that accounting has “a basic core that is timeless” (Mattessich, 1998a: 200) and its development is socio-environment-specific (Perera, 1986, 1989), but challenge the view that certain preconditions would lead to double-entry bookkeeping (Littleton, 1927).

Keywords

Accountability antecedents Ceylon Indian Ocean trade medieval accounting Sri Lanka

Introduction

The article examines evidence concerning the presence of antecedents of bookkeeping (Littleton, 1927) in Ceylon (present day Sri Lanka) and how these may have supported the development of a simple accounting method that did not use the double-entry bookkeeping method. This simple accounting method is identified as Buddhist Temple Accounting (hereafter, BTA). As discussed in Liyanarachchi (2009), evidence of this accounting method emerged during the tenth century and comes from several rock inscriptions that laid down administrative rules for Buddhist monasteries (Perera, 2003, 2005; Ranawella, 2001, 2004, 2005a). In order to better understand the presence of antecedents and how these may have supported the development of BTA, the article does three things. First, it traces evidence of antecedents in periods prior to the tenth century in Sri Lanka. Second, in order to shed more light on the conditions that may have added life to these antecedents of bookkeeping, the country’s involvement in Indian Ocean trade is discussed. This shows that the seven antecedents and economic and social conditions that gave rise to a need for accountability were clearly present in Sri Lanka. However, contrary to Littleton’s (1927) claim, these did not lead to the development of double-entry bookkeeping. To explain this anomaly, the article next considers BTA vis-à-vis three other medieval developments of accounting – English manorial accounting, and early partnership and agency accounting in Italy. These were simple methods and they emerged in response to a need for accountability (albeit with varying levels of complexity), that arose in each respective setting. This suggests a relation between the nature and the level of complexity of accountability and accounting methods. Accordingly, the article shows that whilst antecedents do encourage accounting development, these may not necessarily lead to the development of the double-entry method. This is because accounting is highly versatile and, in order to harness its strengths, accounting need not be confined to a specific method such as the double-entry bookkeeping method.

The article finds its motivation from several noticeable issues in the accounting history literature. First, there is a paucity of knowledge on accounting in the Indian sub-continent. For example, whilst there is an extensive body of literature on medieval accounting in England and Italian cities,¹ there are very few studies on accounting history set in the Indian sub-continent (Choudhury, 1982; Lall Nigam, 1986; Liyanarachchi, 2009; Mattessich, 1998a, 1998b; Scorgie, 1990; Sihag, 2004). Perhaps a major culprit is “the myopic concentration on double-entry bookkeeping” (Mattessich, 1998a: 194), which seems to have encouraged a search for that technique even outside the Mediterranean (e.g., Jacobson, 1964 – ancient Incan Quipu; Lall Nigam, 1986 – Indian Bahi Khata).² Though unintentional, this type of concentration of research may nonetheless impoverish our understanding of the historical development of accounting and its widespread use as a social practice. Indeed, because accounting history research has now witnessed a “substantial expansion and maturation of its research agenda” (Fleischman and Radcliffe, 2005: 61), the current paucity of knowledge of accounting in the Indian subcontinent remains an important concern.

Second, whilst Arthaśāstra, the first known treatise on accounting (Mattessich, 1998a), and its significance in better appreciating the conceptual development of accounting thought has received some recognition (Choudhury, 1982; Mattessich, 1998a; Sihag, 2004), thus far very little is known about any likely application of such ideas in administration and accountability in the region in which that work appeared (Liyanarachchi, 2009). A third and final motivation for the article comes from the relatively little attention given by many accounting historians to the significance of simple accounting methods, even though simple methods were quite adequate to meet the divergent socio-economic needs that arose in different times and places (Baxter, 1956; Chatfield, 1977; Jack, 1966; Yamey, 1949). Arguably, a concerted focus on double-entry may have contributed to accounting being equated to the technique of double entry recordkeeping (Sy and Tinker, 2006). Furthermore, notwithstanding the challenges made against it (Yamey, 1947), the thesis that the double-entry method emerged in response to some issues that were not fully addressed by other methods still lingers on. This is problematic because by over-emphasizing the greatness of the technique, one tends to down-play accounting’s versatility, and, hence, any need for new approaches (for example, triple-entry bookkeeping – see Ijiri, 1986). Supporting such novel approaches, Baxter (1946, 1956, 2004) provides excellent illustrations of how, in colonial America, people successfully used “bookkeeping barter” when they were forced to live with a significant shortage of money (Baxter, 1956: 272).

The article makes several contributions. First, it extends the accounting literature by presenting evidence of antecedents and the socio-economic conditions that may add life to these in the Indian sub-continent region, thus supporting the development of an early medieval accounting method. Second, the article provides evidence that challenges Littleton’s (1927) claim that some antecedents led to the emergence of double-entry bookkeeping. As a third contribution, using the case of BTA and other accounting methods that emerged in medieval England and Italian cities, the article shows that when different societies experienced accountability with varying levels of complexity they successfully harnessed various capabilities of accounting. This adds further support to the contention that simple accounting methods were quite adequate to meet the divergent socio-economic needs that arose during different times and places (Chatfield, 1977; Jack, 1966), and continued to emerge even after the double-entry method became widely known in colonial America (Baxter, 1946, 1956; Schultz and Hollister, 2004; Vollmers and Bay, 2001). Finally, the article helps strengthen theoretical arguments that view accounting and its development as socio-environment-specific (Perera, 1986, 1989). The study shows a likely socio-economic specific nature of accounting development, whilst at the same time it reveals that accounting possesses some basic commonalities (Mattessich, 1998a). Existing differences of accounting methods suggest that accounting ideas acquire their distinctive form, content and execution from peculiarities present in their respective socio-economic environments, one of which is the level of complexity of accountability that a particular method aims to address.

Research site and method

The article focuses on Sri Lanka for several reasons. First, there is evidence of accounting and audits in ancient Sri Lanka (Liyanarachchi, 2009). Second, the country was an important trading post located in a strategic point in the Indian Ocean trade route (hereafter, entrepôt), reaching its zenith during the fourth and fifth centuries (Hourani, 1995). But the country lost its dominant position in the seventh century to another more attractive entrepôt – Sri Vijaya of Sumatra (present-day Indonesia) (De Silva, 2005). As a result of trading and other exchanges (e.g., Fâ-Hien’s travels in 399–414, see Legge, 1965; the Periplus, see Schoff, 1912), the country may have received and assimilated ideas and practices of other places and people, thus improving its potential significance as a research site to better understand historical developments in accounting. A third reason is that Sri Lanka had access to accounting ideas, and their importance in administration, which appeared in Arthaśāstra in India around the fourth century BC.³ One strong piece of evidence in this respect comes from The Great Chronicle of Ceylon or Mahāvamsa, documented in the sixth century (Geiger, 2003: xii), which clearly mentions Cānakka (Cānakka Kautilya), the author of Arthaśāstra (Mahāvamsa, V.16; Ranawella, 2005b).

The archival method is used to collect data. Primary evidence concerning BTA comes from rock inscriptions (see Carnegie and Napier (1996) for a broader interpretation of the archival sources available to accounting historians). Further corroborations are sought through numismatic and various literary sources, which include both primary and secondary sources. The use of the method can be illustrated as follows. The archaeological findings of foreign coin-hoards in Sri Lanka could lead to the inference that the country was involved in foreign trade during a certain time in history. Details provided in inscriptions, uncovered from various parts of the country, may furnish further clues related to the nature and the social and economic significance of such interactions. These inferences are further evaluated using references made to Sri Lanka and its various wares by ancient writers such as Pliny the Elder, Strabo, the author of the Periplus, Ptolemy, Cosmas Indicopleustes, and Fâ-Hien. Finally, secondary literary sources are used to better understand the wider historical context in which evidence of the study could be better interpreted and understood. Table 1 lists the names of inscriptions consulted to obtain data for the study.

Table 1.

Sources of published inscriptions and interpretations.

Author	Period	Number of inscriptions
Paranavitana (1933)	Various	36
Paranavitana (1943)	Various	38
Sirisoma (1990)	third century BC to AD 65	1,440
Hettiarachchi (1990)	second to fourth century	190
Mudiyanse (1990)	400 to 800	Discussions
Dias (1990)	800 to 1200	Discussions
Perera (2001)	third century BC to AD 830	Discussions
Ranawella (2001)	815 to 923	115
Ranawella (2004)	924 to 1029	74
Ranawella (2005a)	ninth and tenth century	178
Ranawella (2005b)	second to sixteenth century	38

Antecedents of bookkeeping

Littleton (1927: 140–141) suggests that seven preconditions are required for the emergence of double-entry bookkeeping: the art of writing, arithmetic, private property, money, credit, commerce and capital. The presence of these antecedents in early Sri Lanka is clearly evident from inscriptions. Even the title of accountant was used from as early as the second century: “From the Thūpārāma inscription of Gajabāhu [112–134 CE] we know that there was at Anurādhapura [the capital city] an official called nakara ganaka, translated as ‘city accountant’” (Perera, 2001: 153).

The art of writing

The presence of the art of writing is evident from the numerous rock inscriptions found in Sri Lanka. The earliest inscription in Sri Lanka dates to the late third to early second century BC (circa 207– 197 BC) (Karunaratne, 1984; Perera, 2001). The script used is the Brāhmī script of India (Paranavitana, 1970; Perera, 2001), which is recognized as the precursor of Modern Sinhalese (Karunaratne, 1984). Sinhalese Prakrit is another script that shaped the language. Perhaps one of the most convincing pieces of evidence of literary activity comes from the fact that the Teaching of the Buddha was documented in Sri Lanka “circa 89–77 B.C.” (Mahāvamsa; Karunaratne, 1984: 39). Another is the presence of documented history from 400 BC to 300 AD in Mahāvamsa, the Great Chronicle of Ceylon, and its earlier form Dīpavamsa (Geiger, 2003). It appears that by the fifth century there was substantial literary work in Sri Lanka and “Buddhaghosa came to Ceylon to translate Sinhalese Prakrit commentaries into Pali, as it was the common medium of the Buddhist world” (Karunaratne, 1984: 39). These sources, therefore, are offered as evidence of the presence of the art of writing in ancient Sri Lanka.

Numerals and arithmetic

Evidence of the use of numerals appeared in reference to money, the Indian karshapana (Cribb, 2007: 340), which was in circulation in Sri Lanka and was also known as kahavanu or kahavanas (De Silva, 2005: 49). Based on the details given in inscriptions, Hettiarachchi (1990: 90–91) has identified various symbols used in the Brāhmī Numeral System for digits 1 to 10, numbers 10 to 100 and the symbol denoting 1,000. Hettiarachchi (1990) provides a detailed discussion of Brāhmī numerals, symbols used to denote numerals, and their appearance in various inscriptions during the second, third and fourth centuries in Sri Lanka. In the Wilewewa inscription for example, the monetary amount of Kahavanu 4,000 has been stated in letters and also written symbolically as: [a symbol for kahavanu, a small square divided into four parts], [a numeral denoting 1,000], [a numeral denoting 4]. In the order of the appearance of symbols this reads as: Kahavanu, 1,000, 4 (kahavanu 4,000 or 1,000 x 4 = 4,000) (Hettiarachchi, 1990: 90).

The details given in various inscriptions suggest that knowledge of basic arithmetic operations, including the use of fractions, existed from very early times. The Bakkiella inscription (circa 300 BC to 65 AD) provides a clear indication of multiplication knowledge. In this inscription, “seven times hundred” has been clearly indicated (Sirisoma, 1990: 10).

Private property

A large number of inscriptions show the presence of private property in ancient Sri Lanka. Table 2 shows details suggesting that some private people, other than the king and his royal family, also owned property.

Table 2.

Inscriptions showing evidence of antecedents of bookkeeping.

Inscription	Details	Concepts/antecedents
Second century: (Hettiarachchi, 1990: 66–72) Sithulpahuwa inscription (p. 66)	Donation by the King Gajabahu (112–134) of the payment daily of 2 kahawanus for the medical expenses of the Situpahu temple out of the income (fines) from the court house … [and] The customs duty from Godawaya port to the temple there.	Court fines, revenue, customs duty
Minvila inscription (p. 67)	Donation of taxes from three ports or ferries in twin Mahaweli rivers to a temple.	Tax revenue
Thamaragala rock inscription (p. 70)	Donation of a share of tax revenue by a woman.	Private property, tax revenue
Ottapuwa inscription (p. 70)	1,500 kahavanu by Mahadem.	Money, private property
Angamuwa inscription (p. 70)	Donation of interest from 100 kahavanu to hold a Buddhist ceremony.	Money, private property, capital and interest
Illukwewa inscription (p. 70)	Donation of one out of the four shares of a tank.	Private property, fractional ownership
Udakandara inscription (p. 70)	Donation of interest from 100 kahavanu to bhikkus [monks].	Money, capital and interest
Third century
Veherekema inscription (p. 71)	Donation of interest from 20 kahavanus.	Private property, capital, interest
Madawala rock inscription (p. 71)	Depositing of paddy on interest by Abaka Baya.	Private property, capital, interest
Sangapola inscription (p. 71)	Donation of one out of the four taxes to a temple.	Private property, tax, proportion of revenue
Khatagasdigiliya inscription (p. 71)	Donation of fish tax from a tank to a temple.	Private property, tax revenue
Fourth century
Aminichchiya inscription (p. 72)	The depositing of the income from six tanks in a bank (or trust institution).	Private property, revenue, banking
Tonigala rock inscription (Perera, 2001: 166)	Depositing of three types of grain with a guild to be lent as seed grain, the interest to be used to perform a ceremony – that “capital should not be spent” (Perera, 2001: 176).	Banking, capital, interest, capital maintenance
Seventh century
Tiriyāy rock inscription circa 660–680 (Paranavitana, 1943: 153–154; Mudiyanse, 1990: 113)	Merchants named Trapussaka and Vallika, of a company of sea-faring merchants founded the Girikandi-caitya in Tiriyāy [located about 50 kilometres north of Trincomalee (port)]; merchants were described as “skillful in navigating the sea, engaged in buying and selling and who possessed a display of goods laden in vessels of [different] sorts” (Paranavitana, 1943: 154).	Sea-faring merchants, commercial vessels, buying and selling goods
Ninth century
Mihintale plinth course inscription (853–887) (Ranawella, 2001: 34–37)	Regulations related to collection of taxes from merchants and instructions to hand over that revenue to a monastery; bidding to obtain permission to trade by merchants.	Bidding for permission to trade, tax revenue
Pillar inscription at the Eastern gate of Anurādhapura (887–898) (Ranawella, 2001: 99–101)	A land grant by the king to a hospital at Mädirigiriya.	Private institution
Tenth century
Mänikdena slab inscription No. 3 (ninth–tenth century) (Ranawella, 2005a: 148)	Purchasing of a field and donation: “I am the wife of Sena of Koboyatela; having purchased a paddy field … with outright ownership … I have endowed that paddy field to the same monastery as a perpetual grant …” (Ranawella, 2005a: 148).	Private ownership, purchase of property, transfer of property rights
Badulla pillar inscription (942)(Paranavitana (1933: 73–80)	Regulations for management of a market place.	Organised trading, regulations to control trading

Whether or not the type of ownership is identical to the one we are familiar with today is unclear. Yet, fields, tanks or reservoirs, and money have been owned by people and they have been transferred to others. One of the main reasons for the writing of early inscriptions was to recognize that something was donated by someone, usually to a Buddhist temple. Strong indications exist that there were at least three distinct segments of society: royalty, a privileged class and kudin (ordinary householders, although literally the term refers to tenants) (Perera, 2001; Ranawella, 2005a). There are indications of another class – merchants – referred to in inscriptions as vanijha (Dias, 2001).

Money

Money has been used in Sri Lanka from very early times. A form of currency called Kahapana (or Kahavanu) has been mentioned in numerous inscriptions from the second century onwards. In northern India, these were known as the punch-marked karshapana (Cribb, 2007: 340; De Silva, 2005: 49). According to De Silva (2005: 49): “There were two types of coins which were legal tender: local issues and coins from outside the country, brought in by foreign traders accepted as means of exchange”. Table 3 shows a number of inscriptions that detailed specific sums of money.

Table 3.

Money.

Inscription*	Common era	Money
Hettiarachchi (1990: 57–104):
Ottapuwa rock inscription (I.C. 145) (p. 70)	Second century	1,500 kahavanu
Angamuwa rock inscription (I.C. 148) (p. 70)	Second century	100 kahavanu
Udakandara rock inscription (I.C. 167) (p. 70)	Second century	100 kahavanu
Dambulla rock inscription (I.C. 175) (p. 70)	Second century	600 kahavanu
Wilewewa rock inscription (I.C. 65) (p. 90)	Second century	4,000 kahavanu
Veherekema (or Weherakema) rock inscription (I.C. 165) (p. 71)	Third century	20 kahavanu
Mudiyanse (1990: 107–166):
Labuätabändigala rock inscription (E.Z. III. 26) (p. 128)	Fifth century	100 kahāpanas
Hinguragela rock inscription (E.Z. IV. 8) (p. 128)	Fourth/fifth century	60 kahāpanas
Nilagama rock inscription (E.Z. IV. 37) (p. 129)	Sixth/seventh Century	100 kahāpanas
Four rock inscriptions from Vessagiriya (E.Z. IV. 15) (p. 129)	526–552	100 kahāpanas
Inscriptions from Burrows’ Pavilion (E.Z. IV. 16) (p. 129)	Seventh century	100; 1,000; 2,000 kahāpanas
Kuda-ratmale rock inscription (E. Z. V. 2) (p. 130)	NA	100 kahāpanas

Note: * The published source of inscription and its serial number followed by the page number of the referenced work are shown in brackets [I.C. = Inscriptions of Ceylon; E.Z. = Epigraphia Zeylanica].

Capital

There are references to capital in inscriptions, mainly with respect to the depositing of money or grain to earn interest (Table 2). The fact that the capital should not be spent has also been clearly stipulated. For example, the Tonigala rock inscription provides instructions that capital should not be spent; rather only the interest that it yields periodically is to be used to fulfil the activity the donor expected his or her gift to be used for (see Table 2).

Commerce

Because of the involvement of Indian Ocean trade, commercial activities were not confined to local exchanges but included exchanges with other places. Table 2 presents some details from inscriptions that provide clues about the type of local activities that could be classified as commercial. Grain banking resembles some essential features of banking, such as the depositing of valuables for interest to be received on a periodic basis (Table 2). Trading and bidding for permission to trade and regulations related to a market show that trading was organized and controlled (Table 2).

Credit

The presence of the practice of credit can be gleaned from the inscriptions that talk about the depositing of money or grain to earn interest (Table 2). The fact that interest could only be accrued as a result of lending the deposited money to someone else could be interpreted as evidence of credit in the early society of Sri Lanka. This shows that in ancient Sri Lanka, credit did not involve specialist institutions, such as the banks in medieval Venice, nor did credit appear to be widespread. Indeed, the use of credit appeared to be at a nascent stage. Even though an activity resembling the practice of banking was present, evidence at hand shows no signs of the organized activity of lending and borrowing.

Similarly, judging by the details of inscriptions, evidence of commerce appears not to be widespread as one would have expected, considering the significance of the country’s involvement in the ancient Indian Ocean trade. A strong possibility exists that a lack of evidence was mainly due to such details not achieving the social importance that would lead to inscriptions in rocks. Other forms of evidence were more likely than not to be destroyed over time. The numerous hoards of Roman coins found at various sites suggest that only the most durable forms could survive nature’s impact. Therefore, the lack of evidence of inscriptions does not rule out vibrant commercial activity.

The details presented above show that all the seven antecedents of bookkeeping were present in ancient Sri Lanka. According to Littleton (1927), both these antecedents and the social and economic conditions that give life to these are necessary for the development of double-entry bookkeeping. In helping understand these contextual features, Liyanarachchi (2009) provides a detailed discussion of how Sri Lanka’s role in promoting the teachings of the Buddha contributed to its institutional and social development. Whilst this helps us to understand the complex social setting within which BTA functioned, it leaves questions about the economic climate unanswered. For example, evidence of major irrigation development projects and the construction of monumental religious edifices (De Silva, 2005) suggest a wealthy economy. But what were the sources of wealth? One answer is tax revenue. The kings of Sri Lanka invested resources in building tanks to collect water and irrigation canals and waterways to reticulate water into fields that cultivated rice – the staple crop of the country. This investment not only helped the kings convert large areas of dry land into productive fields, but it also provided the kings with tax revenue, for the usage of water was taxed. The water rates known as dakapati were used for this purpose (Perera, 2001: 65). According to Hettiarachchi (1990: 80), as a result of irrigation facilities developed around the second century, “there arose a class of wealthy persons – the owners of tanks, canals, dams, lands”. Accordingly, the effects of wealth-generating activities were not confined to the sphere of economics but extended to the social sphere as well.

Another answer may be trade and commerce. This is because epigraphic and literary sources show ample evidence suggesting that Sri Lanka was an important player in the Indian Ocean trade. Accordingly, sea trade and its likely contribution to the royal treasury and society of Sri Lanka are briefly discussed in the next section.

Sri Lanka as an entrepôt

Around the first century, and for several centuries thereafter, Sri Lanka was a thriving trading centre in the Indian Ocean. This was because many seafaring merchants knew Sri Lanka for its products (e.g., pearls, spices) and also as a valuable entrepôt in the Indian Ocean (Bopearachchi, 1996; Hourani, 1995; Schoff, 1912).⁴ In the words of Hourani (1995: 40–41):

Ceylon was the entrepôt for sea trade between China and the Near East. Ships of the Chinese and other Far Eastern nations used to sail as far west as Ceylon, and from here westward the trade was in the hands of the Persians and Axumites. … Persians were the intermediaries for the silk trade between China and the West, both by the Central Asian route from the “Seres” and the sea route from the “Sinae”; that which came by sea was bought by them in the markets of Ceylon and shipped to their ports in Persia.

The easy access to the Bay of Bengal could have been a strong attraction for seafarers, which was further helped by the presence of a natural harbour on the northwest coast of Sri Lanka, almost at the entrance to the Palk Strait. The trading activities seem to have continued beyond early ancient times. “From all parts of India, Persia and Aethiopia come a multitude of ships to this island [Taprobane or Ceylon], which is placed as it were midway between all lands; and it send[s] ships likewise hither and thither in all directions” (Cosmas Indicopleustes, Christian Topography, book XI; sixth century CE, cited in Schoff, 1912: 250).

Roman coin hoards have been found in many of the ancient trade settlements of Sri Lanka, attesting to the presence of trading connections between Sri Lanka and Rome (Codrington, 1924, cited in Bopearachchi, 1996). Table 4 presents details of important coin hoards found in Sri Lanka. The presence of Roman coin hoards near many river mouths where ancient ports were located may suggest that people participated in commercial exchanges with Romans or others who used Roman coins. The archaeological evidence uncovered from excavations at several ports (present day Mannar, Trincomalee, Galle and Hambantota), as well as subsequent numismatic studies, supports the claim that Sri Lanka was an important entrepôt in Indian Ocean trade (Bopearachchi, 1996).

Table 4.

Roman coin hoards.

Source	Place (weight or number of coins)
Codrington (1924: 32–33, cited in Bopearachchi, 1996: 63)	Roman coins Balapitiya (weight of hoard = 13 lbs)
Walburg (1985: 77, 91, 106, 111–116, cited in Bopearachchi, 1996: 63)	Roman and other coins Hambantota (1,600)Hambantota (519)Hambantota (2,828)Matara (300)Matara (3,000)Colombo (122)Colombo (300)
Bopearachchi (1996: 63)	Roman third brass coins Godavaya (30,000)Hungama (20,000)
Bopearachchi (1996: 63)	Roman and Indo-Roman coins BentotaKalutaraNegombo

In addition to the significance of Mannar on the northwest coast of the country, Sri Lanka has several other easily accessible ports. One of these is Trincomalee (De Silva, 2005), a deep water yet safe port, lying on the north eastern shoreline. Three other ports are located on the south-eastern, southern and western shorelines of the country, Hambantota, Galle and Colombo, respectively. Based on the archaeological sites where foreign coin hoards were found, 11 ports were identified along the north-western, western and southern coastlines of Sri Lanka (Bopearachchi, 1996). All these ports are linked to navigable rivers, which no doubt allowed the traders to reach inland parts of the island to obtain the commodities they traded with people in distant countries.

One of the most important commodities sourced from Sri Lanka were pearls harvested from the Gulf of Mannar. According to Pliny (IX, 54–8): “The first rank, and the very highest position among all valuables belongs to the pearl … The most productive of pearls is the island of Taprobane” (cited in Schoff, 1912: 239). Ray (2003) identifies the waters of the Gulf of Mannar as one of three well-known waters for pearl fishery in ancient times, the two others being the Persian Gulf and the Sulu archipelago. As for the monetary significance of pearls, the Great Chronicle of Ceylon provides a clue, stating that: “every year he [King Vijaya] sent to his wife’s father [the Pandu king in Southern India] a shell pearl worth twice a hundred thousand (pieces of money)” (Mahāvamsa, VII: 73). Considering that Vijaya’s reign in Sri Lanka was circa 483–443 BC (Geiger, 2003: Ii) this could be regarded as a significant amount.

Other items traded included precious stones such as rubies, sapphires and various spices including cinnamon. The traded items could also include goods that reached Sri Lanka from other parts connected to the Indian Ocean trade, including silk from China (Hourani, 1995). Smith provides an insight into the significance of aromatics in the ancient world: “Bodily health was associated with the world of scents” (Smith, 2009: 90). On the use of aromatics in funerals, Keay (2006: 45) writes: “In the early days of the Roman republic spices were much used for funerary purposes”. Smith further remarks on the significance of spices to Romans as follows:

For the Roman elite, who were beginning to feel that they deserved to enjoy the benefits that their super power status made possible, the Red Sea connection opened the door to luxuries and exotica … Spice warehouses were established in Rome … supply could hardly keep up with demand despite a steady rise in production and prices. (Smith, 2009: 89)

Other likely trading items were various supplies needed by seafaring merchants when they approached land, such as food, water and other basic necessities, and skilled workers to attend to the repairs needed for their vessels. It appears also that the Sri Lankan seafarers were in control of the transportation of goods along the Palk-Strait. According to Bopearachchi (1996: 70), “Pliny’s specific reference to the ships of Taprobane carrying 3000 amphorae in contrast with the Roman vessels capable of carrying over 10000 amphorae shows that the navigation through the straits of Mannar was assumed not by Romans but by Sri Lankans”. The importance of local knowledge of the waters of the Gulf of Mannar and the Palk-Strait was perhaps the main reason for this, because the sea strips were narrow and shallow making it challenging for seafarers. Using local knowledge, there had been attempts to maintain control of a sea passage bordering a particular territory by the locals of that region. Such attempts to control trading activities were perhaps also necessary to collect taxes from merchants, which were a source of revenue for the ruler of the territory. Accordingly, a very important source of revenue for the royal treasury was the customs duties and other taxes collected from seafaring merchants at the ports (Hettiarachchi, 1990: 66; Perera, 2001: 149).

Deraniyagala (1996) argues that there was a significant increase in human settlements in Sri Lanka during this period, and this increase may have been due to an increase in “medium- and long-distance trade leading to a corresponding increase in wealth” (Deraniyagala, 1996: 284). According to the records of the Chinese pilgrim Fâ-hien, there were affluent Arab traders in Ceylon: “In the city there are many … Sabaean [Arab] merchants, whose houses are stately and beautiful” (Legge, 1965: 104). Literary sources speak of Greek presence in India as well as in Sri Lanka. The Indians began identifying Roman traders as “Yavanas” (Smith, 2009: 89), a name used in Sri Lanka to identify Greeks as well (De Silva, 2005). In Sri Lanka: “Apart from indigenous merchants there was, from very early times, a colony of Yavanas (Greeks) and by the fifth century AD a colony of Persian merchants too” (De Silva, 2005: 46).

This shows that Indian Ocean trade provided an important source of wealth for the royal treasury and lay people who participated in it, and the sea trade also permitted interactions with people from other places. More importantly, given the fact that inscriptions identified merchants as a different class (Dias, 2001), one may also notice the social significance of Indian Ocean trade.

Accounting methods

As discussed above, the seven antecedents of bookkeeping and a vibrant economic and social setting that would be conducive for the development of accounting were present in ancient Sri Lanka. And yet, these only saw the development of a simple method, BTA. Also, it appears that BTA could successfully meet the needs of accountability that arose in ancient Sri Lanka (Liyanarachchi, 2009). This suggests that a simple accounting method could meet a need for accountability that arises in a particular social context. In order to shed more light on this, BTA is next discussed vis-à-vis three other medieval accounting methods that emerged in England and in Italy. This shows how accounting may adapt to serve accountability needs in divergent social contexts.

Buddhist Temple Accounting (BTA)

Several inscriptions show evidence of the use of periodic accounts and audits in the administration of Buddhist temples of Sri Lanka in the early parts of the tenth century (Perera, 2003, 2005; Ranawella, 2001, 2004, 2005a). Table 5 presents extracts from six inscriptions that provide specific regulations concerning accounts and audits of Buddhist temples.⁵ The earliest of these was dated to the period 914–923AD, whilst the latest inscription belongs to the late tenth century (956–972 AD) (see Table 5). Using these inscriptions, Liyanarachchi (2009) provides a detailed examination of accounting and audits of ancient Sri Lanka and how these were used in the administration of Buddhist temples. This section provides a brief summary of the main features of BTA.

Table 5.

Regulations concerning keeping of annual accounts and conducting audits.

Inscription	Selected extracts
Anurādhapura slab inscription (914–923) (Ranawella, 2001)	“Eight persons … shall inspect the [Temples] and a record (of income and expenditure) shall be prepared and be made the community of monks hear it at the end of the year” (Ranawella, 2001: 336).
Mihintale tablets of Mahinda IV (956–972) (Perera, 2005; Ranawella, 2004)	“Whatever is spent daily on the maintenance of the Maha-pā (refectory) on maintenance of those receiving such from the vihāra and on repairs shall be entered in registers and a statement of accounts made with the concurrence of the (officials of the) kam-tän. … Every month the statement of accounts placed in the caskets shall be made into one statement and with the twelve statements of accounts one balance shall be made at the end of the year. This shall be read out and concluded in the midst of the monks” (Perera, 2005: 277).
Jetavanārāma inscription of Mahinda IV (956–972)	“Annually the monks of the six āvāsas [monastic cells] shall be convened, when the royal officials and the monastic officials shall read out in the presence of the community of monks the records kept at the aforementioned places, indicating how the income has been derived and the expenses were incurred, how the wages had been paid to the servants, and how the tithe tenures had been assigned. Should any dispute arise with regard to these matters, the high dignities of the Court of Justice shall sit in session and settle that dispute” (Ranawella, 2004: 257).
Dambegoda pillar inscription (956–972) (Ranawella, 2004)	“Records of income and expenditure of the (above mentioned places) should be maintained, detailing how the incomes due to those places had been collected, and the details of the expenses, such as the wages paid to the servants (attached to those places), the balance (of income) left after expenditure should be retained as non-transferable goods…” (Ranawella, 2004: 267).
Mädirigiriya slab inscription No. 1 (956–972) (Ranawella, 2005a)	“The functionaries of the hospital shall not accept any gift or bribe from the tenants attached to the hospital … At places guarding the collection of water-tax, the Warden and their lordships, the physicians shall make (the tenants) to perform work on (those) reservoirs … they should cause the recording (of accounts annually)” (Ranawella, 2005a: 39).
Mapagala fragmentary slab inscription (ninth–tenth centuries) (Ranawella, 2005a)	“The monks who come to assist these villages shall sit with the (committee of) seven persons who come annually to keep accounts, shall keep the accounts of expenditure incurred …” (Ranawella, 2005a: 117).

From the details contained in inscriptions one can see that BTA had the adequate conceptual support needed to successfully function as a simple accounting method (Table 5). Some of the important concepts and features of BTA evident from inscriptions are as follows (Table 5; Liyanarachchi, 2009):

Entity, periodicity, revenue, expenditure, asset, profit/net income, daily records, monthly statements, twelve monthly statements, adequate details, categories of revenue and expenditure, verifiability, segregation of duties, safeguarding of cash, supervision of work, taking security from employees entrusted with receipts, annual audits, inspection of accounts, a process for resolving disputes, removal of inaccurate details.

The type of accounting that was described in inscriptions could be recognized as a form of revenue and expenditure accounting. The entity in focus was a particular temple or a group of temples, which came under common administration. There is a clear focus on revenues and expenditure. Yet, BTA is broader than the mere description of receipts and payments because there is reference to net income and its periodic calculation. For example, the Dambegoda pillar inscription (956–972) shows that there was a requirement to treat net income as a non-transferable item (Table 5). This treatment and the conceptual understanding of its significance as an item continuing from one period to the other suggests a likely influence of ideas contained in Arthaśastra. As stated in Arthaśastra: “That which remains after deducting all the expenditure already incurred and excluding all revenues to be realized is net balance (nivi) which may have been either just realized or brought forward” (Shamasastry, 1988: 61).

The extract from the Anuradhapura slab inscription of Kassapa V ( 914–923) shows that there was a clear emphasis on the need to examine activities of a particular monastery and this responsibility was placed on the chief monks of that monastery (Table 5). The recommendation of “eight persons” to inquire and agree on the statement of accounts may be interpreted as an attempt to avoid disputes over revenues and expenditure recorded in such statements prior to their finalization, and as a sign of rigorous examination of accounting records (Liyanarachchi, 2009).

Similarly, the Mihintale slab inscriptions (956–972) (Table 5) contained a requirement to keep daily records and remove any entries that were found to be incorrect. This and the specific requirement to obtain summaries, such as daily records and monthly statements, suggest that there was a systematic process for keeping records to enable the extraction of an annual summary of revenues and expenditure of a monastery. More importantly, these requirements indicate a clear understanding of the concept of periodicity. The same inscription shows that attempts were taken to separate important duties and to protect valuable items, thus suggesting the presence of internal controls. According to Liyanarachchi (2009: 114): “notions such as systematic record keeping, internal control … periodic closing of accounts, audits and accountability and their relevance to organizational administration, seem to have been well-established in ancient Sri Lanka”. Furthermore, according to the Dambegoda pillar inscription (956–972) it was necessary for those examining accounts to probe into the way revenue was collected and expenses incurred (Table 5). There were other controls, such as direct supervision of work to ensure efficient and honest performance by the respective individuals. This is evident from the Mädirigiriya slab inscription No. 1 (956–972 AD) (Table 5).

The interaction of the Buddhist monasteries with the royal court, their dependency on the royal court for resources, the delegation of temple work to lay officials, and likely misappropriations of resources, may have accentuated the need for accountability and scrutiny of monastic affairs (Liyanarachchi, 2009). The enormous social and political significance of this task was noted in Liyanarachchi (2009: 117): “accounting and auditing were relied upon to maintain the reputation of the monastery, its members, and more importantly, to maintain goodwill among Buddhist monks, rulers and people”. Annual audits or readings of accounts were the main vehicle used to enact the discharging of accountability. Interestingly, a specific process seemed to have existed to resolve any disputes over records. This further highlights the recognition of the possibility of disputes and the need to settle them amicably. All of this suggests that accounting records were maintained to facilitate accountability for the resources of the Buddhist temples. More importantly, these provide important clues about the high level of complexity involved in maintaining accountability for the affairs of Buddhist temples. Undoubtedly, as leaders of the most significant institution next to the royal court, those in charge of Buddhist temples had significant power in society and the rulers were eager to win their support, with which they could easily win the support of the masses (Liyanarachchi, 2009).

English manorial accounting

Oschinsky (1956, 1971) provides details of English manorial accounting (also see Chatfield, 1977; Harvey, 1994; Jack, 1966). The accounts described by Oschinsky (1956, 1971) appear to belong to the early parts of the thirteenth century. A special feature of manorial accounting is the presence of two different accounts – the money account and the corn and stock account (Jack, 1966; Oschinsky, 1956). The corn and stock account showed entries related to “corn, beasts and dairy produce”, whereas the money account contained details of monetary activities, which were shown under different “subheadings – such as rents, moneys from sales or for purchases, court-dues, money liveries to the head of the estate” (Oschinsky, 1956: 91). For each item for which a steward was accountable, records showed “the arrears” at the start of the year, what was received during the year and the total of the two. The expenses were then deducted from this total showing the balance at the end of the year (Oschinsky, 1956: 91–92). Using records and subsequent audits, each officer’s accountability to the owner of the manor was ensured.

As described in Chatfield (1977: 24), the manorial duke or earl had to rely on many people to work and administer his vast landholding, and this created the need for accounting records. According to Oschinsky (1971: 213), accounting was of paramount importance for the successful management of estates: “The account as an administrative record was of the utmost importance for the successful working of manors and groups of manors and for the tightening of the management on the manorial estates”. Furthermore, a focus on the efficiency of manors, by setting standards for resource usage, highlights that there was interest in using accounts widely as a tool of estate management.

“Manors – the estates of the nobility – were the farms and workshops of medieval Britain. English manorial accounting described the receipts and payments of a self-contained economic entity” (Chatfield, 1977: 24). Chatfield (1977) identified charge and discharge as the basic method that underpinned both manorial accounting and Exchequer accounting. Whilst the charge and discharge method used in manorial accounting was concerned primarily with the private estates of the nobility, the same method focused on royal finance when it was used at the Exchequer.

Genoese partnership accounts

Florence de Roover (1956) illustrates the accounting method used by merchants of twelfth-century Genoa. According to de Roover (1956), the accounts were for the winding up of three partnerships between merchants of Genoa. The partnerships concerned overseas trade and each was formed for a single venture. Of the three partnerships, the first one, formed in 1156 between Ingo da Volta and Ansaldo Baialardo, took the form of a commenda – a form of partnership where the business was financed entirely by the investing partner with no investment from the travelling partner (F de Roover, 1956: 86; Lopez, 1971). Profits were shared according to rules of the commenda, in the ratio of 3:1 between the investing and the travelling partner respectively (F de Roover, 1956: 88). The second partnership was formed in 1157 between the same partners and was much more profitable than the first one. When the same two partners formed a third partnership, the travelling partner too had capital to invest and as a result it took the combined form of a commenda and a societas maris contract, where the latter type prescribed equal sharing of profits (F de Roover, 1956: 89). Partnership accounts also highlighted the need of the capital account. The focus of accounting records was mainly on the travelling partner’s activities and obligations to the partnership (and to the investing partner). This provided the main reason for keeping accounts, whilst a second reason came from the possibility of one travelling merchant having contracts with more than one investing partner (F de Roover, 1956). In this second case, the travelling partner had to keep separate accounts for each contract. The accounts were required to calculate the profit or loss from each venture. Therefore, adequate details were required for profit calculation, which was done at the end of each venture, at which point the partnership too was brought to an end. Proceeds of goods were calculated using both sales and valuations. The use of valuations became important when profit calculation took place before all sales were completed. The travelling partner’s expenses came from his records and these were deducted from the proceeds from sales to establish the net proceeds. In settling the amounts, the investment was paid out first (deducted from net proceeds) and the remainder (the profit) was distributed between partners according to the rules of the contract (F de Roover, 1956: 90). Similarly, in ancient Sri Lanka there was a clear understanding not only of capital but also the significance of its maintenance, thus leading to clear emphasis that only interest from a donated amount was to be used to carry out the specific purpose for which the donation was made (Tonigala rock inscription 303–331 AD; Hettiarachchi, 1990: 69).

Agency accounting

Agency accounting allowed the agents to show, at all times, the extent of the agent’s indebtedness to the principal. In addition, the agent was expected to show “for what reasons he is indebted to his principal, or vice versa” (Yamey, 1947: 265). These two requirements called for the recognition of both cash as well as credit transactions and the keeping of sufficiently detailed records by the agent. As described in Yamey (1947: 265), the method of bookkeeping involved maintaining a personal account in the name of the principal and recording “all expenses incurred by the agent on the principal’s behalf”, whilst separately recording “all the proceeds of the agency business received by the agent”. For two reasons, there was no need for profit calculation in the agent’s books. First, the agent was not given all details; for example, cost of the goods or any expenses incurred by the principal. Second, the profit calculation was irrelevant for the agent. Therefore, in agency bookkeeping, a goods record was maintained to show only the quantities of goods received from the principal, along with details concerning disposal instructions received from the principal. When the agent made a sale, the proceeds would be recorded in the account kept in the name of the principal as this would increase the agent’s indebtedness to the principal. In addition to the goods record or “stores book” (Yamey, 1947), the agent would maintain records of cash and credit transactions related to the agency.

These examples show how different bookkeeping methods were used to meet divergent accountability needs that arose in four different social contexts. This and the evidence presented in previous sections are discussed in the next section.

Discussion

At the outset, it is necessary to recognize that there is ample evidence of ancient architecture, language, philosophy, religion, ship-building, politics and economics, all of which suggests that many ancient societies were rich in terms of their conceptual grasp of different phenomena. Accounting ideas are unlikely to be an exception. Indeed, there is evidence of accounting thought in India around 300 BC (Arthasastra) (Mattessich, 1998a), in China from 1122 BC to 256 BC (Rites of Chou; see Fu, 1971), and in Egypt (Zenon Papyri, 256 BC) (Hain, 1966). As is widely known, even before these times, accounting ideas had emerged in ancient Mesopotamia and Egypt around 4,000 BC to 538 BC (Carmona and Ezzamel, 2007; Keister, 1963; Mattessich, 2000).

It has been shown that the antecedents of bookkeeping were clearly present in ancient Sri Lanka. Furthermore, various activities and antecedents of bookkeeping embedded in them were evident over nine centuries, thus suggesting continuity as opposed to a sporadic occurrence. As a result of the country’s commitment to the preservation and promotion of Buddhist teaching, substantial development occurred in all spheres of society (Liyanarachchi, 2009). Also, the country received substantial economic and social contributions from its involvement in the Indian Ocean trade. These led to the development of a complex social setting, thus providing conditions necessary to “give vitality” (Littleton, 1927: 140) to the antecedents of bookkeeping. Whilst all this saw the development of a simple accounting method, both antecedents and social conditions did not lead to the emergence of the double-entry method. This is inconsistent with the claim that certain antecedents would lead to double-entry bookkeeping (Littleton, 1927). These results are discussed next.

It is noteworthy that some antecedents of bookkeeping amplify a need for accountability as much as they stimulate the development of bookkeeping methods. And, some others provide the tools necessary for bookkeeping. For example, private property, capital, credit and commerce, all have the potential to amplify a need for accountability. In contrast, antecedents such as the art of writing, money, arithmetic and numerals provide the tools necessary for recordkeeping. Taken together, these antecedents are highly likely to create accountability obligations as well as the tools necessary to develop records by which such obligations may be discharged. However, the nature and level of complexity of accountability that some of these antecedents give rise to tend to vary from one social setting to another. Judging by the results presented in this article, the need for accountability that arose in Sri Lanka was high in its social and political significance. The important position of the Buddhist monastery and the high esteem accorded to its members in Sri Lankan society made the task of ensuring accountability for temple affairs more burdensome to the king and his officials as well as to the leaders of the Buddhist clerical community (Liyanarachchi, 2009). In comparison, accountability issues relating to the manor, which was a closed and self-sufficient institution of medieval England, was largely a private affair of the duke or earl of each manor and its people. Unlike these two contexts, both partnership and agency accounting ensured accountability between a few private individuals. This shows that some antecedents may lead to a need for accountability, albeit with varying levels of complexity. Furthermore, the level of complexity of accountability seems to influence the nature of the bookkeeping method that will be needed to ensure accountability. For example, it was necessary to recognize both cash and credit transactions in agency accounting. The need to calculate profit or net income arose in BTA and partnerships. A need arose in manorial accounting to recognize the arrears from the previous year to accurately show the amount for which the steward was accountable. Similarly there was a need in manorial accounting to keep both corn and stock accounts and a money account. Prevention and detection of frauds and thefts were the most significant aims for all four methods, thus suggesting that accounting records enabled accountability. Accordingly, all four accounting methods – BTA, English manorial, partnership and agency accounting in Italy – emerged in response to specific challenges of a particular social milieu, and each method displays features of its own unique setting. These show that recordkeeping methods are context-specific and antecedents may not necessarily lead to the double-entry bookkeeping method.

Perhaps even more than accounting, the specific features found in each setting affected audits. Such features as the number of people whose interests were affected by accounts, their power differences, and the social and political significance of the institution for which accounts were prepared, all seemed to have become important when conducting audits. For example, the affairs of both the manor and the monastery affected a large group of people, who were also divided into various social ranks and statuses. Existing power differences of various groups of people therefore introduced challenges in ensuring accountability, whilst at the same time securing cordial relationships among the groups. Accordingly, audits acquired ceremonial features and fulfilled a ritualistic function (Chatfield, 1977), which perhaps was as important as the real purpose of ensuring accountability, and these were carried out permitting others to witness their proper completion. This was the case both in manorial and temple audits: “A final step was the annual Declaration of Audit. The charge and discharge statement as verified by the auditor was read in the presence of the lord and the assembly of stewards whose discharge of duties was under scrutiny” (Chatfield, 1977: 27). Similarly, the audits of temple accounts were read out loud, during an annual, perhaps ceremonial, gathering of Buddhists monks: “Eight persons … shall inspect the [Temples] and a record (of income and expenditure) shall be prepared and be made; the community of monks hear it at the end of the year” (Ranawella, 2001: 336). Furthermore, Chatfield (1977) described how, during manorial audits, it became necessary for accounts to be negotiated or contested, as opposed to being passively accepted or refuted as records of facts. In his words: “At midyear the auditors often made preliminary examination or ‘view,’ which included an assessment of managerial efficiency… The view of account thus became a subtle contest between auditor and steward” (Chatfield, 1977: 27).A parallel cannot be found in BTA, but the presence of a clear requirement for those examining to agree on the authenticity of records as well as a process for resolving disputes related to accounts may suggest that some disagreements were present and needed to be settled amicably. In the case of early-partnership accounting and agency accounting, however, there was little need for such ritualistic functions, for their audits concerned the affairs of mostly two (or a few) private individuals.

All four are simple record-keeping methods but they are rich in their conceptual underpinning. This shows that in order for accounting to serve the interests of the individual, family, institutions, or society, conceptual development of important elements such as revenue, expense, net income, and the classification of expenses and revenues are far more important than the type of recordkeeping technique. Even with the most simple recordkeeping methods, one would be able to put these concepts into a meaningful arrangement so as to learn important details of an activity of significant interest, be it administering a temple, a trading venture, tax collection, and so on. For example, knowledge of revenues, expenses and net income is sufficient for one to work out the results of a particular economic activity (e.g., medieval partnership accounts). If there arises a further need to trace such activities over a specific time period then a knowledge of time periods such as days, weeks and months would likely result in periodic statements (e.g., BTA and manorial accounting). These may not be as organized or orderly as one would like, yet they may be adequate to fulfil some basic yet important functions expected of accounting. Therefore, in so far as the record keeping method does not lead to disputes over its repeated application or the key outcomes resulting from such applications, the method would be fit for its purpose.

The idea of audits and control was even more ancient than accounting, and the earliest evidence available to accounting historians in fact points out that ancient people were primarily concerned with the need to provide some form of control, which also culminated in verifications and audits. Schmandt-Besserat’s (1996) work suggests that counting (perhaps, as an aid to control) emerged even before writing. The idea of audits existed in Babylonia and Egypt (3,600 BC), Persian civilization (549 BC to 330 BC), Cretan and Hebrew civilization (1,600 BC to 1,500 BC) (Stone, 1969: 286), and Ancient Greece (c. 1,400 BC) (Stone, 1969: 284–287). The idea of an audit presupposes other related ideas, such as the unreliability of memory, the possibility of dishonesty, and inefficiencies due to negligence. Simply, it is inconceivable to think that ancient people would not be able to grasp concepts such as theft, errors and mistakes and also the need for some form of records to arrest these problems.

When determining what may be considered as adequate accounting records to serve a particular need in society, the recordkeeping technique is unlikely to be the final determining factor. Yamey (1949, 1964), Jack (1966), and later Mattessich (1998a), challenged this overrated significance of the technique, especially the significance given to the double-entry technique by many accounting writers. Arguably, rather than the technique, the ability of a record keeping method to provide the required details for the purposes for which it is designed is the key to determining its usefulness (Jack, 1966). Conceptual advancements of accounting are also largely unrelated to the technique of double-entry (Mattessich, 1998a, 1998b). Mattessich (1998a) provides a detailed elaboration of the conceptual richness of Arthaśāstra vis-à-vis Pacioli’s work on accounting. Other accounting historians have challenged the thesis that the double-entry method arose to serve needs not fulfilled by other methods (Yamey, 1947; Jack, 1966). Similarly, Chatfield (1977) recognized that very simple methods could fulfil the basic functions of accounting. Baxter (1946, 1956, 2004) convincingly illustrated how simple records were used by businesses in colonial America, even at a time when money was a rarity and exchanges were carried out using a system of bookkeeping barter. All of this suggests that accounting is highly versatile, and if accounting remains sufficiently amenable to changes when they are needed due to economic or social challenges, it will readily adapt to meet such challenges. Attempts to stereotype accounting, hoping that its effectiveness in arresting the problems of one society makes self-evident its usefulness to many other places, is more likely than not to stifle the versatility of accounting.

Conclusion

Liyanarachchi (2009) showed evidence of early accounts and audits in Sri Lanka. Extending that work, this article provided evidence of antecedents and social and economic conditions that gave life to these antecedents in ancient Sri Lanka. Furthermore, the article briefly discussed BTA vis-à-vis three other medieval accounting methods. From the data and analysis presented in the article, several conclusions can be drawn.

First, as suggested by Littleton (1927), certain preconditions are necessary for the development of accounting. However, these preconditions may not necessarily lead to double-entry bookkeeping. BTA emerged within a complex social, religious and economic climate of a particular geographical location. Not only were the basic preconditions of systematic recordkeeping present, the involvement of Indian Ocean trade and the development of Buddhist monasteries as wealthy and powerful institutions added life to these preconditions. The emerging need for accountability, however, was successfully met by a simple accounting method, which did not utilize an elegant technique such as the double-entry method of bookkeeping. Yet, BTA responded to highly sensitive and complex accountability issues that arose in the administration of Buddhist temples, which had to be addressed with utmost care so as not to create unwanted interference with the affairs of the Buddhist clerics, who enjoyed a privileged place in the religious, social and political spheres of Sri Lanka.

Second, different societies and people were able to conceptualize accounting methods to suit their purposes. All four methods considered in this article may have been influenced by what was known by each society through their historical experiences, and yet, the fact that each method was as different as the setting in which it was used is a sign of accounting adapting to the needs of each setting. To put it differently, ancient societies were capable of harnessing the potentiality of accounting ideas in order to strengthen accountability. Accordingly, it is the need for accountability that may provide accounting with its basic crux which remains unchanged across time (Mattessich, 1998a), and something that is intelligible to different people across different places.

Finally, in determining accounting’s ability to serve its purpose, the bookkeeping technique is of little relevance. All four accounting methods considered in the article showed that the primary focus of accounting was accountability. Although there were differences both in the level and complexity of accountability, simple accounting methods were seemingly adequate to enable accountability. An important implication of this is that whilst accounting is highly versatile in meeting divergent social and economic needs, an overrated emphasis on a singular accounting method across all places and all times might stifle such versatility.

Future research may examine the continuity of the use of BTA (or any variants of it) in Sri Lanka beyond the tenth century. In this respect, the period of 1153 to 1250 attracts special attention. Whilst this period bears witness to significant advancement in administration, expansion of trade, and new relations with south-east Asia, it is also marked with lavish investments that severely weakened the royal treasury. Another research avenue is to extend the brief comparison of simple accounting methods provided in this article to better illustrate the conceptual advancements in accounting that occurred during the medieval period but across divergent social settings.

Footnotes

Acknowledgements

The author thankfully acknowledges the helpful comments received from three anonymous reviewers and Garry Carnegie on earlier versions of the article. Research assistance and insightful comments received from Emma Liyanarachchi are also appreciated. The article originated whilst the author was employed at the University of Maryland Eastern Shore, USA.

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

Notes

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