The measurement of nineteenth century accounting error: cases from the British coal industry 1864-1900

The appeal to economic historians of utilising nineteenth century company financial reports as a primary historical source in the measurement of corporate performance of that period is often tempered by a strong mistrust of data which was, until 1900 at least, published in an environment substantially lacking in statutory accounting and auditing regulation. One significant consequence of this is the propensity for such reports to contain a degree of so called, "accounting error" resulting from, "... the failure to systematically distinguish between capital and revenue expenditures and the failure to periodically allocate the cost of fixed assets to expense..." (Brief 1965). This paper examines the accounts produced by four major coal and iron companies during the second half of the nineteenth century and attempts to develop a methodology by which accounting error might be more consistently measured and compared than has previously been the case.