ACCOUNTING and AUDITING in ROMAN SOCIETY Lance Elliot
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ACCOUNTING AND AUDITING IN ROMAN SOCIETY Lance Elliot LaGroue A dissertation thesis submitted to the faculty at the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Department of History. Chapel Hill 2014 Approved by: Richard Talbert Fred Naiden Howard Aldrich Terrence McIntosh © 2014 Lance Elliot LaGroue ALL RIGHTS RESERVED II ABSTRACT Lance LaGroue: Accounting and Auditing in Roman Society (Under the direction of Richard Talbert) This dissertation approaches its topic from the pathbreaking dual perspective of a historian and of an accountant. It contributes to our understanding of Roman accounting in several notable ways. The style and approach of Roman documents are now categorized to reflect differing levels of complexity and sophistication. With the aid of this delineation, and by comparison with the practices of various other premodern societies, we can now more readily appreciate the distinct attributes present at each level in Roman accounting practices. Additionally, due to the greater accessibility of Roman accounting documents in recent years – in particular, through John Matthews’ work on the Journey of Theophanes, Dominic Rathbone’s study of the Heroninos archive, and the reading of the Vindolanda tablets -- it becomes easier to appreciate such differences among the few larger caches of accounting documents. Moreover, the dissertation seeks to distinguish varying grades of accountant. Above all, it emphasizes the need to separate the functions of accounting and auditing, and to gauge the essential characteristics and roles of both. In both regards, it is claimed, the Roman method showed competency. The dissertation further shows how economic and accounting theory has influenced perceptions about Roman accounting practices. In particular, double-entry accounting has been III overvalued in accounting theory. Early 20th century works by Werner Sombart and Max Weber heavily influenced historians of Rome. Typically, they accepted that the Romans’ failure to develop double-entry accounting served as a structural flaw which deprived them of the impetus for economic rationalism and profit-seeking behavior. Roman historians, however, have not kept abreast of advances in accounting theory. Today, its practitioners reject the arguments upon which Roman historians have relied, opting to emphasize instead the worth the contributions made by the accountants and managers of accounting data themselves, which have never been adequately assessed in the Roman context. Altogether, the dissertation taps an enlarged body of ancient testimony (still pitifully small, nonetheless) together with scholarship in two disciplines that had lost touch with one another, in order to place our appreciation of accounting and auditing in Roman society on a fresh, more realistic footing. IV ACKNOWLEDGEMENTS It is with the greatest appreciation that I thank my primary advisor Richard Talbert for his guidance during my graduate school career at the University of North Carolina at Chapel Hill. Like all good advisors, his structured approach ensured that I became better prepared in all relevant aspects such as writing prose, translating, incorporating various styles of historical analysis, and teaching. However, what made him a truly great mentor was his discipline and honesty. To this day, I have not seen a harder working academic and one so devoted to his students. Without fail, he would arrive before eight and left after six. An hour was never wasted, and he ensured that all spare moments went to meeting with students for their improvement. Those frequent meetings made the greatest difference in my studies, as it was during them where he provided honest appraisal with a firm route to improvement. The result was that he instilled in me a work ethic and a desire for self-improvement that I shall always take with me. Yet, perhaps the most enduring legacy is that I shall always try to emulate his devotion to students. I would also like to extend a special thanks to my other advisors. Fred Naiden has been a constant inspiration. He has never failed to contemplate every possible element when considering a historical topic, and his willingness to engage with my ideas has been critical to my development. Howard Aldrich’s sociology classes added a level of depth to my historical approaches for which I am grateful. Terrence McIntosh’s impressive command of history and his readiness to challenge my assertions on comparative history has improved my focus. Brett V Whalen has been a valued friend, who worked with me to improve my teaching ability, and I hope to become as accomplished a lecturer as he is. Also, special thanks to Dominic Rathbone, whose discussions with me on Roman accounting proved invaluable while pursuing this project. To finish this dissertation has been a test of mental fortitude, which I could not have carried through without the immense love and support of my family and friends. My parents, David and Renee, along with my wife Michelle, always filled my reservoir of strength whenever I stared blankly at a computer screen or reread the same book for the fiftieth time. I would also like to thank my friends Michael Chen, Alex Ritchie, Adam Russell, and Graeme Ward for willingly subjecting themselves to my mock presentations and requests to read drafts, or to provide technical support. I would like to extend a final thank you to Melissa Barden Dowling for my initial inspiration to pursue ancient history. I recognize that a dissertation can never be written in isolation. It was only possible with such wonderful advisors, mentors, family and friends. Thank You. VI PREFACE Accounting and Auditing in Roman Society has proven a challenging project for many reasons. Initially, when I discussed it with advisors and colleagues, their individual interests pointed the focus in a maze of different directions. Should the project reflect and catalog all accounting data and references as it pertains to the Roman economy? Or should it focus primarily economic theory in the ancient world, using accounting data to assess the degree of entrepreneurship of Roman merchants and bankers? Or should it give pride of place to exploring the differences between the Roman government and army’s uses of accounting versus the private sphere? Equally, what weight should it give to the social aspects of accounting, the ways in which the Romans valued and used accounting? To what degree should it seek to engage with accounting in other premodern societies for comparison? My first experience was to try as far as possible to incorporate many of these elements. I sought to trace an individual Roman’s path through the process of accounting: who were the accountants, how much training did they receive, how much time did they spend on the job, how long did it take for them to compose documents, how varied were these documents, and what were their possible uses? The problem rapidly emerged, however, that there was not enough data to make meaningful assessments. The surviving material about education, career paths, training, time of composition, approach to documents, notions of standard format and more, was limited or even non-existent. VII After prolonged experiment, it seemed the best compromise to discuss the surviving material not so much as a historian, but more as an accountant. Drawing on my training in that discipline, my concern became how accountants would approach the material, especially if they were to view it from the perspective of an audit. When accountants today view their data, they look for functionality and effectiveness. They ask whether their accounting documents are doing what they were designed to do: track inventory accurately and effectively; create an accessible format; offer speed of understanding with numeric data; provide cash flow analysis and calculate profitability. From this perspective, my contention is that the Romans can be seen to have had a fully functional accounting method. Admittedly, several weaknesses were present and I discuss them, but the method did allow the Romans to achieve the core roles and functions of accounting. Moreover, the one cultural area where their accounting material prominently featured was in the legal setting. Accounting ledgers and data were critical records which were clearly relied upon. Accounting was needed in banking and wills, and its perceived value alone could prove the innocence or guilt of an individual. These uses underscore the functionality of Romans’ accounting documents in their society. I draw upon our understanding of accounting in a limited, but varying, range of other premodern societies in order to reinforce this claim. This dissertation contributes to our understanding of Roman accounting in several notable ways. The style and approach of Roman documents are now categorized to reflect differing levels of complexity and sophistication. With the aid of this delineation, we can now more readily appreciate the distinct attributes present at each level in Roman accounting practices. Additionally, due to the greater accessibility of accounting documents in recent years – in particular, through John Matthews’ work on the Journey of Theophanes, Dominic Rathbone’s study of the Heroninos archive, and the reading of the Vindolanda tablets -- it VIII becomes easier to appreciate such differences among the few larger caches of accounting documents. Moreover, the dissertation seeks to distinguish varying grades of accountant. Above all, it emphasizes the need to separate the functions of accounting and auditing, and to gauge the essential characteristics and roles of both. In both regards, the Roman method showed competency. Finally, the dissertation shows how economic and accounting theory has influenced perceptions about Roman accounting practices. In particular, double-entry accounting has been overvalued in accounting theory. Early 20th century works by Werner Sombart and Max Weber heavily influenced historians of Rome. Typically, they accepted that the Romans’ failure to develop double-entry accounting served as a structural flaw which deprived them of the impetus for economic rationalism and profit-seeking behavior.