DEVELOPMENT OF A BELGIAN ACCOUNTING CODE DURING THE FIRST HALF OF THE 20TH CENTURY, THE

Accounting Historians Journal, The, Dec 2003 by De Beelde, Ignace

Abstract: Continental European countries are familiar with standardized charts of accounts. Practices in these countries have been quite diverging however, ranging from the voluntary adoption of schemes developed by professionals or associations to state-imposed charts. In the development of these schemes, several Belgian accounting scholars have played an important role, particularly from the end of the 19th century to the beginning of the 20th century. This paper links the charts proposed in Belgium with attempts to develop unified accounting and costing methods and efforts to introduce principles of scientific management around the end of the Second World War. It also seeks to explain why the introduction of decimalized charts took longer in Belgium than other countries such as France.

INTRODUCTION

The observation of significant international differences in financial accounting practices has triggered a large body of research and different types of classifications of accounting systems across countries [for a summary see Nobes and Parker, 2002]. These classifications of accounting systems tend to place those of Belgium and France in the same category. Although there are many similarities between the accounting frameworks of both countries, the historical development of accounting was rather different. Currently, both Belgium and France have an accounting plan. The French 'plan comptable' was introduced after the second World War and the state was strongly involved in its implementation [Mommen, 1957, CNC, 1957]. It used a decimal classification of the accounts with up to five-digit codes. Development in Belgium was different: a three-digit decimal chart of accounts only became compulsory in 1983, following the implementation of the Fourth EC Directive.1 On the following pages the causes of this divergence in development are discussed. It will be hypothesized that the dominance of the Societe Generale de Belgique, the major Belgian holding company, and its preference for the Godefroid [1864] classification of accounts, explains the reluctance to arrive at an officially imposed chart of accounts.

The second half of the 19th century and the 20th century were periods of intensive thinking in Belgium about ways to organize bookkeeping and financial reporting [Vlaemminck, 1956]. Before 1983 there were many proposals from accounting professionals and academics, as well as private initiatives from industrial bodies. This paper examines some of these initiatives.

The French 'plan comptable' is a typical example of accounting charts as they are currently applied in continental Europe [Roberts, 1994]. It is a balance sheet oriented code because many of its classes of accounts relate to that financial statement. It is also an example of a dualist approach to accounting, because accounting for internal transactions, such as the calculation of unit cost, is not necessarily included in the system which culminates in the financial statements. Most of the initiatives that were discussed in Belgium had a monistic perspective and focused on cost calculations. A second hypothesis developed in this paper is that the early attempts to harmonize Belgian accounting codes were driven by a desire to unify cost calculation practices, rather than financial statements.

Literature Review on the Development of Charts of Accounts: The development of charts of accounts was widely discussed in Belgium during the 1950s. This reflected similar interest in other European countries. The Anglo-American world appears to have been less engaged with this discourse [Mommen, 1957]. Although the number of academic articles devoted to the development of accounting charts is generally limited, it is the German accounting plans and the French 'plan comptable' which have received most attention [e.g., Forrester, 1977; Standish, 1990; Bechtel, 1995]. A series of articles in The European Accounting Review broadened this focus to other countries such as Spain [Chauveau, 1995], and Russia and Romania [Richard, 1995b].

Summarizing this literature, Richard distinguished three phases in the structuring of accounts [1995a]. The first phase is 'formal monism' during which financial and management accounting are integrated in one accounting system. This is followed by a transitional phase. The focus of 'formal monism' was accounting unity, excluding all types of partitioning within an accounting system. Then follows a period of "exclusive recourse to the principle of formal dualism" [Richard, 1995a: 89]. Such systems were characterized by the creation of different subsystems within the accounting system, giving the same results in different ways and linking subsystems to each other using what were called 'mirror accounts'. Typically, one subsystem focused on the preparation of financial statements and another subsystem provided more detailed information that could be used for management purposes. Geertman [1949] uses the same terminology and refers to Lowenstein who apparently introduced these terms. In his discussion of the first phase in the structuring of accounts, Richard stressed the important role of Belgian accountants such as Godefroid and Blairon. Their contributions are discussed in the following paragraphs.