Unprophetically (or not), Montgomery wrote in the preface to the 1905 American edition of Dicksee’s work: “It cannot be expected that any hard and fast rules will ever prevail, nor is it desirable that the personal element in an audit should be superseded by instruction prepared in advance.” So at the dawn of the 20th century, Montgomery was campaigning against rules-based auditing standards and checklist-driven audits―way ahead of his time! Dicksee, entitled Auditing: A Practical Manual for Auditors, re-edited in 1909 by Montgomery. Prior to 1912, however, the principal source of auditor guidance in the United States was an American edition of a work first published in 1892 by English professor Lawrence R. Montgomery, first published in 1912 and later known simply as Montgomery’s Auditing (the latest version, the 13th edition, was published in 2008). auditors was Auditing Theory and Practice, by Robert H. One of the earliest and most widely used comprehensive, influential, and durable (albeit nonauthoritative) sources of “practical” guidance for U.S. So prior to the 1930s, the direction and scope of auditing was solely determined at the discretion of the auditor until the enactment of the federal securities laws, it was clearly focused primarily on the detection of fraud, a subject that continues to receive a great deal of attention. Interestingly, however, auditors were required under British law to be stockholders in order to have a stake in the audit client entity, a common interest with those that they were engaged to protect, but be independent in other significant respects ( The Rise of the Accounting Profession: From Technician to Professional, 1896–1936, AICPA, New York, N.Y., 1969, pp. Carey, a former administrative vice president of the AICPA (known before 1957 as the American Institute of Accountants), audits were required by law in England as early as 1845 to protect shareholders from “improper actions by promoters and directors.” But there was no organized profession of accountants or auditors, no uniform auditing standards or rules, and no established training or other qualifications for auditors, and they had no professional status. The Early Beginnings of Financial Auditing-Pre-1930Īccording to accounting historian John L. Unfortunately, due to these limitations, many significant details, events, and developments were unavoidably omitted. Kravitz pointed out that the “most important crossroads, of course, was the enactment of the Securities Acts of 19, and the establishment of the Securities and Exchange Commission (SEC).” As Kravitz mentions, another landmark event near the end of that decade was the highly publicized McKesson & Robbins audit scandal, which led to an SEC investigation and inspired the 1939 issuance of the first authoritative auditing standard, Statement on Auditing Procedure (SAP) 1.īecause of the vast wealth of detailed, scholarly, and well-documented research available covering this long, rich, and complicated history, this article, of practical necessity, is not an exhaustive, academic analysis such as are several of the sources cited but rather is greatly summarized and comprises only highlights as necessary in the author’s judgment to keep it interesting and readable. In his brief, historical editorial message of February 2015, “Then and Now-A Celebration of 85 Years of The CPA Journal,” ( ), Editor-in-Chief Richard H.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |