Audit History
Memorandum
To: DeLaune/Simonov
From: Courtney Lancaster
Date: October 15, 2013
Subject: History of the Auditing Profession
Similar to all aspects of the accounting profession, the auditing focus in the business world has evolved considerably over its history. The main drive behind the changes has been new legislation and a strict enforcement standard which more times then not was influenced by the fraudulent activity delivered by corporate management. By the creation of oversight policies and standard setting entities, these countless scandals have shaped the accounting and auditing profession into what we know today.
In 1986 the state of New York passed legislation in which the credentials regarding a Certified Public Accountant were formally acknowledged and recognized, thus creating the accounting profession itself. In 1913 the United State of America ratified the 16th amendment leading to the creation of income tax causing a spike in demand for accountants. While these changes in legislation were coming about and the profession itself was growing rapidly there was still no entity in the US that regulated the profession. In 1917 the first step to set a standard for the profession was put into action. The Federal Reserve Board and Federal Trade Commission requested that American Institute of Accountants produce a bulletin for a standardization of auditing procedures. A publication titled “Uniformed Accounting” was released shortly after as a first set of published standards. While it was still not required for companies to release a set of audited financial statements, those who were publically traded began to embrace the idea as a way to prove good standing to their loyal shareholders. It wasn’t until the stock market crash in 1929 did people really begin to show concern for the improvement and validity of published financial statements. The New York Stock Exchange sought assistance from the AIA regarding financial disclosure and soon
To: DeLaune/Simonov
From: Courtney Lancaster
Date: October 15, 2013
Subject: History of the Auditing Profession
Similar to all aspects of the accounting profession, the auditing focus in the business world has evolved considerably over its history. The main drive behind the changes has been new legislation and a strict enforcement standard which more times then not was influenced by the fraudulent activity delivered by corporate management. By the creation of oversight policies and standard setting entities, these countless scandals have shaped the accounting and auditing profession into what we know today.
In 1986 the state of New York passed legislation in which the credentials regarding a Certified Public Accountant were formally acknowledged and recognized, thus creating the accounting profession itself. In 1913 the United State of America ratified the 16th amendment leading to the creation of income tax causing a spike in demand for accountants. While these changes in legislation were coming about and the profession itself was growing rapidly there was still no entity in the US that regulated the profession. In 1917 the first step to set a standard for the profession was put into action. The Federal Reserve Board and Federal Trade Commission requested that American Institute of Accountants produce a bulletin for a standardization of auditing procedures. A publication titled “Uniformed Accounting” was released shortly after as a first set of published standards. While it was still not required for companies to release a set of audited financial statements, those who were publically traded began to embrace the idea as a way to prove good standing to their loyal shareholders. It wasn’t until the stock market crash in 1929 did people really begin to show concern for the improvement and validity of published financial statements. The New York Stock Exchange sought assistance from the AIA regarding financial disclosure and soon