Auditing evolved as a business practice as owners began to realize a standardized form of accounting must exist to prevent fraud. Financial audits made their way into businesses during the late 1700s. The industrial revolution brought about the separation of job duties beyond what a sole proprietor or family could oversee. Managers were hired to supervise the employees and the business processes. Businesses began to expand geographically where previously they were all local. Owners, who could not be in more than one place at a time or chose to be absent, found an increasing need to monitor the accuracy of the financial activities of their growing businesses. Owners responded by hiring people to check their financial results for accuracy, resulting in the process of financial auditing. In the early 1900s and at the request of the Securities and Exchange Commission, the auditors’ reports of duties and findings were standardized. Financial auditors developed methods of reporting on selected key business cases as an affordable alternative to examining every detailed transaction. It was found with auditing that the evaluation of both financial risk and financial opportunity was improved.
March 16, 2016
- AUTHOR: Keith Fry
- March 16, 2016