History Of Auditing

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Auditing is in the challenging position with the emerging technologies and real-time approach in doing business. The audit is a complex activity; this profession has been through many significant changes over the time. The changes that were important for auditing to be updated with the changing business environment. All the changes were done as per the requirements of the legislation that shaped the auditing profession. The main purpose of this paper is to examine what different legislations and how the legislation shaped the audit profession over the past century. History of auditing profession People have relied upon the auditing procedures for many years, but the formal practice of auditing has a short period of being into existence. The …show more content…

It is shifting from a profession which has been relatively free of Federal control to one which is both strongly influenced, and indeed regulated, by the Federal government. For the past 75 years, the auditing profession in the United States has promoted "self-regulation." Although it has never been officially defined, "self-regulation" has generally been used to signify the right to establish and enforce auditing standards with only minimal Federal supervision. Yet, ironically, the changes that are taking place may result in broader and more substantive Federal supervision of the profession than any of the proposed Federal regulatory measures that the profession has explicitly challenged. (Granof, M. H. (1992, December). Privatization: The Road to Federal Regulation of Auditing. Accounting Horizons. pp. …show more content…

The most dramatic change was the establishment of the Public Company Accounting Oversight Board (PCAOB) as an external regulator over audit practice, with the authority to conduct annual inspections of the auditors of ‘‘large-filer’’ regulated companies. The increased regulatory environment in conjunction with the audit fee and audit market changes discussed above likely enhanced Big 4 auditors’ negotiation power, potentially making them more conservative and less likely to waive proposed adjustments. (Joe, J., Wright, A., & Wright, S. (2011). The Impact of Client and Misstatement Characteristics on the Disposition of Proposed Audit Adjustments. Auditing: A Journal Of Practice & Theory, 30(2), 103-124.

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