Auditing

The Development of Auditing over 1933 to 1940

The Development of Auditing over 1933 to 1940

Introduction

Audit is the procedure of the independent evaluation of the organization, system, process, project or product. Most often the term occurs in the accounting business. The process and the procedure of the audit has been developed and modified over years (Ratliff and Reding, 2002).

The world economic crisis of 1929-1933 increased the need for the services of accountants, auditors. At this time dramatically harden the quality requirements of the audit and its commitment, increased market demand for such services. After the crisis, almost all countries begin to impose mandatory requirements for the amount of information contained in annual reports, and mandatory publication of these reports, and auditors. By the end of 1940, major developments in the audit procedures took place. Thus it may be said that the era 1933-1940 was the era of major audit developments (Smith, 1933).

Audit is a powerful weapon against fraud. Audit has developed all over the world but due to different scenarios arising in different countries, the process of development differs from one country to another. In order to evaluate the development of the audit, two countries are chosen for the comparison. The countries are USA and UK. Eventually, this will lead to a précised analysis of audit development. This report will evaluate the auditing practice evolve during 1933 to 1940.

Auditing and its development during 1933 to 1940

The audit affects the New York Stock Exchange and government organizations; was no consensus on the objectives of the audit.

At the beginning of this period, most authors agree in opinion that the task of auditing is to detect errors. . Later views have been significantly altered, and it was found that the auditor should not concentrate only on encountering an error.

Up until 1940 there was no any document defining the liability of auditors for detecting errors. It was noted only that it was important enough question, but most authors agree in opinion that it cannot be attributed to the main task of the audit.

From 1940 until the present time, the audit objectives have undergone some changes. Emphasis was placed on a vindication of the financial statements. Officially, this provision has been enshrined in documents of the American Institute of Chartered Accounting: "The first objective of the audit report by an independent auditor is to express an opinion on these financial statements.

Part of the newly developed methods of audit had a strong focus on the errors found. . In 1961, the Regulations on auditing procedures, "30" has been established that the auditor detects a failure, and if it is material, may have a negative impact on his views on fidelity financial reporting and the audit in accordance with generally accepted auditing standards it must assess the degree of probability.

Another view on the audit objective is that the task of peer review is to express an opinion on the information included in financial statements. With regard to the auditor's responsibilities, it is merely carrying out tests ...