Origin and Evolution of Auditing

Origin and Evolution of AuditingOrigin of Audit comes from the word “Audire” but the evolution of Auditing as a financial accountability field in the advent of the Industrial Revolution.

The word “AUDIT” has Latin origins (audio, audire, means listening). During the time this word has known a lot of definitions and classifications. In general, it is a synonym to control, check, inspect, and revise.

Auditing existed primarily as a method to maintain governmental accountancy, and record-keeping was its mainstay.

From the time of ancient Egyptians, Greeks, and Romans, the practice of auditing the accounts of public institutions existed.

Checking clerks were appointed in those days to check the public accounts. To locate frauds as well as to find out whether the receipts and payments are properly recor4ed by the person responsible was the main objective of auditing of those days.

It wasn’t until the advent of the Industrial Revolution, from 1750 to 1850, that auditing began its evolution into a field of fraud detection and financial accountability.

Businesses expanded during this period and brought in large scale production, steam power, improved facilities and better means of communication. This resulted in the origin of the joint stock form of organizations.

Shareholders contribute capital of these companies but do not have control over the day to day working of the organization.

Management was hired to operate businesses in the owners’ absences, but the shareholders who have invested their money would naturally be interested in knowing the financial position of the company.

So they found an increasing need to monitor their financial activities, both for accuracy and for fraud prevention.

This originated the need of an independent person who would check the accounts and report the shareholders on the accuracy of the accounts and the safety of their investment.

In the early 20th century, the reporting practice of auditors, which involved submitting reports of their duties and findings, was standardized as the “Independent Auditor’s Report.”

The increase in demand for auditors leads to the development of the testing process. Auditors developed a way to strategically select key cases as representative of the company’s overall performance.

This was an affordable alternative to examining every case in detail, and it required less time than the standard audit.

PeriodAudit ordinatesAuditorsThe objectives of the audit
Up to 1700Kings, emperors. Churches and the statePeople of the state or scribesThe punishment of the thieves for the funds changing direction

Protecting the assets

1700 – 1850States, Courts and


AccountantsRepressing fraud and punishment of the authors Protecting the assets
1850 – 1900The state and the


Professional accountants or lawyersAvoiding fraud and errors and attesting the viability of the balance sheet
1900 – 1940The state and theProfessionals in audit andAvoiding fraud and errors and attesting the viability of the
1940 – 1970The state and the


Professionals in audit and accounting and counselingAttesting the honesty and regularity of the historical financial data
1970 – 1990The state, the third and the shareholdersProfessionals in audit and counselingAttesting the quality of the internal control and respecting the accounting norms and the audit norms.
1990+The state, the third and the shareholdersAttesting the clear image of the accounts and the quality of the internal control in respecting the norms. The protection against international fraud


The financial audit has progressed and perfected itself step by step with the economic development, as an answer to the challenges of the society.

It has also progressed from the historical point of view, being present in different forms in all the periods, from the concept point of view and mostly from the objectives point of view.