ABSTRACT
The purpose of British statutory audits as follows: “The principal function of an audit was considered to be an examination of the report of stewardship of corporation directors, and the most important duty of the auditor was to detect fraud.” The Auditors reviewed expenditures in exhaustive detail to learn what stewards, government officials, and corporate directors had done with the monies entrusted to them. The beginning, American auditing pronouncements emphasized management’s responsibility for preventing fraud rather than the auditor’s responsibility for detecting fraud. Auditors had many arguments for wanting to limit their responsibility for fraud. The public expects that independent auditors will make reasonable efforts to assure that fraudulent corporate activity will not go undetected or unreported. The several notorious accounting frauds came to light during the late 1980s. Each new scandal resurrected old questions about whether auditors were doing enough to protect the public from fraudulent financial reporting.
