ABSTRACT
Auditors in the early 1900s were subject to scant discipline. State agencies set requirements for obtaining CPA licenses, but few states spent much effort monitoring auditors’ behavior. The American Association of Public Accountants (AAPA) rarely disciplined its members and had no authority over accountants who did not belong. An editorial in the Journal of Accountancy in 1912 advocated holding auditors
legally liable for investors’ losses as a means of promoting higher-quality audits and disciplining negligent or dishonest auditors.
