ABSTRACT
Auditing evolved as a way to monitor the performance of a firm’s managers (e.g., Jensen and Meckling 1976; Watts and Zimmerman 1983a). For example, merchant guilds in medieval England would require that “profits” arising during a year would be audited by an official such as an alderman (Watts and Zimmerman 1983a: 617). Thus, “auditors” have a long history in assuring that periodic measures of performance are free from errors or misstatements.
