The auditing profession in the Netherlands started up at the end of the nineteenth century, with the appearance of the modern company and the separation between ownership and control. Resulting agency problems led to a major bookkeeping scandal in 1876. The management of a Rotterdam-based company called Pincoffs had forced two bookkeepers to falsify the company accounts. Instead of a loss of eight million Dutch guilders, Pincoffs reported a profit of two million guilders. However, when the company was not able to finance its current operations, the fraud was discovered. This created a need for an independent financial expert to verify the financial reports of management on behalf of the shareholders. Accordingly, in 1879 the first independent external accountant was appointed by the Nieuwe Afrikaansche Handelsvennootschap. The birth of the accounting profession was a fact. As such, the origin of the audit profession can be seen as consistent with the ideas of agency theory. In the years that followed, accountants tried to organize the profession and in 1895 established the first professional body of accountants, called Nederlands Instituut Van Accountants (NIVA). Thereafter, several other professional bodies of accountants were established, but most of them disappeared after mergers.1 This process eventually led to a situation (from 1938 on) where there were four professional bodies of accountants in the Netherlands: NIVA, Vereniging van Academisch Gevormde Accountants (VAGA), Nederlandse Unie van Accountants, and Nederlandse Broederschap van Accountants. In 1967, these four professional bodies merged into the Dutch Institute of Registered Auditors (Nederlands Instituut van Registeraccountants, or NIVRA).2 In this year the accounting profession was regulated by the 1962 Act on Registered Auditors, and the statutory auditor was officially created.3

According to this act, only members of NIVRA, called Registered Auditors, were granted the right to conduct statutory audits. Furthermore, the professional body NIVRA was charged with regulating the auditing profession. They became responsible for the education and licensing of statutory auditors and the issuance of auditing standards as authorative guidance for their members. In 1993, after the implementation of the Eighth EU Directive, members of the Dutch Association of