Evolution of Auditing

Auditing has grown in step with the growth of trade, industry, and the corporate form of business:

• Ancient period. Even in ancient civilisations (Egypt, Greece, Rome), officials would verify accounts of public revenue and expenditure by "hearing" the accounts read aloud — the word audit itself comes from the Latin audire, "to hear".
• Pre-industrial / early trade period. As trade grew in medieval Europe, merchants and guilds began checking each other's accounts to detect fraud and error, but this was informal and not legally mandated.
• Industrial Revolution and the rise of the joint-stock company. The 19th century saw a decisive shift: as ownership (shareholders) separated from management (directors), owners needed an independent check on the managers running their money. This is the single biggest driver of modern auditing — England's Companies Act, 1862 was among the first statutes to make an annual audit of company accounts a legal requirement. In India, the Indian Companies Act, 1913 first made audit compulsory for companies registered under it, a requirement that continues (in updated form) under the Companies Act, 2013 today. …