Brief Introduction

The term audit is derived from the Latin verb “audire” which means ‘to hear’. The origin of audit dates from ancient times when the landowners allowed tenants, farmers, to work on their land whilst the landowners themselves did not become involved in the business of farming. The landlords relied upon an overseer who listen’ to the accounts of stewardship given by the tenants.

At this period the word audit is described as: ‘The independent examination of, and expression on, the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation’. Adeniyi, 2004.

Since then auditing developed over the years, but it was not until the late nineteenth century (with the formation of joint-stock companies) that auditing became widely accepted in the United Kingdom and by extension, in other parts of the world.

The Joint Stock Company Act of 1844 was the first legislation in Britain to require all incorporated businesses to have their annual financial statements examined by an auditor. Early auditors were, in many cases, non-accountants who were required to state whether the accounts showed a ‘true and correct view of the state of affairs of the company.