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Unformatted text preview: ie ﬁnancial statement auditing provide a useful tool kit that can improve
the reliability of information for decision makers of all kinds. The Demand for Auditing and Assurance
LO 2 Why would an entity decide to spend money on an audit? This is an important
question in view of the fact that many of the largest companies spend millions
of dollars each year for their annual audit.1 Some might answer that audits
are required by law. While true in certain circumstances, this answer is far too
simplistic. Audits are often utilized in situations where they are not required
by law, and audits were in demand long before securities laws required them.
In fact, evidence shows that some forms of accounting and auditing existed in
Greece as early as 500 BC.2 However, the development of the corporate form
of business and the expanding world economy over the last 200 years have
given rise to an explosion in the demand for the assurance provided by auditors. In 1926, several years prior to the Securities Acts of 1933 and 1934, which
required audits for public...
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This note was uploaded on 12/08/2012 for the course ACCT 564 at Washington University in St. Louis.