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The demand for auditing and assurance lo 2 why would

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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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