Rosa-EIizabeth Gassmann
Librarian of the Institute of Auditors in Germany

Survey of the Development of Auditing in Germany

According to Penndorf, the Fuggers and Welsers were the first private enterprises in Germany having their books audited. The first

audits were internal audits; but later on, external audits were em-ployed for the purpose of control. Aside from this, there were in-dependent auditors appointed by the courts in case of disputes or business failures. An early example of such an external audit dates back to 1578. A major purpose of such early audits was the dis¬covery of fraud.

The number of early audits was relatively small; only since the industrial revolution did their number increase. The corporate form of business led to compulsory examination of financial records. At the time there were no mandatory qualifications prescribed for examiners; but communal authorities and chambers of commerce were permitted to lay down guidelines for their qualifications.

The University of Leipzig was instrumental in introducing a pro-gram for the training and certification of auditors. Professional organizations also began to subject their members to professional examinations. The first uniform examination was prescribed in 1924. In 1931 mandatory examination of year-end financial statements of corporations was introduced.

The function of the examiner of financial statements was ex-panded through legislation of 1959 and 1965. Included were the examination of the entire financial report, as well as the full exami-nation of enterprise relations with affiliated concerns. Aside from this, mandatory examination was expanded to include non-corporate enterprises of a certain size.

The preceding presentation is in no way meant to be complete; but it shows that the scope of independent examination has been expanded to constitute a comprehensive guardianship, not only in the interest of the enterprise under review, but also of the economy as a whole.

(Vol. 1, No. 2, p. 4, 1974)