The word audit comes from the Latin word audire, which means to hear. In the beginning, an auditor would listen to an accountant read over the accounts to check them.
Auditing predates accounting. It was used in ancient Mesopotamia, Greece, Egypt, Rome, the United Kingdom, and India. Accounts and audits are mentioned in the Vedas. Kautilya's Arthasashthra lays out the guidelines for public finance accounting and auditing.
Auditing was created with the intent of detecting and preventing errors and frauds.
During the industrial revolution in the 18th century, auditing developed and increased quickly.
Ownership and management became distinct when joint-stock corporations grew in size. The board of directors managed the company's accounts, the employees, and the shareholders, who were the owners, requiring a report from an independent expert.
The goal of auditing changed, and it was now expected to determine whether the accounts were honest and fair rather than looking for errors and frauds.
The Companies Act of 1913 in India made auditing of business accounts mandatory.
With the growth in company size and transaction volume, the primary goal of auditing switched to determining whether the accounts were truthful and fair rather than accurate and exact. As a result, the emphasis was placed on a realistic portrayal of the financial efforts rather than arithmetical correctness.
For the first time, the Companies Act of 1913 specified auditor qualifications.
The International Accounting Standards Committee and the Accounting Standard Board of the Institute of Chartered Accountants of India developed standard accounting and auditing practices to help accountants and auditors in their daily work.
The use of computers in accounting and auditing is one of the most recent breakthroughs in auditing.
To summarise, auditing has progressed from hearing accounts to using computers to check computerized reports.