f the McKesson & Robbins scandal case, the responsibility for fraud detection now began to shift to management. Auditors’ main concern was to determine the fairness of the reported financial statements. By this time, a uniform agreement was made that testing was the auditors’ technique, and detailed examination was only done when deemed necessary. Of course, the strength of the internal controls was the deciding factor on how much testing should be done.The 1950’s continued to reduce the importance of fraud detection on auditors. The belief that fraud detection was the responsibility of the management of the company was generally held. If auditors found any irregularities as they performed their audit, it was their obligation to bring this to the attention of the management. Ironically, many audit techniques of the period were specifically designed to assist in the detection of fraud (Lee, 1988). Emphasis of the audit was placed on the determination of the truthfulness of the financial statements. The late 1950’s and 1960’s brought more reform and brought up the concept of reasonable assurance of financial statements. Also, materiality of misstatements was brought to attention of the accounting profession. The auditor was required to perform tests in line with G.A.A.S. to detect material misstatements that would influence the confidence of investors in a company. The general concept to start an audit with an examination of the companies’ internal controls and the extent of testing required was decided from the test results. The computer had a great impact on how businesses and accounting would be performed from the 1960’s to the present.The Computer Would Shock the Auditing WorldThe evolution of computers would change auditing forever. The first electronic computers were analog devices that began in the 1920’s and developed through World War II. These computers were used to perform complex...
