The formation and early development of German audit firms

Reiner Quick

Accounting History Review, 2005, vol. 15, issue 3, 317-343

Abstract: This paper examines the emergence of audit firms in Germany through an analysis of contemporary sources. Special attention is paid to the range of services offered, their legal forms and ownership structure. In Germany, the demand for external audits developed because the corporate supervisory boards had been unable to fulfil their monitoring task satisfactorily. As a consequence of the major economic crisis of 1929-1931 and the collapse of large corporations caused by the fraudulent actions of managing directors, statutory audits for stock corporations were introduced in 1931. The first German audit and trust company, the Deutsche Treuhand-Gesellschaft, was established much earlier in 1890. Like other trust companies which emerged from 1905 onwards, it was owned by large banks. After the First World War, large commercial groups on the one hand, and the state on the other hand, started to form their own audit firms. Most of the audit and trust companies used the legal form of a corporation. Originally, the main activities of the trust companies were trustee activities and audits. Subsequently, they also offered tax and business advisory services. These features (a broad range of services offered, the corporation as the dominant legal form, and clients who are also owners) help us to understand key characteristics of modern German audit firms such as their limited liability to third parties.

Keywords: Audit firms; Deutsche Treuhand-Gesellschaft; types of service; legal forms; ownership structure (search for similar items in EconPapers)
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09585200500284252 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:acbsfi:v:15:y:2005:i:3:p:317-343

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rabf21

DOI: 10.1080/09585200500284252

Access Statistics for this article

Accounting History Review is currently edited by Stephen Walker

More articles in Accounting History Review from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().