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Corporate Fraud and Internal Control + Software Demo: A Framework for Prevention by Richard E. Cascarino

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Preface

DATING BACK TO 3500 BC, records of various civilizations indicate by patterns of checks and ticks that record verification took place. In ancient Egyptian, Greek, Chinese, and Roman civilizations, rulers sought to confirm official records by comparing two sets of such records. The lowest-ranking magistrate in ancient Rome was a quaestor, or investigator. This elected official traditionally worked within the treasury to supervise the financial affairs of the empire.

Accuracy of records was tested, typically by two officials working together. One official read from the one record sheet and the other checked against the other record sheet. The term “auditor” is derived from the Latin auditus, meaning a hearing.

With the fall of the Roman Empire, auditing and internal control disappeared in Europe. It was not until the Middle Ages that the growth of centralized control once again demanded proof of the adequacy and correctness of record keeping and the prevention of the defrauding of the king.

In the Orient, however, audit can trace its ancestry back to the Western Zhou Dynasty some 3000 years ago, in which it continued in various forms until the Song Dynasty in 992AD when a “royal audit court” was established. Audit in China took the form of Inspectorates until the Revolution of 1911 when an Audit Court was established, a Chamber of Audit set up, and Audit Law was issued. Auditing continued until the founding of the People’s Republic of China in 1949 when audit was conducted ...

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