Nature & Development of Audit

The nature of assurance engagements is covered in the notes: 3-way relationship, standards, subject matter, evidence, report.

I don’t think there’s a lot to say on development other that audits were invented to cope with the principle/agent problem: shareholders are the owners (principles); directors are their agents: directors should work on behalf of shareholders; financial statement report on what’s happened but need to be audited to give shareholders some assurance that the directors aren’t misreporting.