Twentieth-century developments
By 1900 the industrial revolution was approximately 50 years old and industrial companies had expanded greatly in size .There were many more absentee stock holders , many of whom began to receive auditor's reports .Many of these new stockholders did not understand the significance of an auditor's work , and misunderstanding was widespread even among businessmen and bankers .In fact , it was widely believed that the auditor's opinion was a guaranty of the accuracy of financial statements .
The American accounting profession developed rapidly after world war I . continued misunderstanding of the independent auditor's function was so widespread that in 1917 the federal reserve board published in the federal reserve bulletin a reprint of a document prepared by the American institute of accountants ostensibly dealing with uniform accounting , but in reality a treatise on how to audit a balance sheet . this united states technical pronouncement was the first of many to be issued by the American profession throughout the twentieth century .
During a major portion of current century CPAs drafted their reports with little formal guidance . in the last 50 years , however , the profession rapidly developed common report language through the AICPA. Common report language is so well developed today that audit reporting is so longer a writing exercise; it is a decision process . there are a limited number of alternative types of reports from which an auditor can choose , and once the auditor has made a decision about the type of opinion to render in a specific situation , the auditor can select the report from designated to express that opinion .