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Exploring Early 20th Century Fraud Engagements
Lori L. Epping, University of Mississippi
Dale L. Flesher, University of Mississippi
ABSTRACT. An examination of Haskins & Sells’ fraud-related engagement letters for the period ranging from 1901 to 1903 has exposed a piece of the history of one of today’s national accounting firms. The relative frequency of fraud engagements appeared to be high. Rarely were effective internal controls developed during the period of exploration. However, there were indications that concerns with the quality of the accounting system were on the minds of investors and other stakeholders. The early 20th century engagement letters of Haskins & Sells also provide evidence of the growth of the accounting profession during this era and the public’s reliance on public accounting services. The investment environment was that of “buyer beware” or in an accounting sense “investor beware.” To protect one’s interest, investors and managers alike were beginning to rely on reputable public accountants to investigate improprieties.
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