Financial statement audit
The closest structural precedent for lab-paid evaluation. Independence was engineered by standards, inspection of auditors, rotation, and liability rather than by changing who pays.
Path signature
M mandate R rollback V voluntary M mandate A access/publication T trigger S standards D delegation T trigger O oversight I independence
Similarity of its opening to frontier AI: 0.36 (matched opening MRVMATSDTOI)
Stages reached
| Voluntary | 1880 |
| Trigger | 1938 |
| Mandate | 1844 |
| Standards | 1939 |
| Oversight | 2002 |
| Independence | 2002 |
| Access | 1934 |
Mechanisms
| Before reform | Now | |
|---|---|---|
| pays | A | A |
| selects | A | A |
| access | deep | deep |
| publishes | public | public |
| oversees | none | regulator |
Audit committee of independent directors selects since 2002; PCAOB inspects auditors.
Payer, access, publication
Who pays. Audited company pays the auditor; audit committee hires and fires (post-2002).
Access. Full access to books, records, management, and staff under statute and professional standards.
Publication. Auditor's opinion is public; working papers are confidential; PCAOB inspection reports partly public.
Milestones
| Year | Kind | Event | Strength | Harm | |
|---|---|---|---|---|---|
| 1844 | mandate | UK Joint Stock Companies Act requires audited balance sheets; auditors need not be accountants. | 3 | source | |
| 1856 | rollback | Mandatory audit repealed; audit becomes voluntary for most companies. | source | ||
| 1880 | voluntary assurance | ICAEW chartered; audits voluntary in the UK between 1856 and 1900. | source | ||
| 1900 | mandate | UK Companies Act 1900 restores mandatory annual audit. | 3 | source | |
| 1933 | mandate | US Securities Act and 1934 Exchange Act require independent audits for listed companies after the 1929 crash. | 3 | source | |
| 1934 | publication rule | Audited financial statements filed publicly with the SEC. | 2 | source | |
| 1938 | trigger | McKesson & Robbins fraud: auditors had not verified inventory or receivables. | integrity_failure: Audit failed to detect fabricated inventory and receivables | source | |
| 1939 | standards | First Statements on Auditing Procedure: physical inventory observation and receivables confirmation become required. | 2 | source | |
| 1990 | delegation | Audit firms' consulting revenue from audit clients overtakes audit fees at large firms. | source | ||
| 2001 | trigger | Enron collapse; Arthur Andersen had provided audit and consulting services to the same client. | financial_loss: Losses above $1B; auditor complicit | source | |
| 2002 | accreditation | PCAOB registers and inspects audit firms. | 4 | source | |
| 2002 | independence rule | Sarbanes-Oxley: PCAOB created to inspect auditors; audit and most consulting separated; lead partner rotation every five years; audit committee independence. | 4 | source | |
| 2014 | independence rule | EU audit reform: mandatory firm rotation and a cap on non-audit fees for public-interest entities. | 4 | source |
seed; secondary sources; verify each milestone against a primary source before citing in the paper Data: data/industries/financial-audit.json