Auditing Practices from a Historical Perspective: The Case Study of an Italian Railroad Company in the Mid-19th Century

From a historic perspective, the origin and evolution of auditing in the private sector is extremely interesting, especially in regard to 19th-century railroad companies. This paper concerns the auditing practices of the Leopolda Railroad Company, which operated in the Grand Duchy of Tuscany, Italy (1841-1860). Through the use of mainly primary sources, we describe how auditors were selected and hired; their procedures, recommendations, and meetings; and the contents of their reports. This paper makes three contributions to the international literature in accounting history: (1) it is the first paper to present the history of auditing practices in Italy, (2) it broadens literature on external and internal audits in railroad companies, and (3) it supports the assumptions made by many accounting historians about the origin of auditing in industrial capitalism.