Appointment in 1939 of the AICPA's Committee on Auditing Procedure, the first authoritative audit standard-setting body in the U.S., was a response to public sector demands that the private sector ". . . examine into auditing procedure and other related questions in light of recent public discussions." As discussed in the text, the "public discussions" related in part to the McKesson & Robbins, Inc. $19 million overstatement of inventory and accounts receivable. McKesson & Robbins' auditors neither observed physical inventory on hand nor confirmed accounts receivable balances with debtors.

In 1939, the Committee on Auditing Procedure responded with Statement on Auditing Procedure No. 1, which recommended physical inventory observation and accounts receivable confirmations, both of which have since become common practice.

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Do these beginnings, a response to a highly publicized fraud, have any implications for audit standard setting today, which is essentially the same with the Auditing Standards Board as it was in 1939 with the Committee on Auditing Procedure?