The practice of statutory auditing in France (1867–1935): The case of Pont-à-Mousson and Saint-Gobain companies

Abstract

The Company Act of July 1867 introduced a new actor into the life of French limited companies: the statutory auditor. It defined the assignment of this new character but gave free rein with regard to auditor recruitment. The aim of this article is to show how this new legal obligation would be implemented. To this end, this article presents the 1867 Act and the French economic, social and political context. It describes the lowly position of professional accounting organisations, their lack of prestige, the predominance of secrecy in business, and an ethos of individualism. To illustrate the actual practice of statutory auditing, this article studies the archives of two major industrial companies of that period: Pont-à-Mousson and Saint-Gobain. These archives show that the auditors were closer to the directors than the proxies of shareholders. In turn, this led to the auditors remaining tied to business secrecy and their independence was challenged.