2.1 Audit Rotation
McKesson Robbins accounting scandal of the 1930s was the shock which push the investor to reevaluate the confidence and validity of financial statement, although Price Waterhouse failed to detect $19 million in misstatement of inventory and receivables, McKesson Robbins falsified records, and Price Waterhouse did not question or verify the validity of their financial statements. This fraud was followed by congressional hearings and attempts to reform the auditing and accounting profession, which was the reason to develop the first formal standards for auditing procedures and the beginning of mandatory audit rotation as a technique to improve audit quality (Ramos, 2002).