Auditing Practices of British Gas Companies from 1812 to 1830

The aim of this paper is to examine the auditing practices of British gas companies at the beginning of the 19th century, mainly the Chartered Gas Light and Coke Company (GLCC) , which was the first and largest of the gas undertakings worldwide. Gas companies paved the way for the railroads, but their practices have not been sufficiently described. After studying primary source materials from the GLCC, we found that the company created an elaborate accounting system and conducted systematic audits. Our analysis focused on three areas: (1) audit departments, (2) auditors, and (3) audit scope. Our main conclusion is that the GLCC formed a ‘Committee of Accounts, Finance and Audit,’ and audited bills and Accounts from the time of its founding but before the start of legally mandated auditing. The company also instituted an internal check system used to manage the operations of the collectors at each office (‘station’). Concurrently, the GLCC may have created a system related to the internal controls used today. While audits were initially completed by directors serving as auditors, non-director auditors originated in 1815. This change may represent the start of auditors as a discrete independent institution. Simultaneously, developments such as an authorised capital reduction that left the GLCC with limited funds may have forced the GLCC to raise more funds to appease its shareholders.