This study adds to the accounting history literature by looking at features common to major defalcations in two small-sized building societies (namely the Wakefield and the Grays). These features were the dominance of an individual over a building society’s systems, and poor systems of...

Watts and Zimmerman (1979, 1986) portray the external audit as a natural consequence of an agency model where shareholders demand reliable information and managers respond by arranging for an independent audit to make credible the financial statements whose contents they control. Independent,...