Luc Quadackers1
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Dutch auditing has a rich tradition. In 2020, the NBA, the professional body for chartered accountants in the Netherlands (Koninklijke Nederlandse Beroepsorganisatie van Accountants) reached the respectable age of 125 years. Of course, many influential people were travellers on this long journey. But who should you know, at least? In this article, the limelight will be focused on two Dutch persons who had a huge impact on the auditing profession. If you start working as an auditor in the Netherlands, you will almost certainly run into their names. I reckon it will be good to know something about them. We’re talking about Lodewijk Pincoffs and Theodore Limperg. Pincoffs ran a major fraud scheme which led to the establishment of the external auditor. Limperg is commonly viewed as one of the founding fathers of Dutch auditing and accounting. Let’s have a look at their major undertakings.
Lodewijk Pincoffs: from millionaire to tobacconist Let’s start with an important conclusion. The so-called Pincoffs-affair is often viewed as the event that caused the birth of the external auditing profession in the Nether lands. However, the affair was merely the tipping point, it was the straw that broke the camel’s back. At the end of the 19th century, the time was ripe for an external auditor checking company financial statements. But already in the 1700s, a century earlier, similar tendencies were present that didn’t persist: external audits took place, but not by external parties who did this professionally. The emergence of a specialized external auditor was the result of economic progress and the advance of public limited com panies. And formal supervision of accounting became inevitable. Trust alone was no longer enough. The Pincoffs affair provides strong proof for this development. Ho wever, even without the affair, the professional external audit of financial statements would undoubtedly have come into existence.2 1 Luc Quadackers is the owner of Margila. This article is based on two of his articles in Accountant, the journal of the NBA. Please refer to these articles for the references used. 2 Interestingly, the Nieuwe Afrikaansche HandelsVennootschap (the New African Trade Company, the successor of the problematic AHV, to be discussed below) appointed a statutory auditor: B.P. van IJsselstein. In his book on the history of auditing in the Nether lands, the author Johan de Vries calls him (sort of ) the first external auditor in the Netherlands.
two names you need to know: pincoffs and limperg
Two names you need to know: Pincoffs and Limperg
