Government auditing in Ethiopia dates back to the establishment of an Audit Commission (by proclamation No. 69/1944), which was largely responsible for the examination and control of the accounts of the Ministry of Finance, and was directly accountable to the Prime Minister.  The power to control and examine the accounts of all other Ministries was given to the Officers of the Ministry of Finance.  In 1946, proclamation No. 79/1946 was provided to centralize the audit and control of all Government accounts in one Department by establishing the Audit and Control Office under the direction of the Comptroller and Auditor General who reported and was directly responsible to the Prime Minister.  As the result of this proclamation, the powers and duties of the new Office were clearly defined and the scope of its activities expanded.
The Revised Constitution of 1955 (1948 E.C.) provided even wider duties and a large measure of independence.  Accordingly, the Auditor General reported to the Emperor and the Parliament on the financial operations of the government and was given access to all books and records of government accounts.
Subsequently, the functions of the Auditor General were amended by decree No. 32 of 1958, which was later renumbered as proclamation No. 179/1961 (1954 E.C.).  This proclamation has dealt with the appointment and independence of the Auditor General in addition to defining its powers and duties, which include auditing the accounts of all autonomous bodies existing by virtue of Imperial Charters (chartered organizations).  The Auditor General was then appointed by the Emperor and reported to him and the Parliament.  The Office of the Auditor General conducted the audit of the Chartered Organizations, which were established to provide essential services to the public, through its chartered Organizations Audit Department.

After the 1974 (1966 E.C.) Ethiopian Revolution, proclamation No. 164 of 1979 (1971E.C.) was enacted to redefine the powers and duties of the Auditor General giving him additional responsibility of auditing mass organizations, development projects as well as conducting performance auditing.  Besides, the programme of nationalization has created difficulty for the Office of the Auditor General to cope with the need to audit an increasing number of public enterprises through its chartered organizations Audit Department mainly due to lack of qualified manpower.  Consequently, following a study made by the Office of the Auditor General the Audit Services Corporation was established by proclamation No. 126 of 1977 (1969E.C.) to render audit services to production, distribution and service giving organizations of which the Government is the owner or majority shareholder.  Later on, the National Shengo provided proclamation No.13/1987 to establish the Office of the Auditor General of the peoples Democratic Republic of Ethiopia. This proclamation was in effect until the country introduced the new Federal Government structure in 1994. Thus one can understand that up to 1994 OFAG was the only government audit institution in Ethiopia. However, proclamation No. 7/1992 (1984 E.C.) of the transition period has already laid down the basis for the establishment of National/Regional State-Governments. Article 8(e) of this proclamation states "every National/Regional self-government shall have an audit and control Office". Article 15(h) of the proclamation has also given each National/Regional council the power to establish the Audit and Control Office. Therefore, after the overthrow of the Military regime in 1991 (1983 E.C.) and the establishment of a Federal State Structure by the 1994 Constitution of Ethiopia, the whole arrangement of government auditing structure changed, and germane to this duties and responsibilities were separated in to the Federal and Regional audit institutions.   Following this Law every Regional State’s Council promulgated a proclamation to establish an audit office. While article 101 of the New Federal Government Constitution provided the basis for the appointment, powers and duties of the Federal Auditor General, article 33 and 34 of the Proclamation No. 7/1992 specified the accountability, powers and duties of the Head of each National/Regional Audit and Control Office. Based on the aforementioned constitutional provisions proclamation No. 68/1997 was enacted to establish the Office of the Federal Auditor General (OFAG) which gave the power and duty to undertake Financial and Performance audits (or cause to be audited) on accounts of the federal government offices and organisations, accounts involving budgetary subsidies and special grants extended by the Federal Government to Regional States.