Bankers’ and Investors’ Perceptions of the Auditor’s Role in Financial Statement Reporting: The Impact of SAS No. 58

This paper describes the results of a study which examined the impact of the new SAS No. 58 auditor's report on users' perceptions regarding the message being conveyed by this report. One hundred financial statement users, 50 bankers and 50 investors, participated in this study. The purpose was to test the hypotheses that the wording revisions would increase understandability and have no effect on the level of responsibility assumed by auditors. The results indicate that understandability was significantly increased regarding the purposes of the audit and the responsibility of management for the financial statements. The wording changes did not alter investors' perceptions of the level of responsibility being assumed by auditors, but bankers were more skeptical. Bankers perceived auditors as assuming less responsibility under the new SAS No. 58 audit report compared to the old two-paragraph audit report.