Substance and semantics in the auditor's standard report

              The Accounting Historians Journal Vol. 18, No. 2 December 1991
Stevan K. Olson SOUTHWEST MISSOURI STATE UNIVERSITY
and
Charles W. Wootton EASTERN ILLINOIS UNIVERSITY
SUBSTANCE AND SEMANTICS IN THE AUDITOR'S STANDARD REPORT
Abstract: The most recent effort at restating the auditor's standard report, SAS 58, is the most comprehensive statement of the auditor's role that has ever been adopted. It is an acknowledgment that the previous report had become an ineffective communication of the audit function and was perhaps too cautious in circumscribing the auditor's public responsibilities. This paper compares and analyzes the termi-nology of the standard report throughout the professions's history with particular emphasis on the recent years leading up to SAS 58. An exhibit compares the parallel terminology and the social, economic and political issues that resulted in each revision. Additionally, some assessment of the potential future changes to the report are presented.
"In a simple matter such as an auditor's certificate we fail to see why any legal interference is called for. What the public and shareholders want is a readable assurance from the accountants, stating in plain English what they really have done" [The Accountant, 1883].
This statement is as fitting today for the public accounting profession in the United States as it was more than 100 years ago in the United Kingdom. The public accounting profession then, as now, was searching for an effective statement to the public and the shareholder that would tell "what they really have done" when an audit had been performed. The profession has responded many times to this same request by modifying the auditor's standard report to be a more effective communication. However, the gap between the reality of what the auditor has done and the public and shareholder's perception of what has been done has persisted, or is at least repeatedly reopened.
The "gap" that has been the focus of discussion for more than a decade has two dimensions, a semantic dimension and a sub-stance dimension. The semantic dimension is concerned with the common understanding of the terms and concepts used in the auditor s standard report. Terms and concepts used may have dif-