Business organizations disclose financial Information to a wide range of audiences through the medium of audited financial statements. Distinct classes of readers come in contact with these statements—each reader possessing varying degrees of financial expertise. Readers as "semantic reactors" develop their own expectations and interpretations of the messages management and the auditor are attempting to convey. In the process, many readers look upon the auditor's report as a "symbol" or seal of approval. The purposes of this study were to assess the role that communication theory plays In the auditor's attestation, to examine the perceived communication effects of the expanded auditor's certificate versus the current auditor's certificate, and to recommend ways in which communication problems can be dealt with more effectively. It was concluded that a communication problem does exist in relation to the auditor's report, and communication theory can play a distinctive role in reducing the magnitude of this problem. The profession should continue to seek answers as to the proper role of the auditor and management in relation to audited financial statements, as well as to settle the question concerning whom the statements are intended to serve.

This paper investigates whether the audited financial statements of US independent school districts affect the districts' public provision of education services. Exploiting an increase in the regulatory threshold that exempts the school districts from preparing audited financial statements after 2015, I compare the newly exempted school districts with those that have never been exempted and those that have always been exempted. I find that the newly exempted school districts experience deteriorating financial and academic performance, population outflows, housing price decreases, and shrinking local tax revenues after the threshold increase. The evidence suggests that audited financial statements enhance the functioning of school districts.