Readability of Accounting and Auditing Messages

Readability research has resulted in the development of formulas to esti-mate the relative success of comprehension of written messages without requiring the reader to actually read it and be tested. In this paper, the readability of selected accounting and auditing messages in annual reports is measured using the Flesch Reading Ease Formula. Based upon these measurements, notes to financial statements and reports of independent auditors are found to be at unsatisfactory difficulty levels. Additionally, evidence provided indicates that the readability level of recent financial statement notes is significantly lower than that of 1969 statements. IN A STATEMENT OF BASIC AUDITING CONCEPTS the Committee on Basic Auditing Concepts placed into perspective the relationship between accounting and audit communication: The purpose of the primary [accounting] communication process is to convey relevant information about the subject matter to meet users ’ informational needs. The purpose of [the] secondary com-