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Journal articles on the topic 'Going concern (Accounting)'

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Published: 4 June 2021
Last updated: 16 February 2022

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1

Ehoff Jr., Clemense, and Dahli Gray. "Going Concern: Where Is It Going?" Journal of Business & Economics Research (JBER) 12, no. 2 (March 29, 2014): 121. http://dx.doi.org/10.19030/jber.v12i2.8525.

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On June 26, 2013, the Financial Accounting Standards Board (FASB) issued an exposure draft concerning disclosure of uncertainties surrounding the going concern presumption. This exposure draft is the FASBs most recent attempt to bring closure to a project that began in 2007. This paper examines the going concern presumption and the FASBs treatment of the going concern from 2007 to the present.
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2

Holzmann, Oscar J., and Paul Munter. "Going-Concern Reporting Now an Accounting Requirement." Journal of Corporate Accounting & Finance 26, no. 2 (December 19, 2014): 73–77. http://dx.doi.org/10.1002/jcaf.22023.

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3

Mislavskaya, N. "International Financial Reporting Standards: Going Concern Assumption." Auditor 6, no. 8 (September 7, 2020): 60–65. http://dx.doi.org/10.12737/1998-0701-2020-60-65.

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The article analyzes the philosophical foundations of scientific accounting knowledge - assumptions about the continuity of the organization. The relevance, the need for a critical assessment of the modern accounting paradigm in the formation of the information society, in the formation of which a certain role is assigned to accounting and accounting (financial) reporting, is substantiated and proved. The author is convinced of the need to reform the accounting system, taking into account national interests. It is proposed to begin this process by clarifying the underlying accounting assumption.
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4

Hasslinger, Marius, Michael Olbrich, and David Rapp. "Concerned about Going Concern: When do Entities in Liquidation have to be Considered a Non-Going Concern According to IFRS?" FINANCIAL REPORTING, no. 1 (June 2017): 31–61. http://dx.doi.org/10.3280/fr2017-001002.

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The rejection of the going concern premise as the underlying assumption of financial statements has farreaching consequences for accounting. For that reason, it is vitally important to identify the appropriate point in time at which the entity can no longer be regarded as a going concern. Focussing on entities that voluntarily decided to liquidate their operations, the analysis shows that both the IFRS taxonomy and the accounting literature are rather vague on the question of the point in time at which the going concern premise is no longer appropriate. Therefore, we identify the reporting stages that are necessary in the liquidation phase. Contrary to expectations, the paper argues that the going concern assumption should not be immediately abandoned, as retaining it can provide users of financial statements with decisionuseful information. In fact, the paper recommends a value chain based approach. Accordingly, the going concern assumption should not be rejected before the entity has terminated its activities at all stages of its value chain.
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5

Kim, Taewoo. "Does a Manager Respond to a Going-Concern Audit Opinion with an Asymmetry in Gain and Loss?" Sustainability 13, no. 8 (April 15, 2021): 4425. http://dx.doi.org/10.3390/su13084425.

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In this paper, I investigate the relationship between previous going-concern audit opinions and subsequent asymmetric timeliness in accounting. Using the time-series and price-based models and conservatism proxy, I find that firms with going-concern audit opinions subsequently report losses in a more timely manner than firms that did not receive going-concern audit opinions. Furthermore, I also find that firms exiting going-concern audit opinions are more likely to report losses rather than gains in a timely manner, compared to firms non-exiting from going-concern opinions. This study extends the prior research by exploring the association between going-concern opinions and accounting conservatism from the perspective of client firms—that is, how firms behave strategically and conservatively to bypass going-concern opinions, once the firms had received previous going-concern opinions.
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6

Musvoto, Saratiel Wedzerai, and Daan G. Gouws. "Rethinking The Going Concern Assumption As A Pre-Condition For Accounting Measurement." International Business & Economics Research Journal (IBER) 10, no. 4 (March 30, 2011): 31. http://dx.doi.org/10.19030/iber.v10i4.4181.

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This study compares the principles of the going concern concept against the principles of representational measurement to determine if it is possible to establish foundations of accounting measurement with the going concern concept as a precondition. Representational measurement theory is a theory that establishes measurement in social scientific disciplines such as accounting. The going concern assumption is prescribed as one of the preconditions for measuring the attributes of the elements of the financial statements of an entity that is expected to continue in business for the foreseeable future. Studies in accounting measurement have so far not succeeded in establishing foundations of measurements under going concern. The findings of this study suggest that the going concern assumption is anti-measurement in nature. Consequently, the findings suggest that financial statements be prepared on a basis that distinguishes quantifications produced under conditions that facilitate accounting measurement from those that do not.
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7

Amyulianthy, Rafrini. "Faktor Determinan Opini Audit Going Concern." Liquidity 3, no. 1 (July 1, 2018): 27–35. http://dx.doi.org/10.32546/lq.v3i1.102.

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This research purpose to determine the effect of financial condition of company, the size of audited company, the company's growth and reputation of the Public Accounting Firm to going-concern audit opinion on the company's listed on Indonesia Stock Exchange. Companies sample in this research are industrial trade, services and investment covered years 2007-2012 which 20 companies with. Hypothesis tested by using logistic regression models. The test results showed that the financial conditions using by bankruptcy prediction model Altman Z - Score Revised had positive effect but not significant to going-concern audit opinion. The size of the company which is using by log total assets had negative effect and significant to goingconcern audit opinion. Meanwhile the company's growth had positive effect but not significant to going-concern audit opinion. The public accounting firm's reputation using by the scale of the auditor (affiliated with the Big Four KAP), positive effect but not significant to goingconcern audit opinion.
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8

Chen, Chen, Xiumin Martin, and Xin Wang. "Insider Trading, Litigation Concerns, and Auditor Going-Concern Opinions." Accounting Review 88, no. 2 (October 1, 2012): 365–93. http://dx.doi.org/10.2308/accr-50347.

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ABSTRACT: We investigate whether insider selling affects the likelihood of firms receiving auditor going-concern opinions. Prior studies document significant negative market reactions to the issuance of going-concern opinions, indicating that such opinions convey bad news to investors. Insider sales followed by negative news are likely to attract regulators' scrutiny and investor class-action lawsuits. Therefore, we predict that, to reduce the risk of litigation, managers have incentives to avoid receiving going-concern opinions after their insider sales by pressuring auditors for clean audit opinions. We evaluate this prediction empirically and find that the probability of receiving a going-concern opinion is negatively associated with the level of insider selling. Further analysis indicates that this negative relation is more pronounced for firms that are economically significant to their auditors but less pronounced when (1) auditors have concerns about litigation exposure and reputation loss and (2) audit committees are more independent. Finally, the negative relation between going-concern opinions and insider sales is significantly weakened after SOX. JEL Classifications: G18; M42; G48.
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9

Feng, Nancy Chun, and Daniel G. Neely. "Going Concern Disclosure for Local Governments." Journal of Public and Nonprofit Affairs 3, no. 2 (July 31, 2017): 176. http://dx.doi.org/10.20899/jpna.3.2.176-196.

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Going concern opinions (GCOs) indicate that auditors have significant doubt about an entity’s ability to continue operation one year after the financial statement date. This study addresses the following research questions: What are the factors that motivate auditors to issue GCOs to governmental entities? Does a governmental entity disclose going concern uncertainty in the footnotes or the MD&A section of annual financial reports (AFRs) either the year before or the year when the entity receives a GCO? To what extent does the entity disclose the GCO factors used by auditors? We find that auditors most often cited two reasons, “Deficiency in Funds” and “Losses or Revenue Declines,” accounting for the majority of reasons given for a going concern opinion. Further, the disclosure is most likely to be in the notes to the AFRs. In addition, we find that going concern reporting varies by auditor type (state auditors vs. public accounting firms), government size, and government type. We also find some evidence that going concern disclosures improve after the enactment of GASB No. 56. The results of our study should be of interest to stakeholders’ interested in lead indicators of fiscal distress.
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10

Kwarto, Febrian. "PENGARUH OPINION SHOPPING DAN PENGALAMAN AUDITORTERHADAP PENERIMAAN OPINI AUDIT GOING CONCERN DALAM SISI PANDANG PERUSAHAAN AUDITAN." Jurnal Akuntansi 19, no. 3 (March 3, 2017): 311. http://dx.doi.org/10.24912/ja.v19i3.82.

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Perusahaan yang mendapatkan opini going concern dari auditor di sebabkan karena kondisi dan peristiwa yang menimbulkan keraguan akan kelangsungan hidup suatu perusahaan. Opini audit going concern merupakan peringatan awal (early warning) bagi para pengguna laporan keuangan guna menghindari kesalahan pengambilan keputusan. Penerimaan opini audit going concern dapat di pengaruhi oleh opinion shopping dan pengalaman Auditor. Penelitian ini bertujuan menganalisis opinion shopping dan pengalaman Auditor terhadap penerimaan opini audit going concern pada perusahaan auditan. Teknik pengambilan sampel dalam penelitian ini adalah purposive sampling yaitu pimpinan perusahaan atau kepala keuangan (kepala accounting/manajer keuangan) yang sudah diaudit oleh Kantor Akuntan Publik di Kota Tangerang, yang memiliki Pengalaman minimal 2 tahun. Jumlah kuesioner yang dianalisis adalah 50 kuesioner. Teknik analisis data yang digunakan dalam penelitian ini adalah analisis regresi berganda. Berdasarkan hasil penelitian ini menunjukan bahwa opinion shopping berpengaruh positif dan signifikan terhadap penerimaan opini audit going concern. Sedangkan pengalaman Auditor tidak berpengaruh positif dan tidak signifikan terhadap penerimaan opini audit going concern.Companies that get the of the auditor's going concern opinionwas caused of conditions and events that give rise to doubts about the viability of a company. Going concern audit opinion is an early warning for the users of the financial statements in order to avoid decision-making errors. Going concern audit opinion can be influenced by the opinion shopping and Auditorexperience. This study aimed to analyze the opinion shoppingand Auditor experienceon going concern audit opinion on the company's audited. The sampling technique in this research was purposive sampling, there arethe director of the company or chief financial officer (chief accounting/finance managers) that have been audited by Public Accountant in Tangerang, which has a minimum of 2 years experience. The number of questionnaires analyzed were 50 questionnaires. The data analysis technique used in this study is multiple regression analysis. Based on the results of this study indicate that opinion shopping have positive and significant impact on going-concern audit opinion. While there is no positif and significant impact on the going-concern audit opinion
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11

Hartono, Dina, and Christine Novita Dewi. "DETERMINAN PENERIMAAN OPINI GOING CONCERN PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA." Jurnal Riset Akuntansi dan Keuangan 14, no. 2 (July 16, 2019): 83. http://dx.doi.org/10.21460/jrak.2018.142.326.

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This research aims to do a testing empirically regarding the measurement of public accounting firm, the education background of auditor, and work durations of auditor towards the acceptance of going concern audit’s opinion. The public accounting firm, the education background of auditor, and work durations of auditor are independent variable, meanwhile the going concern audit’s opinion is dependent variable. This research use secondary data which collected from Indonesia’s Stock Exchange and PPPK, with a total processed data of 270. Statistic method that used is logistic regression. The result of this research showed that the measurement of public accounting firm and the education background of auditor gave a positive impact and significant towards the acceptance of going concern audit’s opinion, while the work durations of auditor gave a negative impact and significant towards the acceptance of going concern audit’s opinion. Keywords: going concern audit’s opinion, Public Accounting Firm measurement, education background, work duration. ABSTRAK Penelitian ini bertujuan untuk melakukan pengujian secara empiris mengenai pengukuran kantor akuntan publik, latar belakang pendidikan auditor, dan durasi kerja auditor terhadap penerimaan opini audit going concern. Kantor akuntan publik, latar belakang pendidikan auditor, dan durasi kerja auditor adalah variabel independen, sedangkan opini audit going concern adalah variabel dependen. Penelitian ini menggunakan data sekunder yang dikumpulkan dari Bursa Efek Indonesia dan PPPK, dengan total data yang diproses 270. Metode statistik yang digunakan adalah regresi logistik. Hasil penelitian ini menunjukkan bahwa pengukuran kantor akuntan publik dan latar belakang pendidikan auditor memberikan dampak positif dan signifikan terhadap penerimaan opini audit going concern, sedangkan durasi kerja auditor memberikan dampak negatif dan signifikan terhadap penerimaan akuntan publik. opini audit going concern. Kata kunci: opini audit going concern, pengukuran Kantor Akuntan Publik, latar belakang pendidikan, durasi kerja
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12

Willenborg, Michael, and James C. McKeown. "Going-concern initial public offerings." Journal of Accounting and Economics 30, no. 3 (December 2000): 279–313. http://dx.doi.org/10.1016/s0165-4101(01)00014-3.

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13

KAUSAR, ASAD, RICHARD J. TAFFLER, and CHRISTINE TAN. "The Going-Concern Market Anomaly." Journal of Accounting Research 47, no. 1 (March 2009): 213–39. http://dx.doi.org/10.1111/j.1475-679x.2008.00317.x.

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14

Visvanathan, Gnanakumar. "Audit Committee Accounting Expertise and Audit Quality – the Case of Going-Concern Opinions." Accounting and Finance Research 10, no. 3 (July 5, 2021): 27. http://dx.doi.org/10.5430/afr.v10n3p27.

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This study examines whether audit committee accounting expertise and other audit committee characteristics promote or deter the likelihood of receiving going-concern reports from the auditors and whether such characteristics shield auditors from dismissals after the issuance of a going-concern report. The study finds no significant association between the likelihood of a going-concern report and audit committee accounting expertise or other audit committee characteristics. No significant association is also found for auditor dismissals following going-concern reports and audit committee accounting expertise. These results contrast with prior literature that examined data preceding the passage of the Sarbanes-Oxley Act of 2002 (hereafter SOX) or the period immediately thereafter. Additional analysis shows that audit committee accounting expertise is found to improve the information in going-concern audit opinions by reducing Type I errors, however. Overall, these findings shed light on the evolving role of audit committees in overseeing the auditors and have implications for regulators interested in improving audit quality and investors interested in improving the effectiveness of audit committees.
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15

Magnan, Michel L. "Boritz, J.E.The “Going Concern” Assumption: Accounting and Auditing Implications." Contemporary Accounting Research 10, no. 2 (March 1994): 787–92. http://dx.doi.org/10.1111/j.1911-3846.1994.tb00415.x.

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16

Dewi, I. Gusti Ayu Agung Omika, and Ni Made Niki Premashanti. "Pengaruh Reputasi Kantor Akuntan Publik, Keberadaan Komite Audit, dan Prior Opinion Terhadap Pemberian Opini Audit Going Concern Pada Perusahaan Manufaktur di Bursa Efek Indonesia." STATERA: Jurnal Akuntansi dan Keuangan 2, no. 2 (October 31, 2020): 133–42. http://dx.doi.org/10.33510/statera.2020.2.2.133-142.

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Going Concern audit opinion are opinion was published by auditor to give due consideration about the ability of entity to hold on the business for the next year. The purpose of this study is to determine and analysis (1) The effect of The Public Accounting Firm’s Reputation against the giving of going concern audit opinion, (2) The effect of Existence Audit Committee against the giving of going concern audit opinion, and (3) The effect of Prior Opinion against the giving of going concern audit opinion. The sample were obtained using purposive sampling method. Sample in this study only 52 companies over five years with 260 observation data. The data analysis technice which is used in the research is logistic regression. The result of this research show (1) The Public Accounting Firm’s reputation have positive effect to the giving of going concern audit opinion, (2) The Existence Audit Committee have negative effect to the giving of going concern audit opinion, and (3) The Prior Opinion have positive effect to the giving of going concern audit opinion.
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17

Casterella, Jeffrey R., Rosemond Desir, Matthew A. Stallings, and James S. Wainberg. "Information Transfer of Bankruptcy Announcements: Examining the Impact of Auditor Opinions." Accounting Horizons 34, no. 1 (September 1, 2019): 45–66. http://dx.doi.org/10.2308/acch-52572.

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SYNOPSIS Auditing standards require auditors to consider whether there is “substantial doubt” that their client will remain a going concern and to, accordingly, modify the audit report (PCAOB AS 2415). Prior research reports larger negative excess returns for bankrupt firms when bankruptcies occur without a prior going concern opinion. We investigate whether such audit opinions can also have an impact on industry peer firms. We find that peer firms experience significantly larger negative stock price drops when rivals' bankruptcies are not preceded by a going concern opinion. In addition, we find evidence of incremental stock price declines for peer firms when Big N audit firms fail to issue a going concern opinion. These findings should be of significant interest to regulators, auditors, and capital market participants as they serve to enhance our current understanding of the importance of going concern opinions for the share pricing of industry peer firms. JEL Classifications: G14; G33; M4; M42. Data Availability: All data are from public sources identified in the manuscript.
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18

Svanberg, Jan, and Peter Öhman. "Lost revenues associated with going concern modified opinions in the Swedish audit market." Journal of Applied Accounting Research 15, no. 2 (September 2, 2014): 197–214. http://dx.doi.org/10.1108/jaar-11-2012-0077.

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Purpose – The purpose of this paper is to examine the costs to audit firms in terms of lost revenues of losing small clients due to auditor switching or client bankruptcy after issuing first-time going concern modified opinions. Design/methodology/approach – A population of small Swedish companies receiving first-time going concern modified opinions in 2009 was examined to determine the effects two years later compared with a matched sample of financially stressed companies that had not received going concern modified opinions. Findings – The results indicate that both auditor switching and client bankruptcy are positively related to receipt of going concern modified opinions. Furthermore, the authors find empirical evidence that auditors issuing first-time going concern modified opinions lose proportionately more fees through auditor switching and client bankruptcy than do auditors not issuing such opinions to financially stressed clients. Finally, the authors found that the going concern modified opinions issued by Big 4 firms are no more harmful to clients than are those issued by other audit firms. Research limitations/implications – The authors recognize a limitation of this study regarding the choice of control companies. Although the authors attempted to find similarly sized and similarly financially stressed companies from the same industries as those companies in the test group, the authors may have missed other variables relevant to auditor switching or client bankruptcy. Practical implications – A practical implication for the audit profession is the increased awareness of the fact that the financial dependence issues reported in this study extend to auditors with small client companies. Originality/value – This is the first study to examine fees lost due to auditor switching and client bankruptcy caused by going concern modified opinions in a population of small companies. It contributes to the mixed evidence presented in previous research as to the extent to which going concern modified audit opinions are self-fulfilling prophecies.
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Akbar, Rivaldi, and Ridwan Ridwan. "PENGARUH KONDISI KEUANGAN PERUSAHAAN, UKURAN PERUSAHAAN, PERTUMBUHAN PERUSAHAAN DAN REPUTASI KAP TERHADAP PENERIMAAN OPINI AUDIT GOING CONCERN PADA PERUSAHAAN PERTAMBANGAN YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2015-2017." Jurnal Ilmiah Mahasiswa Ekonomi Akuntansi 4, no. 2 (August 19, 2019): 286–303. http://dx.doi.org/10.24815/jimeka.v4i2.12239.

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This study aims to examine the effect of financial distress, size firms, growth companies, and reputation public accounting firm on acceptance of going concern opinion. The method of this research is a quantitativ approach and SPSS as an analysis tool. Object under study is a mining companies listed on Indonesia Stock Exchange during the periode 2015-2017,as many 33 companies for 3 years with 99 total sample. Testing is done by using logistic regresion analysis by using SPSS version 25.The result showed that the financial distress proxied by the calculation of altman modification model has no significant on the acceptance of going concern audit opinion. Second, the firm size has significant and positive effect on the acceptance of going concern opinion. Third, the growth companies has significant and negative effect on the acceptance of going concern opinion. Finally, the reputation of the public accounting firm proxied at the scale of the public accounting firm has no significant effect on the acceptance of going concern audit opinion
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Geiger, Marshall A., and K. Raghunandan. "Going-Concern Opinions in the “New” Legal Environment." Accounting Horizons 16, no. 1 (March 1, 2002): 17–26. http://dx.doi.org/10.2308/acch.2002.16.1.17.

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The Securities and Exchange Commission (SEC 2000) recently asserted that the litigation environment facing auditors has changed significantly since 1994, and that the reduced threat of litigation can influence auditor behavior. This study examines the potential impact of the “new” legal environment described by the SEC by examining the audit reports on 1,871 companies under financial stress during the years 1992–93, 1996–97, and 1999–2000. We find that after controlling for financial stress, company size, and default status, going-concern audit reports were less likely (1) in 1996–97 than in 1992–93, and (2) in 1999–2000 than in 1996–97. Our results indicate that changes in the litigation environment are associated with the issuance of fewer going-concern-modified opinions to stressed companies in recent years. This finding is consistent with the SEC's claim that auditors' behavior in recent years has been influenced by reduced litigation pressures.
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Geiger, Marshall A., and Dasaratha V. Rama. "Audit Firm Size and Going-Concern Reporting Accuracy." Accounting Horizons 20, no. 1 (March 1, 2006): 1–17. http://dx.doi.org/10.2308/acch.2006.20.1.1.

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Prior research suggests that the Big 4 audit firms are of higher quality than are non-Big 4 firms. However, existing tests for an association between audit firm size and reporting accuracy are indirect and provide mixed results. Our study extends this line of research by examining whether the Big 4 audit firms exhibit higher quality reporting by having fewer “audit-reporting errors” in the context of issuing going-concern modified reports. Our analyses examine both types of going-concern reporting errors (i.e., type I errors—modified opinions rendered to subsequently viable clients; and type II errors—unmodified opinions rendered to subsequently bankrupt clients) over an 11-year period. We also examine reporting error rate differences between the national second-tier firms and regional/local third-tier firms. Our findings indicate that both type I and type II error rates for Big 4 audit firms are significantly lower compared to non-Big 4 firms. In contrast, we find no significant differences between the national second-tier and regional/local third-tier audit firms with respect to either type of reporting error. Our results provide evidence about a Big 4 audit quality difference in reporting on client's going-concern problems.
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Javaid, Muhammad Irfan, and Attiya Yasmin Javid. "Efficacy of going concern prediction model for creditor oriented regime via liquidation." Journal of Applied Accounting Research 19, no. 4 (November 12, 2018): 552–73. http://dx.doi.org/10.1108/jaar-07-2017-0070.

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Purpose The purpose of this paper is to determine whether the original and the revised versions of the existing prediction models are the best tools for assessing the going concern assumption of a firm in the creditor-oriented regime. Design/methodology/approach The analysis begins from estimating the classification accuracy of the original versions of the bankruptcy, going concern and liquidation prediction models. At the second step, the revised versions of the aforesaid existing prediction models are developed. At the third step, the accounting-based going concern prediction model is proposed by using multiple discriminant analysis for the creditor-oriented regime. The sample contains the financial ratios of manufacturing firms for the period 1997–2014. Findings The finding indicates that the five discriminatory variables, which belong to “income statement” and “statement of financial position,” of the proposed model are not only useful for evaluating the going concern assumption of a firm, but also give aid for evaluating the financial fraud risk of a firm as compared to the original and revised versions of the prediction models that are developed for the debtor-oriented regime. Research limitations/implications The external validity of the proposed prediction model can be tested on the large data sets of the countries where the liquidation provisions are a part of their local corporate law. Practical implications The proposed accounting prediction model will be helpful for the internal and external auditors in order to determine the going concern assumption at planning, performing and evaluation stages. Originality/value The proposed accounting-based going concern prediction model is based on liquidated firms.
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Matsumura, Ella Mae, K. R. Subramanyam, and Robert R. Tucker. "Strategic Auditor Behavior and Going-Concern Decisions." Journal of Business Finance Accounting 24, no. 6 (July 1997): 727–58. http://dx.doi.org/10.1111/1468-5957.00131.

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24

Dobre, Elena. "Going Concern in Actual Banking System – An Accounting Approach in the Context of Financial Crisis." Indian Journal of Applied Research 4, no. 2 (October 1, 2011): 8–10. http://dx.doi.org/10.15373/2249555x/feb2014/89.

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25

Berglund, Nathan R., Donald R. Herrmann, and Bradley P. Lawson. "Managerial Ability and the Accuracy of the Going Concern Opinion." Accounting and the Public Interest 18, no. 1 (April 1, 2018): 29–52. http://dx.doi.org/10.2308/apin-52125.

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ABSTRACT Current audit guidance directs the auditor to modify their opinion in the presence of significant doubt about their client's ability to continue as a going concern. This paper examines whether managerial ability influences the accuracy of auditors' going concern information signal. Following prior literature, we assess accuracy based on the subsequent viability of the client. We find that, while managerial ability decreases the risk of Type I errors (the auditor issues a going concern opinion for a firm that subsequently remains viable), managerial ability increases the risk of Type II errors (the auditor issues a standard unqualified report for a firm that subsequently files for bankruptcy). Considering prior research indicates that the auditor's opinion provides important information to the market, this finding has important public interest implications regarding the signaling of bankruptcy risk to investors and creditors by auditors' going concern opinion.
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Berglund, Nathan R., John Daniel Eshleman, and Peng Guo. "Auditor Size and Going Concern Reporting." AUDITING: A Journal of Practice & Theory 37, no. 2 (May 1, 2018): 1–25. http://dx.doi.org/10.2308/ajpt-51786.

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SUMMARY Auditing theory predicts that larger auditors will be more likely to issue a going concern opinion to a distressed client. However, the existing empirical evidence on this issue is mixed. We attribute these mixed results to a failure to adequately control for clients' financial health. We demonstrate how properly controlling for clients' financial health reveals a positive relationship between auditor size and the propensity to issue a going concern opinion. We corroborate our findings by replicating a related study and showing how the results change when financial health variables are added to the model. In supplemental analysis, we find that Big 4 auditors are more likely than mid-tier auditors (Grant Thornton and BDO Seidman) to issue going concern opinions to distressed clients. We also find that, compared to other auditors, the Big 4 are less likely to issue false-positive (Type I error) going concern opinions. We find no evidence that the Big 4 are more or less likely to fail to issue a going concern opinion to a client that eventually files for bankruptcy (Type II error). Our results are robust to the use of a variety of matching techniques. JEL Classifications: M41; M42.
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Zhu, Yun, and Ning Ren. "Going-concern opinions and corporate governance." International Journal of Banking, Accounting and Finance 11, no. 2 (2020): 281. http://dx.doi.org/10.1504/ijbaaf.2020.10028052.

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Ren, Ning, and Yun Zhu. "Going-concern opinions and corporate governance." International Journal of Banking, Accounting and Finance 11, no. 2 (2020): 281. http://dx.doi.org/10.1504/ijbaaf.2020.106717.

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Beams, Joseph, and Yun-Chia Yan. "The effect of financial crisis on auditor conservatism: US evidence." Accounting Research Journal 28, no. 2 (September 7, 2015): 160–71. http://dx.doi.org/10.1108/arj-06-2013-0033.

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Purpose – This paper aims to examine the effect that the recent financial crisis had on auditor conservatism in the form of increased going-concern opinions. Design/methodology/approach – This study uses a sample of US’ distressed firms from 2005 to 2011 to test the change in going-concern opinions issued. This paper uses a logistic regression model to control for other predictors of going-concern opinions to determine when the financial crisis led to an increase in auditor conservatism. Findings – The authors find that auditors became more conservative in the form of issuing higher levels of going-concern opinions even after controlling for other predictors of going-concern opinions. This increased conservatism was present in both Big 4 and non-Big 4 accounting firms. The increased conservatism quickly returned to normal levels when the financial crisis eased. Originality/value – These findings add to the literature on the effects of environmental changes on audit opinions. Additionally, this study finds a difference in the timing of the reaction by large and small accounting firms, but, overall, it finds consistency in that both increased conservatism during the crisis and quickly returned to normal afterward.
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Regina, Diva, and Hyasshinta Dyah S. L. Paramitadewi. "PENGARUH REPUTASI KAP, OPINI AUDIT TAHUN SEBELUMNYA, LIKUIDITAS, SOLVABILITAS, DAN KONDISI KEUANGAN TERHADAP PENERIMAAN OPINI AUDIT GOING CONCERN." BALANCE: Jurnal Akuntansi, Auditing dan Keuangan 18, no. 1 (July 8, 2021): 52–71. http://dx.doi.org/10.25170/balance.v18i1.2306.

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This study aims to analyze the effect of public accounting firm's reputation, previous year's audit opinion, liquidity, solvency, and financial conditions on going concern audit opinion acceptance. The companies studied were the mining sector listed on the Indonesia Stock Exchange in 2015-2019. This study examines 65 firm years data using logistic regression. The results indicate that the previous year's audit opinion has a positive, while financial conditions have a negative effect on going concern audit opinion acceptance. On the other hand, the public accounting firm's reputation, liquidity, and solvency do not affect the acceptance of going-concern audit opinion.
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Parker, Susan, Gary F. Peters, and Howard F. Turetsky. "Corporate Governance Factors and Auditor Going Concern Assessments." Review of Accounting and Finance 4, no. 3 (March 1, 2005): 5–29. http://dx.doi.org/10.1108/eb043428.

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When making going concern assessments, Statement on Auditing Standards No. 59 (Auditing Standards Board 1988) directs auditors to consider the nature of management's plans and ability to mitigate periods of financial distress successfully. Corporate governance factors reflect attributes of control, oversight, and/or support of management's plans and actions intended to overcome financial distress. Correspondingly, this study investigates the impact of certain corporate governance factors on the likelihood of a going concern modification. Using survival analysis techniques, we examine a sample of 161 financially distressed firms for the time period 1988–1996. We find that auditors are twice as likely to issue a going concern modification when the CEO is replaced. We also find that going concern modifications are inversely associated with blockholder ownership. We also confirm Carcello and Neal's (2000) findings with respect to the association between an independent audit committee and an increased likelihood of modification. In a repeated events setting, we find that insider ownership and board independence are inversely associated with repeated going concern modifications. Our study concludes by proposing implications for the current financial reporting environment (including the Sarbanes‐Oxley Act of 2002) and future research avenues.
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Rosman, Andrew J. "Auditors' going‐concern judgments: rigid, adaptive, or both?" Review of Accounting and Finance 10, no. 1 (February 22, 2011): 30–45. http://dx.doi.org/10.1108/14757701111113802.

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33

Kaplan, Steven E., and David D. Williams. "Do Going Concern Audit Reports Protect Auditors from Litigation? A Simultaneous Equations Approach." Accounting Review 88, no. 1 (August 1, 2012): 199–232. http://dx.doi.org/10.2308/accr-50279.

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ABSTRACT: Audit researchers have a long-standing interest in understanding whether issuing a going concern report to financially stressed clients protects auditors from litigation. An endogeneity issue arises, in that litigation risk affects the going concern decision and the going concern decision impacts auditor litigation risk. Using a simultaneous equations approach, we find a significant positive association between auditors' ex ante litigation risk and going concern reporting. By applying simultaneous equations, we also find a significant negative association between going concern reporting and auditor litigation, suggesting that auditors deter lawsuits by issuing going concern reports to their financially stressed clients. Our research further provides a more rigorous analysis of the relation between going concern reporting and lawsuit outcomes in the form of auditor litigation dismissals, small settlement amounts, and large settlement amounts. Our results indicate that when auditors are named in lawsuits, having issued a going concern report reduces the likelihood of large financial settlements. Data Availability: The data used in this study are publicly available through sources identified in the study.
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Zaher, Angie Abdel. "Going-concern opinions, executive tenure and gender." Corporate Ownership and Control 12, no. 3 (2015): 19–27. http://dx.doi.org/10.22495/cocv12i3p2.

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Regulators in the USA and elsewhere have shown renewed interest in auditors’ judgments related to going-concern modified (GC) audit reports. Such judgments involve evaluating management’s plans, and prior research suggests that executive turnover is associated with significant organizational changes. Further, some recent studies posit that gender is associated with accounting and audit judgments. We examine audit opinions for two different samples: 2,089 financially stressed firms and 642 manufacturing firms that filed for bankruptcy. In both samples, we find that GC opinions are more likely for firms with a new CFO; however, we find no significant association between GC opinions and executives’ gender. The CFO tenure related result may arise from auditors’ professional skepticism related to a new executive. Our gender-related results differ from those of Gold et al. (2009) and suggest the need for additional research related to the role of client gender in auditing settings.
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Amin, Keval, Jagan Krishnan, and Joon Sun Yang. "Going Concern Opinion and Cost of Equity." AUDITING: A Journal of Practice & Theory 33, no. 4 (May 1, 2014): 1–39. http://dx.doi.org/10.2308/ajpt-50827.

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SUMMARY: Prior studies document a negative market reaction to going concern opinions. We extend this literature by focusing on the link between the going concern opinion and the cost of equity capital. Using two different samples (one comprising distressed firms and the other matched on propensity score), we document a significant positive association between the issuance of the going concern opinion and the firm's subsequent cost of equity capital. This result is robust to sensitivity tests using various subsamples, time periods, and multiple methods for computing the cost of equity capital. We also examine the association between changes in the audit opinion (going concern to clean opinion and vice versa) and subsequent changes in cost of equity. We find that the cost of equity increases between 3.3 percent and 5.7 percent for firms that receive a first-time going concern opinion. This evidence illuminates the relevance of going concern opinions and the value of the information embedded in them.
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36

Muhamadiyah, Farid. "OPINI AUDIT GOING CONCERN: KAJIAN BERDASARKAN MODEL PREDIKSI KEBANGKRUTAN, PERTUMBUHAN PERUSAHAAN, LEVERAGE DAN REPUTASI KANTOR AKUNTAN PUBLIK." Media Riset Akuntansi, Auditing dan Informasi 13, no. 1 (May 3, 2017): 79. http://dx.doi.org/10.25105/mraai.v13i1.1738.

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<p>Going-concern audit opinion is the auditor’s opinion regarding the ability of<br />the entity to maintain the viability of their business is one of the important things to<br />consider users of financial statements to make decisions especially berinvestas<br />decisions. This study aimed to examine the effect of bankruptcy prediction models (Altman revised model), growth companies (earnings), leverage and reputation of the public accounting firm of the admission trends going concern audit opinion. The sample used in this study consisted of 32 financial statements of listed manufacturing companies in Indonesia Stock Exchange (IDX) during the period 2007-2010. The sample was selected by using the purposive sampling method. In this research, data analysis using SPSS by binary logistic regression analysis to test the hypothesis. From the analysis in this study suggests that the use of bankruptcy prediction model (Altman revised model) positive effect on revenue trends going concern audit opinion, while the company’s growth, leverage and reputable CPA firm negatively affect revenue trends going concern audit opinion.<br />Keywords : Bankruptcy Prediction Model (Altman revised model), Corporate<br />Growth (income), Leverage, Reputation Public Accountant and Going Concern Audit Opinion.</p>
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Menon, Krishnagopal, and David D. Williams. "Investor Reaction to Going Concern Audit Reports." Accounting Review 85, no. 6 (November 1, 2010): 2075–105. http://dx.doi.org/10.2308/accr.2010.85.6.2075.

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ABSTRACT: The literature provides mixed evidence on whether investors find audit reports modified for going concern reasons to be useful. Using a substantially larger sample than previous studies, we observe negative excess returns when the going concern audit report (GCAR) is disclosed. We find that the reaction is more negative if the GCAR cites a problem with obtaining financing, suggesting that the GCAR provides new information to investors. Also, the reaction is more adverse if the GCAR triggers a technical violation of a debt covenant that restricts the firm from getting a GCAR. The evidence suggests that institutional investors drive the reaction to the GCAR, since there is no detectable reaction at low levels of institutional ownership. The market reaction gets more negative as the level of institutional ownership increases, and there is a decline in institutional ownership after the GCAR is issued. We attribute these results to sophisticated investors’ awareness of the firm’s financing needs and the covenants carried by the firm’s debt.
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38

Atkinson, Glen, and Mike Reed. "The Individual in a Going Concern." Journal of Economic Issues 26, no. 2 (June 1992): 469–76. http://dx.doi.org/10.1080/00213624.1992.11505306.

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39

Nariman, Augustpaosa. "PENGARUH UKURAN KANTOR AKUNTAN PUBLIK TERHADAP OPINI GOING CONCERN DAN EARNINGS RESPONSE COEFFICIENTS (ERC) PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEI TAHUN 2011-2013." Jurnal Akuntansi 19, no. 2 (March 6, 2017): 160. http://dx.doi.org/10.24912/ja.v19i2.92.

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Penelitian ini bertujuan untuk menganalisis pengaruh ukuran kantor akuntan publik terhadap opini going concern dan earnings response coefficients (ERCs). Metode penelitian menggunakan metode empiris dengan data sekunder yang diperoleh dari Bursa Efek Indonesia tahun 2011-2013 dengan observasi sebanyak 282 perusahaan. Hasil penelitian untuk semua sampel menunjukkan bahwa terdapat hubungan positif antara perusahaan yang diaudit oleh KAP Big 4 dengan penerbitan opini going concern dan terdapat hubungan negatif antara KAP Big 4 dengan informasi laba yang dinilai dengan earnings response coefficients (ERCs). Ukuran KAP besar tidak selalu menghasilkan kualitas laba yang tinggi. Kualitas informasi laba pada KAP besar dan kecil dapat dianggap cukup seragam.This study specifically aims to examine the link and effect between the accounting firm size on issuance of the going concern audit opinion and earnings response coefficients (ERCs). The research method uses empirical methods to secondary data obtained from Indonesian Stock Exchange for the year 2011-2013 with total observation of 282 firm-years. The result for the entire samples show that there is a positive relationship (association) between the firms audited by the Big 4 accounting firms on the issuance the going concern audit opinion and interestingly, there is a negative relationship (association) between the firms audited by the Big 4 accounting firms on the earnings response coefficients (ERCs). Large accounting firms does not always produce high quality earnings. Thus, earnings quality information of large and small accounting firms can be considered fairly uniform.
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Riley, Richard, Bruce K. Behn, and Kurt Pany. "Management plans and SAS No. 59 going concern resolutions." Advances in Accounting 17 (January 2000): 187–203. http://dx.doi.org/10.1016/s0882-6110(00)17011-7.

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41

Schaub, Mark. "Investor reaction to regulated monopolies announcing going concern opinions." Review of Accounting and Finance 5, no. 4 (October 2006): 393–409. http://dx.doi.org/10.1108/14757700610712453.

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42

Bierstaker, James L., Thomas F. Monahan, and Michael F. Peters. "Going Concern Designations and GAAP versus Non-GAAP Earnings Metrics." Issues in Accounting Education 28, no. 1 (September 1, 2012): 77–92. http://dx.doi.org/10.2308/iace-50298.

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ABSTRACT: Many students have not spent much time studying or contemplating the importance of non-GAAP (Generally Accepted Accounting Principles) earnings to the “Street.” Based on the facts of an actual company and utilizing the financial information drawn from this company's 10-K and Earnings Release, this case introduces students to the strengths and weaknesses of GAAP and non-GAAP earnings measures, and why the Street might be more interested in cash and recurring earnings in attempting to predict movements in stock price. It also provides the instructor with an opportunity to discuss the dangers of allowing firms to emphasize earnings in their press releases that are not defined by an external authoritative body (such as the Financial Accounting Standards Board [FASB]), and how this can hurt the consistency and reliability of reporting. This is an important discussion, since regulators have recently formally proposed to include non-GAAP measures in their overhaul of the auditor reporting model (Public Company Accounting Oversight Board [PCAOB] 2011). The case also familiarizes students with current auditing guidelines dealing with the going concern decision and the potential role that non-GAAP earnings can play in this decision. Thus, the three primary learning objectives are to teach students: (1) to apply going concern audit standards, (2) about the potential role of non-GAAP earnings in this decision—especially as a predictor of future cash flows, and (3) other issues associated with non-GAAP earnings. This topic is important, as auditors are frequently auditing companies that release non-GAAP earnings and/or have going concern issues. This case can be used in Intermediate and Auditing classes, as well as master's-level courses.
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George-Silviu, Cordoş, and Fülöp Melinda-Timea. "New Audit Reporting Challenges: Auditing the Going Concern Basis of Accounting." Procedia Economics and Finance 32 (2015): 216–24. http://dx.doi.org/10.1016/s2212-5671(15)01385-4.

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44

Masli, Adi, Christine Porter, and Susan Scholz. "Determinants of Auditor Going Concern Reporting in the Banking Industry." AUDITING: A Journal of Practice & Theory 37, no. 4 (January 1, 2018): 187–205. http://dx.doi.org/10.2308/ajpt-51999.

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SUMMARY We develop and test a model of the determinants of going concern reporting for banks. Banks are an essential component of the economy, but most audit market studies exclude them because they have significant differences from other companies. Our model draws on banking literature and industry sources to identify bank-specific risk factors, including measures of capital adequacy, asset quality, liquidity, and regulatory concern. We find that regulatory sanctions are a significant determinant of going concern opinions along with low capitalization, poor loan quality, and declining customer deposits and that these are incremental to characteristics drawn from studies of other industries. Also, going concern reports anticipate bank failures and provide descriptive evidence regarding Type I and Type II errors. We shed light on the audit market for banks and add to the going concern literature by providing evidence on going concern reporting in this unique industry.
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45

Mayew, William J., Mani Sethuraman, and Mohan Venkatachalam. "MD&A Disclosure and the Firm's Ability to Continue as a Going Concern." Accounting Review 90, no. 4 (November 1, 2014): 1621–51. http://dx.doi.org/10.2308/accr-50983.

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ABSTRACT This paper explores the role of textual disclosures in the Management, Discussion, and Analysis (MD&A) section of a firm's SEC 10-K filing in predicting a firm's ability to continue as a going concern. Using a sample of firms that filed for bankruptcy between 1995 and 2012 to identify firms that cease as a going concern, we find that both management's opinion about going concern reported in the MD&A and the linguistic tone of the MD&A together provide significant explanatory power in predicting whether a firm will cease as a going concern. Moreover, the predictive ability of MD&A disclosure is incremental to financial ratios, market-based variables, and even the auditor's going concern opinion. We also find that the incremental predictive ability of MD&A disclosures extends to three years prior to bankruptcy.
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46

Citron, David B., and Richard J. Taffler. "The Comparative Impact of an Audit Report Standard and an Audit Going-Concern Standard on Going-Concern Disclosure Rates." AUDITING: A Journal of Practice & Theory 23, no. 2 (September 1, 2004): 119–30. http://dx.doi.org/10.2308/aud.2004.23.2.119.

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There was a significant increase in going-concern opinions in the U.K. during the 1990s despite a strong economy. This paper tests the impact of a new audit report standard versus an enhanced audit procedures standard in explaining this change. We find the increased going-concern modification rate among financially distressed firms is directly associated with the introduction of the less confrontational audit report standard: SAS No. 600. On the other hand, the going-concern procedure standard (SAS No. 130) had no impact on our results. We interpret this finding as highlighting the importance of audit report presentation for standard setters when seeking to enhance disclosure.
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Umar, Umar Habibu, and Junaidu Muhammad Kurawa. "Business succession from an Islamic accounting perspective." ISRA International Journal of Islamic Finance 11, no. 2 (December 9, 2019): 267–81. http://dx.doi.org/10.1108/ijif-06-2018-0059.

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Purpose The purpose of this paper is to discuss the inheritance of a business from the Islamic accounting perspective. Design/methodology/approach The paper adapts the relevant provisions of conventional accounting standards and practices that conform to Sharīʿah (Islamic law). In addition, the provisions of the Islamic accounting standard for musharakah (AAOIFI’s FAS No. 4) found to be relevant are also adapted. Findings The study shows that the assets of an inherited business should be measured at their fair values and that liabilities and legacies must be deducted therefrom with the view to arriving at the equity (or residue). The equity is then distributed among the heirs based on the sharing ratio established according to the Noble Qurʾān, the Sunnah (the Prophet’s way) and Muslim jurists’ views. Therefore, the inherited business becomes a family business as each heir is admitted into it. By extension, Islam emphasizes that the business should remain a going concern to generate income to sustain the welfare of the heirs. Research limitations/implications The discussion of the paper is limited to the inheritance of a business and its going concern in line with the Sharīʿah. Practical implications Special attention should be paid to the inherited business to ensure not only its continuity to generate income for the heirs but also that each heir gets a correct share of the equity of the business as regulated by the Sharīʿah. Originality/value This study links Islamic inheritance to the going concern of the business, which from all indications has not been given full consideration by previous studies.
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Popova, Velina K., and Sarah E. Stein. "Trading Styles, Inc.: An Analysis of the Going Concern Assessment." Issues in Accounting Education 31, no. 3 (July 1, 2015): 355–66. http://dx.doi.org/10.2308/iace-51218.

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ABSTRACT This instructional case focuses on the auditor's going concern decision for a private retail client. The primary objective of this case is to understand and examine the auditor's consideration of the client's ability to continue as a going concern in a real-world setting. The case provides students with the financial aspects as well as the personal aspects of such a decision. Specifically, students must complete analytical procedures and evaluate information from several sources when forming their opinion. We also ask students to contemplate the auditor's relationship with the client in order to understand issues involving auditor independence. Throughout the case, students have the opportunity to review applicable auditing standards and to draft a going concern audit report. We expect this case would be most applicable for an undergraduate or a graduate audit course.
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Bakarich, Kathleen, and Devon Baranek. "Evidence on going concern reporting before and after ASU 2014–15." Accounting Research Journal 33, no. 6 (November 26, 2020): 757–72. http://dx.doi.org/10.1108/arj-06-2020-0165.

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Purpose This study aims to examine the impact of Financial Accounting Standard Board’s Accounting Standard Update (ASU) 2014–15 on auditors’ going concern reporting. ASU 2014–15 provides accounting guidance for managers related to going concern issues, but there is evidence that regulatory changes affect auditor behavior. The authors examine if auditors’ propensity to issue going concern opinions (GCOs) for non-bankrupt, financially distressed firms changes after ASU 2014–15 became effective, and if the proportion of client bankruptcies with prior GCOs changes after ASU 2014–15 became effective. Design/methodology/approach The authors examine audit reports for non-bankrupt, financially stressed firms three years before and after the effective date of ASU 2014–15 to see if the propensity to issue a GCO differs in the pre- vs post-period. The authors then examine bankrupt, financially stressed firms to determine if the proportion of bankruptcies preceded by a GCO differs in the pre- vs post-period. Findings The authors find a significant increase in GCO reporting for non-bankrupt, financially stressed firms in the post-ASU 2014–15 period, suggesting auditor conservatism increased. The propensity for auditors to issue a GCO to bankrupt firms also increased significantly in the post-ASU period, providing evidence that auditors became more accurate, as more bankruptcies were preceded by a GCO than in the pre-ASU period. Originality/value This study uses new legislation which creates an exogenous shock to going concern reporting. Models and techniques are combined from prior literature and extended to investigate auditors’ reporting behaviors using two important and distinct samples.
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Bruynseels, Liesbeth, W. Robert Knechel, and Marleen Willekens. "Turnaround Initiatives and Auditors' Going-Concern Judgment: Memory for Audit Evidence." AUDITING: A Journal of Practice & Theory 32, no. 3 (July 1, 2013): 105–21. http://dx.doi.org/10.2308/ajpt-10346.

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SUMMARY: This study uses an experiment to investigate how management turnaround initiatives influence auditors' going-concern decisions for financially distressed firms. Using mediation analysis, we are able to distinguish between a direct effect of strategic and operating turnaround initiatives on going-concern judgment and a mediated effect through auditors' evaluation of subsequent financial evidence. Results from the experiment indicate that operating turnaround initiatives (e.g., cost cutting) are associated with lower relative recall of positive financial evidence and a higher likelihood of receiving a going-concern opinion. Further, we find no evidence of a direct link between client operating or strategic initiatives and an auditor's going-concern judgment. Data Availability: Data are available from the authors upon request.
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