The Auditor's Going Concern Opinion Decision: A Pilot Study

17 Pages Posted: 19 Dec 2010

See all articles by Ann Vanstraelen

Ann Vanstraelen

Maastricht Accounting and Auditing Research and Education Center (MARC); Maastricht University

Date Written: September 1, 2003

Abstract

This research attempts to find empirical evidence of ex ante factors relating to the economic trade?offs that an auditor faces when deciding whether or not to disclose going concern uncertainties in an audit report in a non?litigious continental European setting, Belgium. The research methodology consists of univariate and logistic regression analysis. The results of the study confirm the belief that the auditor's going concern opinion decision is not only a question of competence but also of independence. A significant moderating factor appears to be recent client loss on the part of the auditor. The legal obligation for Belgian auditors to refer to the report of the Board of Directors in their own audit report seems to significantly influence their reporting behaviour. The disclosure by the Board of Directors of bad news regarding the state of affairs of a company diminishes any conflict of interest that may exist between the Board and the auditor. However, no evidence was found to justify the fear for a self?fulfilling prophecy effect.

Keywords: auditors' opinion decisions, going concern assumption, competence, independence, audit loss, litigation, self?fulfilling prophecy, US/UK vs. Continental Europe (Belgium), report, Board of Directors, statistical analysis

Suggested Citation

Vanstraelen, Ann, The Auditor's Going Concern Opinion Decision: A Pilot Study (September 1, 2003). International Journal of Auditing, Vol. 3, Issue 1, pp. 41-57, 2003, Available at SSRN: https://ssrn.com/abstract=1727149 or http://dx.doi.org/10.1111/1099-1123.00048

Ann Vanstraelen (Contact Author)

Maastricht Accounting and Auditing Research and Education Center (MARC) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

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