Auditor reporting on going-concern-related uncertainties remains one of
the most challenging issues faced by external auditors. Business owners,
market participants and audit regulators want an early warning of
impending business failure. However, companies typically do not welcome
audit opinions indicating uncertainty regarding their future viability.
Thus, the auditor's decision to issue a "going concern opinion" (GCO) is
a complex and multi-layered one, facing a great deal of tension. Given
such a rich context, academic researchers have examined many facets
related to an auditor's decision to issue a GCO. This monograph reviews
and synthesizes 182 recent GCO studies that have appeared since the last
significant review published in 2013 through the end of 2019.
The authors categorize studies into the three broad areas of GCO: (1)
determinants, (2) accuracy and (3) consequences. As an integral part of
their synthesis, they summarize the details of each study in several
user-friendly tables. After discussing and synthesizing the research,
they present a discussion of opportunities for future research,
including issues created or exacerbated as a result of the global
COVID-19 pandemic.
This monograph will be of assistance to researchers interested in
exploring this area of auditor responsibility. It will also be of
interest to auditing firms and individual practitioners wanting to learn
what academic research has examined and found regarding this challenging
aspect of audit practice. Auditing standard-setters and regulators will
find it of interest as the authors review numerous studies examining
issues related to audit policy and regulation, and their effects on GCO
decisions. The examination of GCO research is extremely timely given the
financial and business disruption caused by the worldwide COVID-19
pandemic. This unprecedented global event has caused companies, auditors
and professional bodies to revisit and reassess their approach to going
concern, and to think even more deeply about this fundamental business
imperative.
