Accounting standards require auditors to attach an explanatory paragraph to their audit report if they have substantial doubt about an entity's ability to continue as a going concern. In the paragraph, auditors state reasons for the opinion. Alternatively, given the auditors' opinion, induction algorithms can discover the rules underlying the auditors' decision based on corporate financial data. This study compares the auditors' explanations to the decision rules induced from cases of financially troubled companies for the period of economic expansion from 1991 to 2000. The reasons auditors most frequently state in audit reports, such as recurring losses, working capital deficit, stockholders' deficiency and default, agree with the induced rules for the going-concern opinion. The induction also indicates that an auditors' loss function is a factor in ambiguous cases. A logistic regression model provides further confirmation of the auditors' standards. This model also confirms that auditors were less likely to issue the going-concern opinion after the Private Securities Litigation Reform Act in 1995.
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