An empirical investigation of the relationship between financial distress, external factors, and the auditor's going concern opinion modification.

摘要

This dissertation investigates empirically the factors associated with the auditor's going concern opinion modification decision. While previous research has focused on internal financial ratios, this dissertation attempts to explain and predict the auditor's going concern determination by modelling the decision as a function not only of the financial condition and prospects of the client, but also non-financial variables (factors "external" to the financial condition of the client) associated with inappropriate modification/non-modification. Such external factors include audit fees, tenure, auditor and client industry litigation, auditor client losses, the change in audit report lag, and the existence of previously disclosed evidence of going concern difficulties. In addition, this dissertation provides early evidence on the impact of SAS No. 59 on the auditors' going concern decision.; The results of the study show that, while classification accuracies are actually higher (based on AICPA Professional Standards guidelines) than previously reported, auditors' going concern modification decisions are influenced by factors other than clients' financial condition. Further, early evidence indicates that SAS No. 59 does not appear to have an effect on the auditors' going concern decisions.