Explaining Auditors’ Propensity to Issue Going‐Concern Opinions in Australia after the Global Financial Crisis

39 Pages Posted: 19 Mar 2020

See all articles by Elizabeth Carson

Elizabeth Carson

University of New South Wales

Neil Fargher

Australian National University (ANU)

Yuyu Zhang

Queensland University of Technology - School of Accountancy

Date Written: December 2019

Abstract

We document an increase in auditors issuing going‐concern opinions in Australia over a prolonged period since the Global Financial Crisis that is not fully explained by changes in client risk. Overall, our evidence is consistent with auditors reporting more conservatively with the increased level of scrutiny from Australian Securities and Investments Commission inspections and other increased regulation, and in particular, the negative attention following the 2011–2012 inspections. As a result, auditor reports with reference to going‐concern issues have become less informative regarding future corporate failure.

Keywords: Auditor inspections, Auditor reporting, Going concern

Suggested Citation

Carson, Elizabeth and Fargher, Neil and Zhang, Yuyu, Explaining Auditors’ Propensity to Issue Going‐Concern Opinions in Australia after the Global Financial Crisis (December 2019). Accounting & Finance, Vol. 59, Issue 4, pp. 2415-2453, 2019, Available at SSRN: https://ssrn.com/abstract=3556072 or http://dx.doi.org/10.1111/acfi.12313

Elizabeth Carson (Contact Author)

University of New South Wales ( email )

Sydney, NSW 2052
Australia
+612 9385 5822 (Phone)
+612 9385 5925 (Fax)

Neil Fargher

Australian National University (ANU)

Canberra, Australian Capital Territory 2601
Australia

Yuyu Zhang

Queensland University of Technology - School of Accountancy ( email )

2 George Street
Brisbane, Queensland 4000
Australia

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