Explaining Auditors Propensity to Issue Going-Concern Opinions Post-GFC in Australia

• In Event: Benefits and Unintended Consequences of Auditor Inspections

Abstract

We document an increase in auditors issuing going-concern opinions in Australia over a prolonged period since the GFC 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 ASIC 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.

Authors

• Elizabeth Carson, University of New South Wales

• Neil L Fargher, Australian National University

• Yuyu Zhang, Queensland University of Technology