A Case Study on the Statistical Sensitivity of Conclusions in an Auditor’s Going Concern Report

• In Event: Auditing Opinions and Specialized Auditors

Abstract

I have developed a case study that addresses how auditors evaluate a client’s going concern assumption. In this case scenario, the client has significant negative trends indicating doubt about its ability to continue as a going concern. To mitigate the going concern issue, the client uses a discounted cash flow valuation to show the auditors its projected financial position. Students, acting as auditors, must evaluate the feasibility of management’s discounted cash flow analysis and make a judgement on whether the going concern issue is mitigated.

Authors

• Brandon Holloway, East Carolina University

• John T. Reisch, East Carolina University