Auditors’ Going Concern Decisions: Insights from Practice

This practice note provides initial insights from an interview study that investigates audit professionals’ decision-making processes regarding their clients’ ability to continue as a going concern. The authors find that these decisions involve the activation of a range of different actors that the engagement leader needs to manage and coordinate. Specifically, auditors need to recognize going  concern as a relevant issue (Phase 1). They then need to negotiate the involvement of their firm’s national office and restructuring specialists (Phase 2).

As they conduct the going concern assessment, they mobilize a range of internal and external actors to negotiate management disclosures and the inclusion (or not) of a going concern paragraph in their audit opinion (Phase 3).