88% of bankrupt organizations fail to file their financial statements or a 403 declaration for the last fiscal year within the statutory deadline. This is one of the key findings from the report by the Continuity Working Group—a collaboration between the NBA, SRA, and audit firms—on the auditor’s role in business continuity.
Researchers also found that 71% of the financial statements filed in the year prior to bankruptcy do not include an explicit management disclosure about uncertainty regarding continuity.
As a result of not filing financial statements, 88% of bankruptcies also lack an audit opinion for the fiscal year preceding the year of bankruptcy. Among the audit opinions that are available, 63% do not include a material uncertainty paragraph (going concern statement) or a voluntary explanatory section.
The review of available (international) academic literature on continuity revealed that it is highly unlikely that a going concern statement becomes a self-fulfilling prophecy. The literature also shows that stakeholders rely more on confidential information obtained from the organization than on publicly available information.
Publication Info
Publication Author(s)
Involved University
Paper Type
Theme(s)
Related project(s)
Newsletter
Receive updates on FAR research, publications and events.
Filter projects:
