Auditor’s going-concern opinion prediction: the case of Slovenia

Abstract

In an audit of a firm's financial statements, the auditor assesses whether there is material uncertainty about the firm's ability to continue as a going concern. If the existence of material uncertainty is confirmed, the auditor considers the adequacy of the firm's disclosures regarding its going concern in the firm's annual report. Most commonly, if the firm's disclosures are adequate, the auditor issues a going-concern opinion in the auditor's report. The auditor modifies his opinion on firm's financial statements because of auditor's going-concern doubt on the firm's ability to continue as a going-concern rarely in specific circumstances. In the present paper we provide an auditor's going-concern prediction model using various combinations of a firm's economic predictors. A sample data of 14,761 firm-year observations from Slovenia during the period 2005-2013 has been used for the model. The results reveal that firms with a going-concern qualification have a worse financial structure (i.e., lower equity financing rates), worse liquidity, worse efficiency, and worse profitability in comparison to firms without this qualification. Using a logistic regression prediction model for a going concern qualification in auditor's report, qualification can be predicted with sufficient accuracy on a sample data of Slovenian firms.

Factors Influencing Going Concern Audit Opinion Among Basic Materials Companies Listed on the Indonesia Stock Exchange (Idx) During the Period of 2019-2021

“…Conversely, the possibility of the auditor giving an audit opinion related to going concern will be greater in companies with low levels of profitability. This is also consistent with research conducted by [12] which states that companies that receive audit opinions with modifications related to going concern have lower profitability than companies that do not receive audit opinions with modifications related to going concern. Research conducted by [12] and [13] also states that profitability has a negative effect on audit opinion related to going concern.…”

hipótesis de negocio en marcha en base a informes de auditoria

“…En ese sentido los auditores presentaron informes con opiniones afirmativas acerca de la continuidad del negocio cuando estas empresas están experimentando dificultades financieras. Los resultados discrepan de los obtenidos por Zdolšek et al (2022) en el sentido de que las empresas eslovenas presentan una calificación positiva por parte del auditor acerca de la hipótesis de negocio en marcha, sin embargo, los indicadores financieros tales como la liquidez, eficiencia, rentabilidad, tasas de financiamiento, son peores respecto de aquellas empresas que no tienen esta calificación.…”

“…Según Zdolšek et al (2022), las empresas eslovenas presentan una calificación positiva por parte del auditor acerca de la hipótesis de negocio en marcha. Sin embargo, los indicadores financieros tales como la liquidez, eficiencia, rentabilidad y tasas de financiamiento son peores respecto de aquellas empresas que no tienen esta calificación.…”

“…La metodología usada es un modelo logit por la naturaleza de la variable dependiente. Este enfoque ha sido empleado por Zdolšek et al (2022) o Hardies et al (2018, entre otros. Estos autores se fundamentan en varios artículos de la literatura de la hipótesis de negocio en marcha, destacando su robustez y su interpretación directa en términos de ratios de probabilidad.…”

Chilean Universities and Universal Gratuity: Suggestions for a Model to Evaluate the Effects on Financial Vulnerability

“…Financial logistic regression models are statistical models used to describe the relationship between a variable of a categorical-type response, bankruptcy, or no bankruptcy, which can be explained using a set of categorical or continual explicative variables [95,96]. For this reason, the methodology used to discriminate between organisations that fail and those that do not encourages the use of binary logistic regression models, which are a particular type of conditional probability model requiring the dependent variable to be classified as categorical for financially vulnerable universities (or not) [97,98]. The logistic regression model is represented by a logistic function [99,100] and has a distribution of S that lies between 0 and 1.…”