Trends in Auditor Reporting in Australia: A Synthesis and Opportunities for Research

Abstract

The purpose of this review is to synthesise the existing research literature regarding audit reporting and, in particular, the going concern decision. We consider the findings of research conducted in Australia and New Zealand on these issues. We then analyse trends in audit reporting from 2005 to 2013. We identify an increase in auditors' reports highlighting going concern issues well beyond the global financial crisis period confirming that this period represents a period of prolonged economic uncertainty. We identify trends by audit firm type, by industry and company size. We analyse the subsequent year outcomes for firms receiving going concern opinions. We also identify opportunities for future research.

Audit Quality, Climate Risk Disclosures and Ethical Guidance (eCode)

“…We particularly draw attention to Tan and Ho () and Carson et al. (). An economic analysis of audit market reform is provided by Tan and Ho ().…”

“…They traverse such topics as mandatory auditor rotation, audit independence, audit expertise, the prohibition and limitation of non‐audit services, joint auditors and audit committees. Carson et al.’s () paper is relevant because it examines the most visible impact of audit quality – when auditors issue a going concern opinion. Carson et al.…”

“…Carson et al. () provide a synthesis on the research literature with regard to audit reporting, with particular reference to the going concern decision. They analyse the trends in audit reporting from 2005 and 2013 and, importantly, analyse the subsequent outcomes of firms receiving going concern opinions.…”

ISA 570: Italian Auditors’ and Academics’ Perceptions of the Going Concern Opinion

“…The following financial indicators proposed by the auditing standard are widely addressed in the literature (Carson et al. ).…”

“…Major summaries of the entire international literature on the subject have been produced by Carson et al (2013) and by Gissel et al (2010). A number of attempts have also been made to develop quantitative models for predicting failure which can provide auditors with useful tools for reducing the inherent subjectivity of making GC assessments, and help build consent around the auditor's decision (Carson et al 2016). For our investigation, we analysed the literature on identifying the indicators that can signal GC problems.…”