A Qualitative Look into Auditor’s Going Concern Assessment

Abstract: Introduction: The history of going concern have been surrounded by uncertainties. The concept becomes relevant in times of economic crisis. The accuracy of existing procedures concerning GCOs have been questioned, where firms file for bankruptcy without any prior indications of going concern issues. Therefore, it has been questioned if the auditors are better than anyone else to predict the future. The standards and regulations leave out large room for professional judgement, thus there is a great risk of fluctuations in the judgement process in practice. Without a complete understanding of going concern, one could question the added value of the concept, and what conclusions can be made from prior literature. Purpose: The purpose of our study is to enhance the understanding of the auditor’s going concern assessment by looking further into their application and treatment of the concept in practice. This will provide a more complete nuanced picture of auditor’s conceptualization and their process of evaluating going concern.   Method: Our purpose in this study is achieved by using a qualitative research method. The empirical findings are collected through using a semi-structured interview approach. The interview guide is developed from our model (Figure 2) which is derived from previous literature in the field. Our sample consists of 6 authorized auditors from the Jönköping region. Findings: The findings indicate that the perception shifts based on the process. Going concern is a difficult assessment, which is highly influenced by subjective judgement. Auditor’s application process in practice can be identified as a step-process. Between these steps, the perception changes. The process is characterized by auditors seeking evidence to the contrary of issuing a GCO.