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  • Jennifer M Mueller-Phillips
    The Global Financial Crisis: U.S. Bankruptcies and...
    research summary posted October 22, 2014 by Jennifer M Mueller-Phillips, tagged 09.0 Auditor Judgment, 09.04 Going Concern Decisions, 12.0 Accountants’ Reports and Reporting, 12.01 Going Concern Decisions 
    Title:
    The Global Financial Crisis: U.S. Bankruptcies and Going-Concern Audit Opinions
    Practical Implications:

    As the PCAOB, SEC and other regulators assess auditors’ reporting decisions in the wake of the GFC, the results of our study provide evidence that the propensity to issue a GCO to a financially stressed and subsequently bankrupt client increased during the GFC. Our results suggest that critics of the auditors’ role during the GFC may have overstated a perceived problem based on relatively few bankruptcies without a prior GCO. At the same time, our results indicate that this increased scrutiny was similar for Big 4 and non-Big 4 auditors, but that it was largely restricted to smaller clients. Auditor going-concern modification decisions remain a complex process that is not fully understood or easily captured.

     

    For more information on this study, please contact Marshall Geiger via email at mgeiger@richmond.edu.

    Citation:

    Geiger, M.A., K. Raghunandan, and W. Riccardi. (2014). The global financial crisis: U.S. bankruptcies and going-concern audit opinions. Accounting Horizons 28 (1): 59-75.

  • Jennifer M Mueller-Phillips
    The Relation between Managerial Ability and Audit Fees and...
    research summary posted June 15, 2016 by Jennifer M Mueller-Phillips, tagged 12.0 Accountants’ Reports and Reporting, 12.01 Going Concern Decisions 
    Title:
    The Relation between Managerial Ability and Audit Fees and Going Concern Opinions
    Practical Implications:

     This research makes two primary contributions. The first is to the literature on audit pricing and going concern opinion by providing empirical evidence that after controlling for firm-level characteristics, managerial characteristics are also associated with audit fees and the propensity of auditors to issue going concern opinions. This evidence is particularly important because there is a paucity of empirical evidence on the relation between managerial characteristics and auditors’ decisions. The second contribution is providing two validation checks on the managerial ability measure developed by Demerjian which is becoming more widely used.

    Citation:

    Krishnan, G.V. and C. Wang. 2015. The Relation between Managerial Ability and Audit Fees and Going Concern. Auditing: A Journal of Practice and Theory 34 (3): 139-160.

  • Jennifer M Mueller-Phillips
    There’s No Place Like Home: The Influence of Home-State G...
    research summary posted July 18, 2016 by Jennifer M Mueller-Phillips, tagged 12.0 Accountants’ Reports and Reporting, 12.01 Going Concern Decisions 
    Title:
    There’s No Place Like Home: The Influence of Home-State Going-Concern Reporting Rates on Going-Concern Opinion Propensity and Accuracy
    Practical Implications:

    The findings of this study indicate that increased home-state GC rates lead to lower GC reporting accuracy for non-Big 4 auditors. This lower GC reporting accuracy imposes economic costs on the client and the auditor, which suggests that prior GC rates may be weighted too heavily in the minds of auditors.

    Citation:

    Blay, A.D., J.R. Moon, and J.S. Paterson. 2016. There’s No Place Like Home: The Influence of Home-State Going-Concern Reporting Rates on Going-Concern Opinion Propensity and Accuracy. Auditing: A Journal of Practice and Theory 35 (2): 23-51. 

  • Jennifer M Mueller-Phillips
    Turnaround Initiatives and Auditors’ Going-Concern J...
    research summary posted November 17, 2014 by Jennifer M Mueller-Phillips, tagged 09.0 Auditor Judgment, 12.0 Accountants’ Reports and Reporting, 12.01 Going Concern Decisions 
    Title:
    Turnaround Initiatives and Auditors’ Going-Concern Judgment: Memory for Audit Evidence
    Practical Implications:

    The results on the relations between management turnaround initiatives and going-concern decision-making show that auditors consider client turnaround initiatives when making going-concern decisions. Specifically, client operating turnaround initiatives (such as cost cutting) have a negative indirect effect on auditors’ going-concern judgment through a decrease in attention to subsequent positive client financial information. This suggest that short-term operating management turnaround initiatives may serve as an “early warning signal” of client distress for auditors which causes them to focus less on positive financial client information in subsequent analysis. 

    For more information on this study, please contact Liesbeth Bruynseels.

    Citation:

    Bruynseels, L., W. R. Knechel and M. Willekens. 2013 Turnaround Initiatives and Auditors' Going-Concern Judgment: Memory for Audit Evidence. Auditing: A Journal of Practice & Theory 32(3): 105-121

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