The Impact of the Financial Crisis on Auditor's Going Concern Opinions

Each audit requires an evaluation of whether there is substantial doubt about the issuer's ability to continue as a going concern. In this paper, we empirically analyze the impact of the global financial crisis on the auditor's decision to issue a going concern-modified opinion. Prior research suggests that auditors' decisions are more conservative in an environment of high risk exposure. For a given level of client risk, we cannot find that auditors had a higher propensity to issue a going concern-opinion during the financial crisis in Germany. However, we find that the net income has been less suited for predicting the issuance of a going concern-modified opinion in 2008. We analyze and discuss potential implications.