Going Concern Uncertainty: What Do Firms Disclose?

Michael Bradbury, Neil Fargher, Brad Potter*, Stephen Taylor

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    3 Citations (Scopus)

    Abstract

    We examine disclosure of going concern uncertainties by Australian companies. We begin by outlining the extant reporting framework applicable from accounting and auditing standards, and compare the approach to this issue taken across several different countries – Australia, New Zealand, the United Kingdom and the United States. We then examine reporting of going concern uncertainties for a selection of 127 Australian companies reporting at 30 June 2020 that also receive modified audit reports highlighting going concern issues. Our results indicate substantial variation in the specific requirements of audit and accounting standards impacting going concern disclosure across jurisdictions, with relevant disclosure guidance for Australian entities primarily contained in auditing, rather than accounting, standards. Not surprisingly then, we also observe significant variation in management reporting practices. These results inform our understanding of existing disclosure requirements and highlight how regulatory reliance on auditor discussion of going concern issues likely results in relatively limited management disclosure. We suggest that additional guidance may be required from accounting standard setters and also regulators with respect to management discussion of going concern uncertainty.

    Original languageEnglish
    Article number102
    Pages (from-to)294-314
    Number of pages21
    JournalAustralian Accounting Review
    Volume32
    Issue number3
    DOIs
    Publication statusPublished - Sept 2022

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