TY - JOUR
T1 - Going Concern Uncertainty
T2 - What Do Firms Disclose?
AU - Bradbury, Michael
AU - Fargher, Neil
AU - Potter, Brad
AU - Taylor, Stephen
N1 - Publisher Copyright:
© 2022 The Authors. Australian Accounting Review published by John Wiley & Sons Australia, Ltd on behalf of CPA Australia.
PY - 2022/9
Y1 - 2022/9
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=85133638472&partnerID=8YFLogxK
U2 - 10.1111/auar.12379
DO - 10.1111/auar.12379
M3 - Article
SN - 1035-6908
VL - 32
SP - 294
EP - 314
JO - Australian Accounting Review
JF - Australian Accounting Review
IS - 3
M1 - 102
ER -