ABSTRACT
Auditor reporting on the ability of their client to remain a going concern (i.e., continue in business) has had a long history of legislative and research interest around the globe. Auditor reporting on going concern uncertainty is of interest to standard setters, practitioners, academics, investors, and the business press because it represents the only allowable communication from the auditor (a knowledgeable “insider”) regarding their professional assessment of the continued viability of the company under audit. While professional standards from all jurisdictions would stress that it is not a prediction of future viability, audit reports modified for going concern uncertainty are viewed with great importance and are often treated as such. So whenever a business fails it is commonplace for regulators, investors, the business press, and interested parties to ask “where were the auditors?” and “what did their audit report say?” And in that context many believe that lately auditors have not been providing the investing public with enough forewarning of impending business failures through their reports. In fact, as of the writing of this chapter, standard setters in the European Union, the United Kingdom (UK), and the United States (US), at a minimum, are simultaneously considering changes in auditor reporting responsibilities with respect to going concern uncertainties in order to enhance communication of this information to readers of the financial statements.
