Auditor's Uncertainty About Going Concern – Predictor of Insolvency Risk

Abstract

The primary indications of some uncertainties about the going concern of an entity can be obtained by investors and the general public in the financial statements and in the audit report. The present paper analyzes the going concern principle based on the regulations in the field of financial reporting and on the basis of the regulations in the field of international, European and national auditing. The financial statements must provide a faithful image of the performance and financial position of the entities, and the auditors must to express an opinion on compliance with all accounting principles. The study showed that in most cases the auditors had uncertainties about the going concern that led to insolvency of companies, and the main underlying factors were the reported losses, negative equity, the business history.

Keywords

• going concern
• auditor’s opinion
• auditor’s report
• financial statements
• insolvency risk
• uncertainty