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Information content, audit reports and going-concern: an Australian study

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Abstract:

Abstract

Research conducted on the information content of going concern ‘modified’ reports in the USA and UK indicates that a modified audit report does not appear to have information content to users if the going concern contingency is disclosed in the notes to the financial statements. In the present study, we provide evidence from Australia. We examine whether modification/qualification by an auditor in Australia (an ‘Emphasis of Matter’ and an ‘Except for’ report, respectively) has information content to a user. The results indicate that for a company in a state of financial distress, the modification, in either form, does not appear to significantly enhance either perceptions of risk or decision-making.

Keywords: Audit reports; Financial distress; Going concern

Document Type: Research Article

DOI: https://doi.org/10.1111/j.1467-629x.2003.00091.x

Affiliations: 1: School of Accounting and Information Systems, University of South Australia 2: School of Management, New Jersey Institute of Technology, USA

Publication date: 2003-11-01

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