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This study aims to explore the effects of intellectual capital (IC) on the occurrence of a modified audit opinion decision. The authors expect that high IC intensive firms are positively associated with the occurrence of a modified audit opinion since they are associated with an increased business risk and are more likely to exhibit issues concerning their financial health and stability.

Using a data sample of 423 listed firms from Greece, Italy, Spain and Portugal over a 10-year period, the authors estimated a logistic regression model to examine the effects of IC on the probability that a modified audit opinion is issued. The authors used organizational capital as a measure of a firm’s intensity on IC.

Empirical findings indicate a significant and positive relationship between the IC and the likelihood of a firm receiving a modified audit opinion decision.

This study expands prior literature by exploring the predictive ability of IC on the likelihood of a firm receiving a modified audit opinion decision.

The research aims to address the Going Concern Audit Opinion published by the auditor with an ISA 570 basis. The application of ISA 570 will help to facilitate the auditor in publishing the Going Concern Audit Opinion. The Going Concern Audit Opinion is the opinion which is released by the auditor to assure whether the company is enabled to maintain its viability. The difference between SA 341 and ISA 570 will to contribute effective impact to the management for elucidating the management plan undertaken to overcome any difficulty they may encounter. The ISA 570 will represent that the auditor intensely guides the management in plan or strategy development for upgrading the finance and non-finance performance. The research approach is the Non-Positivistic approach from an Interpretive Perspective. The researcher obtains the source and type of data from key persons consisting of all auditors working in Public Accountant Firms (PAF) in Surabaya. The data collecting technique uses observation, interview and documentation. The result of the research shows the ISA 570 application gives the facility for the auditors in publishing a Going Concern Audit Opinion. In the audit execution, the auditor will accentuate the strategic plan for resolving the problems with which the company deals.

This paper aims to examine whether Andersen’s audit quality in the five years preceding its collapse lagged that of other Big-Five auditors.

This paper compares Andersen’s audit quality and the other Big-Five auditors using five methodologies, namely, earnings response coefficients, magnitudes of abnormal accruals, propensities to issue going-concern opinions, usefulness of going-concern opinions in predicting bankruptcy and the frequency of Accounting and Auditing Enforcement Releases. The comparisons are based on both pooled samples of all observations and propensity-score-based matched-pairs.

The preponderance of evidence shows that Andersen’s audit quality did not differ materially in audit quality from other Big-Five auditors prior to its failure. However, it was found that Andersen’s independence was compromised in the year leading to its collapse (2000), as indicated by the lower likelihood to issue going-concern opinions.

This paper complements and improves on Cahan et al. (2011) by using more measures of audit quality, as no one measure is perfect, showing that their results using discretionary accruals are sensitive to the model used and showing that there is a more powerful direct measure of audit quality, namely, going-concern opinions.

The purpose of this paper is to identify the circumstances that gave rise to an adverse audit opinion by a New Zealand (Christchurch) accounting firm, Hicks and Ainger, on the annual financial report of the local firm, T.J. Edmonds Ltd, in 1976. In so doing, this study revealed not only previously undocumented issues surrounding major asset purchases but also the impact of key personalities before and after the adverse opinion decision.

The study is located within the Cultural Theory of History, to theorize the narratives within the wider contextual perspective. The issues surrounding the use of memory from such interviews are also considered. The key material offered in this study is sourced from a 2015 interview with the two key audit partners in this audit engagement.

The accounting standard on depreciation at that time, SSAP 3, had not been applied properly to the accounting treatment of four helicopters for wild deer operations, purchased a week before balance date. Neither the artificial suppression of profits by this purchase decision and accounting choice nor the fall in profits nor the adverse opinion, influenced share prices or shareholder perceptions long term.

The significance of this project is that it informs the appreciation of the importance of contextual understanding of a singular adverse audit opinion.

The purpose of this study is to examine the impact of corporate sustainability performance on the quality of financial reporting, proxied via the probability of external auditors, to offer a qualified audit opinion. Moreover, the impact of audit committee (AC) independence is considered as a mediating factor affecting the quality of sustainability performance and the opinion of external financial auditors.

This study is based on a sample of listed firms from 24 EU countries over the period 2003–2019, summing up to 144,317 firm-year observations. Panel logistic regression models were estimated.

Results indicated that firms with increased sustainability performance were less probable to receive a qualified audit opinion, suggesting that sustainability performance complements the quality of financial reporting. In addition, this negative association was significant for firms with above-average AC independence, verifying the mediating impact of firms’ governance structure on the quality of financial reporting.

This study quantifies a broader data set of sustainability information and uses a multi-country framework (24 EU countries), thus providing more concrete evidence on the issue, extending the study by Tuo et al. (2023). Also, this study responds to calls for more research on the mediating role of ACs made by Velte (2023) and Stuart et al. (2023) on the impact of sustainability performance on qualified audit opinion.

Audit consortium of joint and dual audits is one of the most controversial mechanisms aimed at improving audit quality and resolving several related debatable issues. This study aims to empirically investigate the impact of audit consortium on audit quality assessment in Egypt. It specifically examines whether audit opinion modification level is triggered by joint and dual audits existence and whether it is influenced by the relative importance of the auditor pair combination types.

A sample of companies listed on the Egyptian Stock Exchange constituting the EGX 30 index is examined over a period of five years, from 2016 to 2020. A quantitative research methodology is used, using content analysis of companies’ audit reports and carrying out longitudinal panel ordinary least squares multiple regression tests.

Results show that audit quality is significantly enhanced by conducting joint and dual audits of Egyptian companies’ financial statements. Findings indicate that both joint and dual audits significantly increase auditors’ propensity to modify audit opinions as compared to companies that engage in single audits. However, this increase in audit quality is not supported by the presence of Big 4 joint auditors or affiliated joint auditors, while the impact of Big 4 dual auditors cannot be confirmed. Nevertheless, such a potential increase in audit opinion modification is boosted by the presence of affiliated dual auditors, which appears to translate into higher quality.

The study has important implications for researchers, corporates, those charged with governance, financial statement users, auditors, regulators and standard setters, who might be interested in whether an audit consortium and a particular auditor pair combination are associated with superior audit quality. It provides empirical evidence that might contribute to the continuous challenge of promoting the quality and effectiveness of the external audit.

This study adds to the relatively limited and challenging literature on the potential contribution of audit consortium, using audit opinion modification level as a direct assessment of audit quality. It extends the scope of prior research by examining the existence of joint and dual audits and the relative importance of joint and dual auditor pair combination types. The study provides key insights from a distinctive and complex emerging audit market.

The purpose of this study is to investigate the association between individual auditor characteristics (gender, experience and sector expertise) and audit opinions in Belgian non-profit organizations (NPOs). The purpose is to identify auditor characteristics that imply a better assurance of financial statement (FS) quality. FS quality is essential to enhance financial accountability toward the resource providers of NPOs and the public at large.

Multinomial regressions are conducted on a data set of Belgian NPOs. Propensity score matching is used to control for potential self-selection bias.

Auditors with sector expertise are found to provide better assurance than their non-sector-expert counterparts. The former are more likely to disclose FS errors and uncertainties in their audit report.

This study contributes to the auditing literature by focusing on an understudied audit market, namely, the non-profit audit market. The number of non-profit studies that investigate determinant of audit quality is very scarce, and none of them explores the determinants of audit opinions. Moreover, these studies ignore individual auditor characteristics as determinants of audit quality. The findings of this study provide meaningful information for several actors in the NP field and for audit firms.

The literature has revealed auditors' going concern risk disclosures are examined in research as a homogenous risk class. This is despite the various going concern modifications auditors are entitled to give pertaining to this issue. A five‐level risk class is established in this paper derived from Australian Auditing Standard pronouncements to examine the appropriateness of auditors' going concern reporting relating specifically to the likelihood of firm failure.

Time is necessary to reveal the appropriateness of going concern reporting therefore a longitudinal research methodology was adopted. The research focuses on all Australian listed companies within the building industry in 1989 and follows all of the reporting of going concern by auditors and directors through until 2007. The building industry was selected because of its volatility, which increased the possibility of going concern reporting allowing a more in‐depth focus in the research. All auditors' going concern modifications were examined along with all indications of going concern problems identified by directors. To properly investigate the appropriateness of auditors' reporting, all sampled audit reports were examined using Altman's Z‐score model which were matched with a risk class model using the relevant requirements to report in order to determine the appropriateness of the auditors' and directors' opinions.

The level of under reporting of going concern risk by auditors (75 per cent) implies they are more affected by the agency relationship found in literature than directors who are found to have an incidence of underreporting of 57 per cent.

Literature classifies auditors along with directors as part of the agency problem. Altman's Z‐score bankruptcy prediction model is used because of its enduring nature, reliability and ability to be externally calculated to independently compare the going concern reporting performance of auditors and directors as part of the contribution to this research area.

The paper for the first time examines going concern reporting at a multi‐risk level rather than the binomial level used in research previously. The approach is developed in this paper using auditing pronouncements. These risk levels are linked with an independent measure being the Altman Z‐score to determine the appropriateness of auditors' and directors' reporting of going concern issues.

This study aims to examine the effect of real activities manipulation (RAM) on auditors’ decision of issuing going concern (GC) opinions for distressed companies.

This study estimates and examines three types of RAM: reduction of discretionary expenses, sales manipulation and overproduction. It investigates the effect of RAM on auditor reporting conservatism by including the three measures of RAM methods in logistic regressions that explain the issuance of going concern opinions. The authors perform the analysis specifically on distressed firms for 2004-2013 period.

This study finds a significant and positive association between RAM and the likelihood of receiving going concern opinion in the financial distressed firm sample, suggesting that client’s abnormal business activity affects the auditor reporting conservatism.

This study provides evidence that auditors make going concern reporting decisions in consideration of the client’s abnormal operating decisions and management’s opportunism.

Recent literature argues that auditors have little recourse other than to resign if a client uses RAM to impact earnings or the financial statements, and hence the enhanced audit quality in the post-SOX period is due to the shift from using accruals management to RAM (Cohen et al., 2008; Chi et al., 2011; Kim and Park, 2014). The evidence provided in this study indicates that auditors report more conservatively (rather than simply resign) in response to the aggressive RAM.

Prior studies on the determinants of audit reports focus on non‐financial sectors. In contrast, the present study seeks to examine the determinants of auditors' opinion in the banking industry, using a sample of banks drawn from nine Asian countries over the period 1995‐2004.

Logistic regression and a sample of 199 qualified financial statements and 4,403 unqualified ones are used.

The results indicate that Asian banks that receive qualified opinions are in general smaller ones, less well capitalized, less profitable and cost efficient, and appear to have excess liquidity. More external auditing requirements and less accounting and disclosure requirements in the banking sector, also increase the probability of receiving a qualified audit opinion.

Knowledge of the above mentioned characteristics could be of particular interest to banks' managers, investors, credit analysts and bank supervisors.

Despite the economic importance of the banking industry, accounting researchers have done little to investigate the various relationships that exist between banks and their auditors. Furthermore, most studies focus on the US market and examine the pricing of audit services for financial institutions, the audit opinions on publicly‐traded savings and loans institutions that subsequently failed, the effectiveness of bank audit, the loss underreporting and the auditor role of examination of banks, the impact of accounting and auditing systems on risk‐shifting of safety nets in banking. The present paper extends the literature by investigating the determinants of external auditors' opinion on Asian banks.