Auditors' views on the type of audit report issued to entities with going concern uncertainties

When auditors have determined that there is substantial doubt about a client's ability to continue as a going concern, they are permitted to issue either an unqualified modified report or a disclaimer of opinion. However, there is virtually no authoritative guidance nor published research that auditors could use for determining which type of going concern report to issue. As a first step towards the understanding of this reporting decision, a study reports the views of audit partners on the importance of various factors that could influence their choice between the 2 types of reports that are permitted under current reporting standards. Results from the multivariate analysis of variance indicate that partners from Big 6 accounting firms differ from partners of non-Big 6 firms in the importance given to good and bad news characteristics, internal control items and financial ratios.