Have Do Auditors’ Going Concern Assessments Differ as a Result of COVID-19?

Abstract

Purpose: The purpose of this paper is to identify which events and conditions used for assessing whether an entity may be able to continue as a going concern (GC) are the most important with the onset of the Coronavirus 2019 (COVID-19) pandemic. These events and conditions are those pursuant to the International Standards on Auditing (ISA) 570 Going Concern and Staff Audit Practice Alerts both issued by the International Auditing and Assurance Standards Board (IAASB), and the latter issued in response to the COVID-19 pandemic.

Design/methodology/approach: This paper examines auditors’ opinions regarding the most important events and conditions that may influence an entity’s ability to continue as a GC by means of a questionnaire survey. The survey analysis allows a comparison between auditors’ assessments of those events and conditions in normal circumstances and those during the pandemic.

Findings: In general, auditors’ assessments of the events and conditions that impact an entity’s ability to continue as a GC differ during the COVID-19 period compared to assessments under normal circumstances. In particular, auditors have become more concerned regarding ‘industry of operation’ as a factor in their assessment of GC.

Originality/value: This study is novel in that it is the first to investigate whether auditors’ appraisals of events or conditions that influence their GC assessments change with prevailing circumstances such as the onset of the COVID-19 pandemic period.