ABSTRACT: (GOING CONCERN ASSUMPTION IN LITERATURE, REGULATORY CHANGES AND ASSESSMENT PROCESS). The paper aims to analyze the going concern assumption in light of risks systems, balance sheet items appraisal and financial reporting by investigating if financial report disclosure is able to bring out crisis situations at an early stage. In the actual context regulatory development has strengthened disclosure in financial statements requiring more information on risks, quantitative and qualitative indicators, situations which can generally show conditions of company’s crisis. But the disclosure quality on going concern assumption is affected by main stakeholders interests and by relationships that among them are established. Interests conflicts among main stakeholder can induce company’s directors to hide crisis situations in financial reporting. Paper is based on the general framework of Italian and International literature about balance sheet evaluations, risks, and stakeholder conflicts and, first of all, analyzes going concern assumption assessment as a process and its disclosure in financial reporting. Assessment process is focused on auditor report on going concern opinion which seems to be useful, as some bankruptcy models, to asses going concern assumption but both aren’t able to promptly and systematically identify and predict default conditions of firms.
KEYWORDS: Going concern assumption, going concern opinion, bankruptcy models, default
