ABSTRACT: (AUDIT REPORT DISCLOSING GOING CORCERN UNCERTAINTIES). This paper aims at analyzing some information features of audit reports when an adverse opinion or a disclaimer of opinion is issued in the Italian regulatory environment in relation with going concern uncertainties An empirical analysis is conducted over the period 2004 – 2011 with reference to Italian listed companies. In particular, the analysis compares the period 2004-2007 and 2008-2011 to test a difference in the information characteristics of the audit report as a consequence of the recommendation of Banca d’Italia/Consob/Isvap (2009), calling for more attention in verifing the going concern assumption. Adverse opinions and disclaimers of opinion are rare thus our sample comprises 61 audit reports issued during the period under investigation. We used non parametric tests to validate our hypothesis that an Authority raccomandations may have changed the auditor behaviour in disclosing going concern uncertainties. The emphasis is on some key information (indicators) expressed in the audit reports when a severe opinion is issued related to going concern uncertainties. Following the Italian auditing standard based on International Standard on Auditing (ISA) 570 we classify the information reported in the audit report in three types of inidcator: financial, operating, and other. The total number of indicators is 17, however four of them were never used, the other 13 are disclosed 248 times in the audit reports investigated. The financial, operating, and other indicators are then categorized as quantitative or qualitiative. In the first case a quantitative measure of the indicator is reported, in the second case the indicator is reported in a narrative way using adjective or other form of description. In general, the most common indicator used by auditors is the ‘substantial operating losses or significant deterioration in the value of assets used to generate cash flows’ mentioned in 49 audit reports (80% of our audit reports sample), followed by ‘adverse key financial ratios’ (62%). We are able to show that there has been a significant increase in the use of indicators expressed in quantitative way compared to the qualitative (descriptive) form. In particular, in the period 2004-2007 quantitative indicators have a frequency of 39% while in the period 2008-2011 this percentage becomes 69%. It appears that the Authorities paper (Banca d’Italia/Consob/Isvap, 2009) somehow influenced auditors behavior in the way of reporting going concern issues.
KEYWORDS: audit report, going concern unceratinties, auditor opinion
Ianniello, G., Mainardi, M., Rossi, F. (2015). La relazione del revisore nei casi di incertezza sulla continuità aziendale, RIREA, n.2, pp. 128-143.
