Evidence on Auditors Use of Business Continuity Models as an Analytical Procedure

Auditors expressing unqualified audit opinions and asserting going concern for companies that subsequently fail is regarded as audit failure and results in considerable disapproval of the auditing profession. Prior research has suggested that corporate failure models, as an analytical procedure, improve the accuracy of auditors’ assessments of going concern. This study utilizes a survey to examine the practical efficacy of such models within the audit decision framework. It is found that corporate failure models facilitate the formation of more appropriate going concern opinions and increase judgment consensus.