On the information content of going concern opinions: The effects of SAS numbers 58 and 59

Mark Schaub () and Michael Highfield
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Mark Schaub: Northwestern State University, College of Business
Michael Highfield: Assistant Professor of Finance at Louisiana Tech University

Journal of Asset Management, 2003, vol. 4, issue 1, No 4, 22-31

Abstract: Abstract The information content of audit opinions has been scrutinised in the past. Research and discussions attempted to ascertain whether audit opinions contain useful information for financial statement users and whether accountants are qualified to make accurate assessments about a firm's viability as a going concern. Statements on Auditing Standards (SAS) 58 and 59 eliminated the ‘subject to’ audit opinion because of doubts whether such opinions contained useful information. Instead, a ‘subject to’ qualified opinion is communicated as ‘special language’ included in unqualified audit opinions. Evidence is provided that the audit opinion name change in 1988, which did away with the ‘subject to’ qualified designation of going concern opinions (GCOs), was merely cosmetic and did not affect the information content of those opinions when the GCOs with ‘special language’ are announced in the financial media.

Keywords: going concern opinions; information transfers; audit opinion information content (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1057/palgrave.jam.2240093

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