The incremental information content of SAS No. 59 going-concern opinions

Article Abstract:

An evaluation of whether expanded requirements in the SAS No. 59 standard, which requires auditors to actively evaluate and report their clients' going-concern status for the coming year as well as the current one, will help investors make more accurate ex ante assessments of which companies will go bankrupt. The earlier SAS No 34 gave auditors only passive responsibilities for evaluating a firm's ability to continue operations. The revised standard creates a 'triggering point' for report modification if there is any substantial doubt about a firm's continued existence even in the absence of other factors. Results show that price responses to bankruptcy announcements are less negative if a company receives auditing reports under SAS No. 59 than under SAS No. 34.

Organizational history, Capital funds & cash flow, Standards, Methods, Forecasts and trends, Accounting, Bankruptcy

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The effect of the external accountant's review on the timing of adjustments to quarterly earnings

Article Abstract:

An assessment of whether timing of external reviews of quarterly financial data affects differences in the timing of recognition that quarterly earnings should be adjusted. Timely and retrospective views are compared along with whether adjustments were recognized during the first three quarters or the fourth quarter. Analyses of companies reporting non-routine adjustments during 1988 and 1989 show that a disproportionately large number are reported in the fourth quarter and that companies with timely reviews have more adjustments during the first three quarters and fewer fourth-quarter adjustments. The evidence supports earlier claims that timely reviews shift adjustments to earlier in the year.

Management, Business forecasting

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Auditing in the presence of outside sources of information

Article Abstract:

When outside sources of information are available to an auditor, the auditor tends to spend more time gathering information.

Statistical Data Included

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