مقاله انگلیسی رایگان در مورد شرح دلایل شکست در کسب و کار با گزارش حسابرس – الزویر 2018

This paper examines the ability of audit report disclosures to explain the causes of business failure. Despite incremental interest in organizational failure, much of the existing literature has used accounting ratios to foresee why firms fail. We hypothesise that the audit report can also be employed for this purpose because it provides information regarding any material uncertainty relating to events that may warn users about possible causes of business default. Using a matched sample of 808 failed and non-failed firms, our results suggest that audit report disclosures significantly explain the causes of business failure. Moreover, these findings are consistent with the results of studies that integrate both deterministic and voluntaristic perspectives into the examination of the antecedents of organizational failure, as disclosures about both external and internal factors are mentioned in the audit report and contribute to assessing default. Managers, auditors, regulators and other users may consider the audit report to be useful as a tool to anticipate business failure.

Introduction

During past decades, researchers from multiple social science disciplines, including accounting, finance, strategy and organizational studies, have studied the topic of business failure,1 as well as its causes and its consequences (Lukason, 2016; Mellahi & Wilkinson, 2004). Despite the number of studies of the causes of business failure, there is a need to improve the integration of this stream of research across social science disciplines (Amankwah-Amoah, 2016). For instance, to date, scholars have apparently ignored the intersection between the causes of business failure and the discipline of auditing. This paper addresses the question of whether causes of business failure are explained in audit report disclosures,2 that is, whether external auditors can anticipate the reasons for a firm failing immediately before it occurs. As the process of failure may take up to 5–6 years, “it is not a sudden phenomenon” (Korol, 2013, p. 22). Therefore, auditors could detect the earlier warning signals of a firm’s crisis, and users of the audit report could be prepared to react in subsequent phases. In a letter to the firm’s shareholders, the auditors present the results of the auditing process in a report. The audit report is in writing, identifies the firm whose annual financial statements are analysed, and specifies the financial reporting framework applied and the period covered in those statements. This document includes an audit opinion, which can be either unqualified, qualified or an adverse opinion, and states clearly the opinion of the auditor as to whether the annual financial statements gives a true and fair view3 in accordance with the relevant framework and, where appropriate, whether the annual financial statements comply with statutory requirements. If the auditor is unable to express an audit opinion, the report will contain a disclaimer of opinion. Additionally, the report should refer to any other matters to which the auditor draws attention by way of emphasis without qualifying the audit opinion. Additionally, the report provides a statement on any material uncertainty relating to events or conditions that may cast significant doubt about the firm’s ability to continue as a going concern. The going concern is a common qualification generally issued when a firm’s financial viability is in doubt. Auditing standards specify that the auditors’ responsibility is to evaluate the going concern uncertainty (Pedrosa & López-Corrales, 2018). Thus, auditors are required to mention any evidence found during the audit processes regarding the risk of failure and to qualify their audit reports if the risk remains high after the conclusion of the audit (McKee, 2003). Therefore, the audit report can be used as an early warning of impending failure (Casterella, Lewis, & Walker, 2000). Courts, investors and analysts rely on this document to evaluate firms in financial distress (Geiger, Raghunandan, & Rama, 2005; Kim, Kim, & McNiel, 2008; Lennox, 1999). As failed firms’ stakeholders must be aware of going concern risks when making decisions, it seems reasonable that auditors, financial advisors and even the business press should have an obligation to report failure risks to stakeholders (Van Peursem & Chan, 2014).