Pros And Cons Of Going Concern Opinions

Sarene Su Acct 597 First Draft INTRODUCTION BACKGROUND AND HYPOTHESIS Going-Concern Opinions and Bankruptcies Auditors can make two types of misclassification errors regarding going concern Auditor’s Dilemma on the Issuance of Going-Concern Opinions Although SEC and other legislative bodies have provided significant litigation relief to auditors making Type II misclassification errors, the cost of making Type II misclassification can still be quite large (Geiger and Raghunandan). In the expense of making Type I misclassification errors, auditors may choose to issue going concern opinion to financially distressed clients to prevent potential litigation costs. In addition, prior literature suggests that when auditors