Rules Rather than Discretion in Audit Standards: Going-Concern Opinions in Belgium

• 成果类型: Article
• 署名作者: Carcello, Joseph V.; Vanstraelen, Ann; Willenborg, Michael
• 署名单位: University of Tennessee System; University of Tennessee Knoxville; Maastricht University; University of Antwerp; University of Connecticut
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2009.84.5.1395
• 发表日期: 2009
• 页码: 1395-1428
• 关键词: Financial distress; propensity score; earnings quality; INDEPENDENCE; INFORMATION; prediction; LITIGATION

摘要

We study going-concern (GC) reporting in Belgium to examine the effects associated with a shift toward rules-based audit standards. Beginning in 2000, a major revision in Belgian GC audit standards took effect. Among its changes, auditors must ascertain whether their clients are in compliance with two financial-juridical criteria'' for board of directors' GC disclosures. In a study of a sample of private Belgian companies, we report two major findings. First, there is a decrease in auditor Type II errors, particularly by non-Big 6/5 auditors for their clients that fail both criteria. Second, there is an increase in Type I errors, again particularly for companies that fail both criteria. We also conduct an ex post analysis of the decrease in Type II errors and the increase in Type I errors. Our findings suggest the standard engenders both favorable and un-favorable effects, the net of which depends on the priorities assigned to the affected parties (creditors, auditors, companies, and employees).