Abstract
This study investigates audit effectiveness (or the lack thereof) of audit opinions issued by auditors preceding company bankruptcies. Data from all 26 bankrupt UK financial institutions were used to determine if auditors appropriately issued opinions other than unqualified, as signs of non-going concern, and any differences in audit-opinion effectiveness between international and domestic audit firms. Results show that unqualified opinions issued was significantly higher than other opinions prior to bankruptcy. While international audit firms were less likely to issue unqualified opinions than their domestic counterparts, no firm issued adverse or disclaimer of opinions in any given year, despite serious warning signals from return on assets (ROA), return on equity (ROE) and current ratios.
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