Abstract
PurposeIt is argued that the going concern opinion is issued if auditors have a doubt about financial condition of a company. Provision of the going concern audit opinion may worsen the company in terms of gaining public trust and may even indicate bankruptcy. This study aims to determine the factors that affect the auditor's going concern opinion.Design/methodology/approachThis research used secondary data obtained from annual reports and independent audit reports published by the Indonesia Stock Exchange. The population of this research included manufacturing firms registered in the Indonesia Stock Exchange from 2015 to 2019. The sample after the purposive sampling technique being applied consisted of 33 companies. The data were analyzed using logistic regression performed in the statistical analysis software, SPSS 24.0.FindingsThe results indicated that leverage positively affected the going concern audit opinion, then the audit quality, profitability and liquidity negatively affected the going concern audit opinion, whereas firm size and audit lag did not affect the going concern audit opinion.Originality/valueThis study is in contrast to several existing studies on the determinants of the auditor's going concern opinion and provides knowledge on developing more factors affecting the auditor's going concern opinion.
Highlights
In Indonesia, the issue of audit reports and their links with the going concern opinion has emerged since 1995
Summary Based on the results of the logistic regression analysis to determine influencing factors on the going concern audit opinion with research data of manufacturing firms listed on the Indonesia Stock Exchange (IDX) from 2015 to 2019, it can be concluded that leverage was positively affected the going concern audit opinion
Implications The going concern audit opinion given by auditors is based on some judgments, especially financial condition, which has a very important role for the judgment
Summary
In Indonesia, the issue of audit reports and their links with the going concern opinion has emerged since 1995. This phenomenon began with the collapse of the Summa Bank that led to its shutdown, it previously received unqualified opinion from an independent auditor. One of the newest going concern opinion case in Indonesia was Batavia Air. The case began with the collapse of Batavia Air that led to its shutdown in 2013 because the company was unable to pay its debt due to December 2012, in 2011, the company still received unqualified opinion from and independent auditor and its audited cash flow showed a good financial condition
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