The Effect of Financial Distress, Company Size, and Audit Quality on the Going Concern Opinion

Santy Setiawan,Rapina ,Yenni Carolina,Kevan Hidayat

doi:10.24002/kinerja.v25i2.4795

Abstract

Since 2020, the Covid-19 pandemic has affected the Indonesian economy and the company's going concern. Therefore, the purpose of this study is to examine the factors that influence an auditor to issue a going concern opinion about a company, particularly the effect of financial distress, company size, and audit quality. Data was collected from property companies listed on the Indonesia Stock Exchange for three years, from 2018 to 2020, using financial statement data. Furthermore, logistic regression was used as the test tool to determine the effect of the independent variable on the dependent. The results showed that financial distress affects going concern opinion, while company size and audit quality do not.Keywords: Keywords: financial, quality, and going concern

Highlights

Since 2020, the Covid-19 pandemic has indirectly affected the Indonesian economy and the company's going concern
This study examines the effect of financial distress, company size, and audit quality on going concern opinion
The property industry sector listed on the Indonesia Stock Exchange was selected based on the criteria for the statements accompanied by independent auditor reports

Summary

Introduction

Since 2020, the Covid-19 pandemic has indirectly affected the Indonesian economy and the company's going concern. In the notes to the financial statements, the company is required to disclose how to conduct business during the pandemic. This indirectly affects the audit process, especially the going concern (Nurdin, 2021). The going concern assumption states that a business entity can survive in a predictable future unless management intends to discontinue its business. The level of uncertainty about an event, the complexity and size, including events after reporting or certain future considerations all influence this assumption (IAPI, 2016). KINERJA Volume 25, No 2, 2021 Page.

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Conclusion