Obtaining Audit Evidence for Assessing Companies' Ability to Continue as a Going Concern, Using Duration Models

Abstract

According to The International Standards on Auditing , the purpose of the auditor in an audit engagement is to express an independent, objective and a professional opinion regarding the accuracy of the financial statements of the companies audited. During his mission, the auditors must also assess the company’s ability to continue as a going concern , with a major impact on the preparation and the quality of financial statements that are reported. To support his opinion, regarding the hypothesis of going concern , the auditor must obtain sufficient and appropriate audit evidence, and perform the necessary audit procedures. For that, analytical procedures ensure a series of comparative information at the level of analyzed periods or branch, useful to the auditor in the audit engagement. The present study aims to obtain a deterministic model based on duration models, for assessing the audited companies’ ability to continue as a going concern . The research results are useful to the auditor in the assessment of the audited company’s compliance with the going concern assumption , in preparation of financial statements. The analysis was performed on a sample of 77 companies quoted on the Bucharest Stock Exchange that were subject to the insolvency risk, in the period 2008-2011. To obtain the research results, data were treated with statistical software SPSS 19.0.