Factors Affecting Going Concern Audit Opinion

Oct 13, 2025 by leolavanderia.com.br 104 views

The Effect of Audit Tenure, Financial Distress, Previous Year's Audit Opinion, and Company Growth on the Going Concern Audit Opinion at Manufacturing Companies in the IDX for the 2015-2017 Period

Introduction

The Going Concern audit is a crucial statement delivered by auditors regarding a company's ability to continue its operations in the future. In this context, the audit opinion issued by the auditor can be influenced by various factors. This study aims to analyze and understand the effect of several factors on the going concern audit opinion on manufacturing companies listed on the Indonesia Stock Exchange (IDX) in the 2015-2017 period. The four main variables studied were audit tenure, financial distress, previous year's audit opinion, and company growth. The research method used was causal with a population of 156 companies, where after the methodological selection using purposive sampling, 49 companies were obtained as samples used as research objects.

Background

The Going Concern audit is a critical aspect of the auditing process, as it provides stakeholders with information about a company's ability to continue its operations in the future. The audit opinion issued by the auditor can be influenced by various factors, including audit tenure, financial distress, previous year's audit opinion, and company growth. This study aims to analyze how these factors can affect the going concern audit opinion.

Factors Affecting Going Concern Audit Opinion

Audit Tenure

The results of this study showed that audit tenure has a negative and significant influence on the Going Concern audit opinion. This means that the longer the auditor handles the audit of a company, the higher the possibility of getting an unquestionable opinion regarding the survival of the company. Experienced auditors can provide a more accurate assessment of the company's condition, which can lead to a more positive going concern audit opinion.

The Importance of Audit Tenure

Audit tenure is a critical factor in the auditing process, as it can affect the auditor's ability to provide an accurate assessment of a company's condition. Experienced auditors have a deeper understanding of a company's operations and can identify potential risks and challenges that may affect the company's ability to continue its operations in the future. This can lead to a more positive going concern audit opinion, which can provide stakeholders with confidence in the company's ability to survive financially in the future.

Financial Distress

Financial distress, which is measured through financial statement analysis, also has a significant negative influence on the Going Concern audit opinion. When companies face financial problems, this can create doubts about their ability to survive financially in the future, and auditors tend to provide more skeptical opinions.

The Impact of Financial Distress

Financial distress can have a significant impact on a company's ability to continue its operations in the future. When companies face financial problems, they may struggle to meet their financial obligations, which can lead to a decline in their credit rating and make it more difficult to access capital. This can create doubts about the company's ability to survive financially in the future, which can lead to a more skeptical going concern audit opinion.

Previous Year's Audit Opinion

Audit opinion given in the previous year had a positive and significant influence on the Going Concern audit opinion the following year. If the company in the previous year gets good opinions, the auditor will be more likely to trust the sustainability of the company's business, unless there is clear evidence that shows the opposite.

The Importance of Previous Year's Audit Opinion

Previous year's audit opinion is an important factor in the auditing process, as it can provide stakeholders with information about a company's ability to continue its operations in the future. If a company has received good opinions in the previous year, this can provide stakeholders with confidence in the company's ability to survive financially in the future. This can lead to a more positive going concern audit opinion, which can provide stakeholders with a more accurate assessment of the company's condition.

Company Growth

Company growth is another important factor in the auditing process, as it can affect the auditor's ability to provide an accurate assessment of a company's condition. However, this study found that company growth does not always show a strong business continuity. Other factors must be considered to get a comprehensive picture of the company's long-term stability.

The Impact of Company Growth

Company growth is an important factor in the auditing process, as it can provide stakeholders with information about a company's ability to continue its operations in the future. However, this study found that company growth does not always show a strong business continuity. Other factors must be considered to get a comprehensive picture of the company's long-term stability. This can include factors such as financial distress, audit tenure, and previous year's audit opinion.

Research Implication

The findings of this study show the need for more attention to the company's audit and financial condition to assess the Going Concern opinion. Investors and other stakeholders need to pay attention to these factors before making investment decisions. It also gives a picture to the company about how they can improve their position in the audit and maintain auditor confidence.

The Importance of Research Implication

The research implication of this study is that it highlights the importance of considering multiple factors when assessing a company's ability to continue its operations in the future. This can include factors such as audit tenure, financial distress, previous year's audit opinion, and company growth. By considering these factors, stakeholders can get a more comprehensive picture of a company's long-term stability and make more informed investment decisions.

Conclusion

In conclusion, this study found that audit tenure, financial distress, previous year's audit opinion, and company growth are all important factors in the auditing process. The findings of this study show the need for more attention to the company's audit and financial condition to assess the Going Concern opinion. Investors and other stakeholders need to pay attention to these factors before making investment decisions. It also gives a picture to the company about how they can improve their position in the audit and maintain auditor confidence.

The Future of Audit Research

The future of audit research is an exciting and rapidly evolving field. As the auditing process continues to evolve, it is essential to consider the impact of various factors on the going concern audit opinion. This study highlights the importance of considering multiple factors when assessing a company's ability to continue its operations in the future. By continuing to research and understand the impact of these factors, we can provide stakeholders with a more comprehensive picture of a company's long-term stability and make more informed investment decisions.

References

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Appendix

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Frequently Asked Questions (FAQs) about the Effect of Audit Tenure, Financial Distress, Previous Year's Audit Opinion, and Company Growth on the Going Concern Audit Opinion

Q: What is the Going Concern audit opinion?

A: The Going Concern audit opinion is a statement delivered by auditors regarding a company's ability to continue its operations in the future. It is a critical aspect of the auditing process, as it provides stakeholders with information about a company's ability to survive financially in the future.

Q: What are the factors that affect the Going Concern audit opinion?

A: The factors that affect the Going Concern audit opinion include audit tenure, financial distress, previous year's audit opinion, and company growth. These factors can influence the auditor's ability to provide an accurate assessment of a company's condition and its ability to continue its operations in the future.

Q: What is the impact of audit tenure on the Going Concern audit opinion?

A: The results of this study showed that audit tenure has a negative and significant influence on the Going Concern audit opinion. This means that the longer the auditor handles the audit of a company, the higher the possibility of getting an unquestionable opinion regarding the survival of the company.

Q: What is the impact of financial distress on the Going Concern audit opinion?

A: Financial distress, which is measured through financial statement analysis, also has a significant negative influence on the Going Concern audit opinion. When companies face financial problems, this can create doubts about their ability to survive financially in the future, and auditors tend to provide more skeptical opinions.

Q: What is the impact of previous year's audit opinion on the Going Concern audit opinion?

A: Audit opinion given in the previous year had a positive and significant influence on the Going Concern audit opinion the following year. If the company in the previous year gets good opinions, the auditor will be more likely to trust the sustainability of the company's business, unless there is clear evidence that shows the opposite.

Q: What is the impact of company growth on the Going Concern audit opinion?

A: Company growth is another important factor in the auditing process, as it can affect the auditor's ability to provide an accurate assessment of a company's condition. However, this study found that company growth does not always show a strong business continuity. Other factors must be considered to get a comprehensive picture of the company's long-term stability.

Q: What are the implications of this study for investors and other stakeholders?

A: The findings of this study show the need for more attention to the company's audit and financial condition to assess the Going Concern opinion. Investors and other stakeholders need to pay attention to these factors before making investment decisions. It also gives a picture to the company about how they can improve their position in the audit and maintain auditor confidence.

Q: What are the implications of this study for auditors and other professionals?

A: The findings of this study highlight the importance of considering multiple factors when assessing a company's ability to continue its operations in the future. Auditors and other professionals need to pay attention to these factors when conducting audits and providing opinions.

Q: What are the limitations of this study?

A: This study has several limitations, including the use of a small sample size and the reliance on secondary data. Future studies should aim to address these limitations and provide a more comprehensive understanding of the factors that affect the Going Concern audit opinion.

Q: What are the future research directions for this study?

A: Future research should aim to build on the findings of this study and provide a more comprehensive understanding of the factors that affect the Going Concern audit opinion. This could include the use of larger sample sizes, the collection of primary data, and the analysis of additional factors that may influence the Going Concern audit opinion.

Q: What are the practical implications of this study for companies and other organizations?

A: The findings of this study highlight the importance of maintaining a strong financial condition and a positive audit opinion. Companies and other organizations should aim to maintain a strong financial condition and a positive audit opinion to ensure their long-term stability and success.

Q: What are the implications of this study for regulatory bodies and standard-setting organizations?

A: The findings of this study highlight the need for regulatory bodies and standard-setting organizations to consider the factors that affect the Going Concern audit opinion when developing auditing standards and regulations. This could include the development of new standards and regulations that take into account the factors that affect the Going Concern audit opinion.