Research On The Timeliness Of CPA’s Going Concern Opinion Decision

As the basis of survival and development in the future, the going concernviability of company received extensive attention. In the process of the constructionof the various systems of China’s capital market, the improvement of the goingconcern audit standard and stock delisting system has a similar path. Hence there aretwo complementary information source about the going concern risk of listedcompanies——Going Concern Opinion (GCO）and Special Treatment(ST). By goingconcern audit to assess the going concern viability of listed companies, CPAs send outthe signal of the going concern risk for investors timely. Then market regulatoryauthorities warn investors about the stock delisting risk under the special treatmentinstitution. The information users want the timeliest information, they lookingforward to the CPAs’ going concern opinion more than the special treatment.Certified Public Accountant make audit opinion decisions on the basis of tradeoffbetween audit risk and their own benefit, research on the timeliness of CPA’s goingconcern opinion decision is follow these two aspects. Firstly，the article analyses thebackground of going concern audit standard and stock delisting institution, combinedwith the statistic about the disclosure of going concern opinion and the contentanalysis of going concern report in the A-share market, preliminary exploresignificant events that constitute the going concern risk. Secondly, using multivariatelinear regression analysis to study the timeliness and the influence factors of GCOwhich before and after the year of first ST from2006to2011. Descriptive statisticsshowed the GCO decision-making are timely, CPA can issue GCO warning goingconcern risk before the companies special treatment. During the empirical research,according to the result of content analysis of the going concern audit report, bring intosome non-financial character variables beside the traditional financial variables tomeasure the going concern risk, and taking the proportion of audit fees account for thetotal income of the accounting firm to measure the economic benefits, to analyze therelationship between the two factors and the timeliness of GCO decision-making. The research results show that the risk of going concern is the main factors affect thetimeliness. The higher the going concern risk, certified public accountant issued agoing concern opinion more timely. However, the article does not find audit firms’economic benefits affect the timeliness of GCO decision-making significantly. Usealternative definitions of timeliness and Z-score indicator to measure the financialgoing concern risk, the results of further analysis show that the conclusion is robustand reliable. Finally, the article proposes some relevant recommendations to improvethe timeliness of GCO decision-making.The first innovation of the article is that the article focuses on the timeliness ofgoing concern opinion decision under the unique system background of China, toanswer the question about CPA issue GCO timely or not. Based on the contentanalysis, the empirical study takes into account not only the indicators of financialcondition, also included in the non-financial indicators to measure the going concernrisk. The significant contingencies, the extreme matters will significantly affect thetimeliness of going concern opinion decision.