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Title
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Rules rather than discretion in audit standards: going-concern opinions in Belgium
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Author
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Abstract
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| We study going-concern (GC) reporting in Belgium to examine the effects associated with a shift toward rules-based audit standards. Beginning in 2000, a major revision in Belgian GC audit standards took effect. Among its changes, auditors must ascertain whether their clients are in compliance with two ''financial-juridical criteria'' for board of directors' GC disclosures. In a study of a sample of private Belgian companies, we report two major findings. First, there is a decrease in auditor Type II errors, particularly by non-Big 6/5 auditors for their clients that fail both criteria. Second, there is an increase in Type I errors, again particularly for companies that fail both criteria. We also conduct an ex post analysis of the decrease in Type II errors and the increase in Type I errors. Our findings suggest the standard engenders both favorable and unfavorable effects, the net of which depends on the priorities assigned to the affected parties (creditors, auditors, companies, and employees). |
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Language
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English
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Source (journal)
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The accounting review / American Accounting Association. - Menasha, Wis., 1926, currens
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Publication
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Menasha, Wis.
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American Accounting Association
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2009
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ISSN
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0001-4826
[print]
1558-7967
[online]
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DOI
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10.2308/ACCR.2009.84.5.1395
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Volume/pages
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84
:5
(2009)
, p. 1395-1428
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ISI
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000270298300003
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Full text (Publisher's DOI)
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Full text (publisher's version - intranet only)
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