Aligning Disclosure Requirements for Managerial Assessments of Going Concern Risk: Initial Evidence From New Zealand

Grosse, Matthew
Scott, Tom
Zang, Zeting
Item type
Journal Article
Degree name
Journal Title
Journal ISSN
Volume Title

This study examines the impact of the Financial Reporting Standard No. 44 New Zealand Additional Disclosures (FRS 44) amendment issued by the New Zealand Accounting Standards Board (NZASB). The FRS 44 amendment aligned disclosure requirements for managerial assessments of going concern risk in financial reports with auditing standards for periods ending on or after 30 September 2020. We first present descriptive evidence on the frequency of going concern opinions (GCO), frequency of going concern issues identified as key audit matters (GCKAM), and frequency and content of managerial assessments of going concern risk (GCMA) before and after the FRS 44 amendment. Second, we show lower audit fees and shorter audit lags for financially distressed companies post-FRS 44 implementation. This suggests that the harmonisation of accounting and auditing disclosure requirements alleviates tension during the going concern decision-making process for affected companies, subsequently leading to reduced audit fees.

3501 Accounting, Auditing and Accountability , 3502 Banking, Finance and Investment , 35 Commerce, Management, Tourism and Services , 3507 Strategy, Management and Organisational Behaviour , 1402 Applied Economics , 1501 Accounting, Auditing and Accountability , 1502 Banking, Finance and Investment , Accounting , 3501 Accounting, auditing and accountability , 3502 Banking, finance and investment , 3801 Applied economics
Accounting & Finance, ISSN: 0810-5391 (Print); 1467-629X (Online), Wiley, 64(2), 1525-1547. doi: 10.1111/acfi.13188
Rights statement
© 2023 The Authors. Accounting & Finance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.