Determining The Effectiveness of Going Concern Audit Opinion by ISA 570

Abstract

The research aims to address the Going Concern Audit Opinion published by the auditor with an ISA 570 basis. The application of ISA 570 will help to facilitate the auditor in publishing the Going Concern Audit Opinion. The Going Concern Audit Opinion is the opinion which is released by the auditor to assure whether the company is enabled to maintain its viability. The difference between SA 341 and ISA 570 will to contribute effective impact to the management for elucidating the management plan undertaken to overcome any difficulty they may encounter. The ISA 570 will represent that the auditor intensely guides the management in plan or strategy development for upgrading the finance and non-finance performance. The research approach is the Non-Positivistic approach from an Interpretive Perspective. The researcher obtains the source and type of data from key persons consisting of all auditors working in Public Accountant Firms (PAF) in Surabaya. The data collecting technique uses observation, interview and documentation. The result of the research shows the ISA 570 application gives the facility for the auditors in publishing a Going Concern Audit Opinion. In the audit execution, the auditor will accentuate the strategic plan for resolving the problems with which the company deals.

Company’s Financial Condition Representing Going Concern Audit Opinion Issue Implication for Substitution Public Accounting Firm (Survey at Public Accounting Firms in Jabodetabek)

“…Issuance dan Going Concern Audit Opinion Issuance affects to Substitution Public Accounting Firm, then it can be described as Figure 2 below : Pressure on reduced company achievement or company profitability and effectiveness lack and company efficiency managing liquid funds in order to fulfill its short-term obligations, causes company's financial condition to decline which will illustrate that company's isn't yet able to be responsible for its survival, public accounting firm or an auditor supervising and auditing will make it increasingly possible to issue a going concern audit opinion with a statement that management plan cannot be effectively responsible for entity survival (disclaimer of opinion) [5]. This study results are the same as previous results studies with [1][2][6][7][8] which states that company's poor financial condition will encourage public accounting firms or an auditor to tend going concern audit opinions issue, financial conditions can be represented with profitability and liquidity where both can show company's ability to generate profits, profitability lower and liquidity shows a decrease in operating activities and not being able to fulfill its obligations will encourage public accounting firms or auditors to provide a going concern audit opinion on entities that are supervised by Public Accounting Firms in Jabodetabek. Going concern audit opinion issuance by Public Accounting Firm or an auditor causes an entity to experience two conditions, namely a company that will later survive and a company that will later fail to survive or go bankrupt.…”

Competitive Advantage as Role Moderation Between System-Driven Performance and Economic Performance

“…Greater utilization of cooperative behavior guides stewards, and that behavior is considered acceptable rational behavior. (Triani, Satyawan, and Yanthi 2017). Referring to the stewardship theory, steward behavior is collective; because this behavior guides stewards, organizational goals can be achieved.…”

“…Stewards protect and maximize shareholders through company performance. Therefore, the steward utilization function is maximized (Triani et al 2017). The relationship between Stewardship Theory and the dependent variable of Economic Performance in this study is stewards the collective because stewards are guided by these behaviors so that organizational goals can be achieved.…”

Audit Committee’s Role in Moderating the Effect of Financial Distress Towards Going Concern Audit Opinion

“…When disclosure of information in financial statements provides evidence of financial difficulties and probabilities of business continuity, going concern opinion is an additional communication by the external auditor (Blay, Geiger, & North, 2011). It means that auditor has substantial doubts about the company's business continuity based on their professional judgment (Carcello & Neal, 2000;Knechel & Vanstraelen, 2007;Triani, Satyawan, & Yanthi, 2017). However, there are previous studies that have different results from the theory above.…”