Date of Award

Fall 1997

Document Type


Degree Name

Doctor of Business Administration (DBA)


School of Accountancy

First Advisor

James Johnston


Reporting going concern uncertainty has always been a controversial issue for standard-setters, auditors and users of the financial statements. Current standards require the auditor to include an explanatory paragraph in an unqualified audit opinion to report going concern uncertainty. This research investigated the information content attributed to this additional paragraph as viewed by users.

Two groups of commercial loan officers were presented with the same information for an actual case company exhibiting going concern uncertainty. One group received a modified report and a footnote disclosure of the going concern situation while the other group received an unqualified report and the footnote disclosure. Both groups were asked to indicate the likelihood that a line of credit would be granted to this company, provide an estimate of the interest rate, indicate their confidence in their decision and indicate their perception of this company's potential bankruptcy. A seven-point Likert scale was used.

Parametric and non-parametric tests were applied to the data. The results did not find both groups' answers on any of the Likert scales or the interest rate estimate to be statistically different based on a modified report and a footnote disclosure compared to an unqualified report and a footnote disclosure. This study, therefore, showed that the explanatory paragraph for going concern uncertainty did not have information content. With the elimination of the explanatory paragraph requirement for other uncertainties, serious consideration should be given to eliminating this requirement for going concern uncertainty as well.