Are Spanish auditors skeptical in going concern evaluations?

Andrés Guiral, Francisco Esteo

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)


Purpose - This study is an attempt to explore Spanish auditors' sensitivity towards financial evidence and the implications of the so-called "recency effect" in a context of an ambiguous standard. Design/methodology/approach - Using Hogarth and Einhorn's belief revision model, we designed a lab experiment to examine how presentation order affects the going concern judgments and the audit decisions of auditors, and the level of skepticism showed by auditors towards the signs of evidence. Two important factors, which may affect the decision-making process and auditors' attitude to the evidence were also manipulated: the hypothesis frame and audit experience. The sample of subjects participating in this study comprises 81 Spanish auditors and 104 auditing postgraduate students. Findings - It was found an order effect, whereby those auditors who received favorable evidence at the end of a series showed greater confidence in their client's continuity and thus issued less severe audit reports than in the case of when negative evidence was processed last. Further, it was did not found that experience or framing reduced the recency bias. Moreover, the estimation of auditor sensitivity to the evidence suggests a lack of professional skepticism in the evaluation of the client's going concern status. Practical implications - First, the structure of auditing standards might contribute to auditors' reluctance to issue qualified audit reports. Second, the absence of skepticism might be contributing to the profound debate and notable feeling of distrust regarding the social function that the auditor profession should fulfill. Originality/value - Recent major financial scandals give us a reason to question whether auditors are skeptical in the going concern task. This study expands previous research of Bamber et al. by investigating the auditors' attitude towards the evidence in the going concern evaluation.

Original languageEnglish
Pages (from-to)598-620
Number of pages23
JournalManagerial Auditing Journal
Issue number6
Publication statusPublished - 2006

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Economics, Econometrics and Finance(all)
  • Organizational Behavior and Human Resource Management


Dive into the research topics of 'Are Spanish auditors skeptical in going concern evaluations?'. Together they form a unique fingerprint.

Cite this