AUDITORS’ TENDENCY TO ISSUE GOING CONCERN OPINIONS: EVIDENCE FROM SERBIAN CAPITAL MARKET

This study investigates possible going concern issues in listed companies in the foreseeable future by analyzing the opinions presented in auditors’ reports covering the period 2021-2023. We use descriptive analysis to conclude that auditor reporting on going concern in the Republic of Serbia is below the level typical for developed economies. The dominant share of other audit firms, those outside the Big 4 group, and consequently the fear of legal costs and loss of reputation may be the reasons why auditors in most cases do not modify their going concern opinions. We analyze all paragraphs of the auditor’s report in which auditors point to the circumstances that caused the crisis in companies, and find that the most frequently mentioned indicators are net loss, accumulated loss and over-indebtedness. Furthermore, we include modified audit opinions based on other key issues in financial statements in the analysis, and conclude that the share of modifications is significantly above the average in developed economies. In this way, we further shed light on financial reporting in the Republic of Serbia and confirm that efforts to improve it are yet to come.