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Going Concerns – A Nineteen Year Review

In our latest report, 2018 Going Concerns: A Nineteen Year Review, we examine the trends and statistics of going concern audit opinions filed with the Securities and Exchange Commission since 2000.

This report analyzes going concern totals and percentages of total opinions by year, with a further breakdown of new and repeat going concerns, as well as the issues which undermine these assumptions.

The analysis seems to provide positive news for going concern opinions. Fiscal year 2018 is expected to have 1,774 going concern opinions, representing the lowest total number and percentage of going concern opinions since 2000. The amount of going concerns has been steadily declining since peaking in 2008 with 3,356 going concern opinions. However, further analysis reveals that part of the reason behind the decrease from 2017 to 2018 can be attributed to the disappearance of companies between years – either due to a company’s termination of registration with the SEC, going private, or going out of business.

For additional insight on going concern trends, going concern opinions were divided into companies with a repeat going concern from the previous year and companies with a “new” going concern (those that did not have a going concern opinion from the previous year). As seen in the graph below, for fiscal year 2018 the number of new going concerns is estimated to be 440, the lowest number during the eighteen years analyzed, and the eighth consecutive year having an amount less than 600.

Looking closer at the effects of company attrition on going concern opinion trends, Audit Analytics identified companies that filed a going concern in one or more year, but not the next year, due to either failing to file an audit opinion (disappeared) or filed a clean opinion (improved). 2018 represented the lowest number of disappeared companies since 2005.

Of the 585 companies that filed a going concern opinion in 2017 but not in 2018, 167 companies subsequently filed a clean audit opinion and 418 failed to file any audit opinion. The 418 companies that failed to file a subsequent audit opinion in 2018 represents the second lowest number of disappeared companies since the peak in 2007.

This analysis was performed using the Audit Opinions database, powered by Audit Analytics.

For more information on this report or to request a demo, please contact us.

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