The risk of insolvency and the audit report
Anna Ros, Alba Ruiz, Carles Rusiñol and Alexandre Valeriano
When auditors detect that a company might have problems of insolvency, they have to inform about it with an emphasis paragraph where it is questioned whether it is appropriate to apply “the going concern principle”. This work analyses if auditors are effective in assessing the risk of insolvency and compares it with the Z score formula which applies the discriminant analysis to generate forecasts.
- Z score