Going-concern modified audit opinions for non-profit organizations

Thomas E. Vermeer (Department of Accounting & Management Information Systems at the University of Delaware)
K. Raghunandan (School of Accounting at Florida International University)
Dana A. Forgione (College of Business at the University of Texas at San Antonio)

Journal of Public Budgeting, Accounting & Financial Management

ISSN: 1096-3367

Publication date: 1 March 2013


Non-profit organizations constitute an important share of the U.S. economy, and recent audit failures and GAO findings highlight the importance of auditor reporting decisions in this sector. In this study, we examine going-concern modified audit opinions for non-profit organizations. Using audit opinion data for 3,567 non-profits exhibiting some signs of financial stress, we find that non-profits are more likely to receive a goingconcern modified opinion if they are smaller, are in worse financial condition, expend less on program-related activities, and have more internal control related audit findings. Our analysis of the subsequent resolution of the going-concern uncertainties suggest that only 27 percent of the non-profits receiving an initial going-concern modified audit opinion filed for dissolution in the subsequent four fiscal years. Our findings fill a gap in an important area that has received little research attention, and provide a useful benchmark for non-profits and their auditors.


Vermeer, T.E., Raghunandan, K. and Forgione, D.A. (2013), "Going-concern modified audit opinions for non-profit organizations", Journal of Public Budgeting, Accounting & Financial Management, Vol. 25 No. 1, pp. 113-134. https://doi.org/10.1108/JPBAFM-25-01-2013-B006

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