Accountability under pressure: Auditor going concern reporting and bankruptcy in the Netherlands

This study investigates the reporting behaviour of Dutch organizations under statutory audit requirements in the three years preceding bankruptcy. Using unique nationwide audit data (2012–2020), 572 bankruptcies of organizations subject to mandatory audits were identified. The results reveal widespread non-compliance with filing obligations, indicating weak accountability among firms nearing insolvency. In the year before bankruptcy, only a minority files audit opinions, and many fail to disclose material going concern uncertainties. Although bankruptcies of audited firms are rare (0.31% of audits), they inflict substantial societal harm, largely due to a few major failures. Delayed or missing filings thus serve as important early warning signals. Moreover, the results challenge the notion of a strong self-fulfilling prophecy effect of GCOs.