| Summary: | This research is aimed at examining the relationship between the characteristics of boards of directors and audit committee of financially distressed/going-concern clients and the likelihood of receiving going concern audit reports. ISA 570 (revised) provides a general auditing guideline for auditors in Malaysia to issue a qualified or a modified report when there are substantial doubts regarding the validity of client's going concern. Our sample comprises 167 companies, which were financially distressed and listed on Kuala Lumpur Stock Exchange (KLSE) in year 2000. We hypothesize the going concern opinion is associated with the proportion of outside directors to total directors, outside directors with substantial shareholdings and audit committee with only outside directors. Using binary multiple logistic regression, we find evidence to support our expectation that going-concern opinion is to some extent a function of financial condition.
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