AUDITOR’S AND MANAGEMENT’S ASSESSMENT OF GOING CONCERN IN PRE-BANKRUPTCY SETTLEMENTS

Going concern assessment is a complicated and responsible task for the company’s management and for auditors. For this purpose, a certain legislative framework has been created. However, the determinants are not precise enough which leads to mistakes with long-term consequences. A problem with the going concern assessment for pre-bankruptcy companies has been particularly emphasized in the Republic of Croatia. In order to investigate into this problem in more details, a research has been conducted for the companies which are included in the process of pre-bankruptcy settlement with the aim to establish financial situation of these companies before and after the settlement and comparative differences between the management’s and auditor’s going concern assessment. The conducted investigation found that from statistical point of view there are no significant differences in financial situation of the company before and after pre-bankruptcy settlement. The studies of observed companies have shown that going concern assessments have always been optimistic for the management and diverse for auditors, showing that clear and precise methodology should be created in order to unify the assessment criteria for going concern companies in pre-bankruptcy settlement.