Companies and their auditors are following different rules in determining when each might be compelled to warn investors that there’s reason to doubt a company’s ability to remain in business as a going concern, leading to disclosures like that from Sears recently that has left capital market players scratching their heads.

Auditors have long had the unhappy duty of making the going concern call, but the Financial Accounting Standards Board has put the onus on management to take the first step in warning investors. After much back-and-forth over how to write a standard that preparers and auditors could live with, FASB issued its final standard in 2014, requiring management to warn investors if they deem there’s “substantial doubt” that a company can continue as a going concern 12 months after the financial statements are issued.

That’s a slightly different standard than auditors have followed, and FASB intentionally left more than two years for its standard to become effective in case the Public Company Accounting Oversight Board would care to align the requirements for auditors. The PCAOB kicked around the idea for some time, but took no action. Instead, the PCAOB issued guidance telling auditors to continue to follow auditing standards, which tell auditors they must warn investors if they believe there’s “substantial doubt” about an entity’s ability to continue as a going concern looking out 12 months from the balance sheet date.

That effectively means auditors must first audit management’s assertion under accounting standards, then arrive at an assertion of their own under auditing standards. The rules differ in two key ways. First, “substantial doubt” has a different nuanced meaning in GAAP than it does in auditing literature. For accountants, “substantial doubt” means “probable.” For auditors, “substantial doubt” has come to mean “significant possibility.” Some audit experts said that gives management more room than auditors, which some predicted would lead to reduced instances of going concern warnings.

The second key difference is in the timeline. FASB requires management to look 12 months out from the date financial statements are issued. In Sears’ case, that was March 21. The PCAOB’s rules require auditors to look out 12 months from the balance sheet date, which was Jan. 28. That suggests management is looking out over a longer time horizon than auditors.

Sears’ auditor, Deloitte & Touche, accepted management’s assertion, issuing an audit opinion that says the company’s financial statements “present fairly, in all material respects, the financial position” of Sears. Yet Deloitte issued no opinion of its own expressing doubt about the entity’s ability to continue as a going concern. Deloitte declined to discuss that seemingly contradictory outcome, citing professional standards that prevent auditors from discussing client business.

Miguel Minutti-Meza, assistant professor at the University of Miami who has studied going concern findings, says it is puzzling to see a company take a more conservative view than its auditor. “There is always the chance that client-specific information privately known by the auditor, or unknown, might influence the auditor’s assessment,” he says. That might include a confidential restructuring deal being negotiated with a bank. “However it is unlikely that private information would make the auditor give a clean opinion when all public information is negative. In the restructuring case, what happens if the deal fails?”

Minutti-Meza says research has shown auditors historically have been conservative in issuing going concern opinions, perhaps because auditors face higher costs in terms of litigation and reputation damage if the client goes bankrupt without proper warning than if the client receives a cautious going concern and remains in business. “The client may simply find another auditor next year,” he says.

Roughly two-thirds of entities that get the going concern red flag do not go bankrupt, but half of companies that declare bankruptcy receive a going concern finding in the year before bankruptcy, Minutti-Meza says. He is predicting the Sears disclosure will probably face additional scrutiny, where more will be revealed later about the puzzling disclosure outcome.