Investors are getting very nervous about what will happen if the U.S. government defaults on its debt, according to the Center for Audit Quality.

The CAQ's annual survey of “Main Street” investors, conducted before the partial government shutdown over the lingering budget dispute, found 69 percent of investors are generally confident in U.S. capital markets. In a follow-up poll, however, the CAQ found the shutdown is eroding confidence. Investors say if the shutdown leads to a default, only 39 percent will continue to have confidence in capital markets.

Cindy Fornelli, executive director of the CAQ, points out that in the seven years CAQ has performed the annual survey, confidence has never fallen below 60 percent, even in the height of the financial crisis in 2008. “This new data shows just how high the stakes are for the country and our capital markets if the U.S. defaults,” she said in a statement. It should serve as a wake-up call to Congress to resolve the budget impasse, she says.

As the government shutdown continues in its second week, operations at the Financial Accounting Standards Board and the Public Company Accounting Oversight Board have been unaffected. Neither standard-setter is subject to federal funding, spokesmen for each organization said. PCAOB funding comes from an accounting support fee that is paid by all public companies. Similarly, FASB is funded by a combination of accounting support fees, subscription and publication revenue, and investment income. Some operations of the Securities and Exchange Commission have been curtailed in the shutdown.

The implications of the budget stalemate likely vary for public companies, says Peter Bible, a partner at audit firm EisnerAmper. “If you're a government contractor or have anything to do with providing goods or services to the government that are affected by the shutdown, that might warrant some type of disclosure,” he says. With the shutdown occurring early in the fourth quarter, it's hard to say. “There's still a lot of calendar in front of us,” he says.

Bob Uhl, a partner and national director at Deloitte & Touche, says the uncertainty around the government shutdown and the Federal Reserve policy on possibly tapering its bond-buying program raise questions about what will happen in debt and stock markets and what effect that might have on corporate financial statements. Companies may need to take a fresh look at the various valuations and impairments in their financial statements that could be affected, he says. “That could be a significant issue, but we don't know,” he says. “We have to see what the year end is like.”

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