What is Going concern (substantial doubt)?
In short
Management must evaluate whether conditions and events raise substantial doubt about the entity's ability to continue as a going concern: that is, whether it is probable the entity will be unable to meet its obligations as they become due within one year after the financial statements are issued (or available to be issued).
Key takeaways
- Management's plans are considered only if they are probable of being implemented and of mitigating the conditions.
- Disclosures are required whether or not the doubt is alleviated by management's plans.
- The auditor separately evaluates going concern and reports on it in the auditor's report.
Where it's tested
FAR: Notes, Subsequent Events & Going Concern — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Management's going concern evaluation covers a period of: