‘Going concern’ is not a simple binary or pass/fail concept. A company can be a going concern even when one or more material uncertainties exist. In such circumstances what becomes important is the disclosure about the uncertainties and management’s consideration of these.’ Quote from the recent Financial Reporting Lab’s guidance on ‘Going concern, risk and viability’ in the midst of the Coronavirus (COVID-19).
The Financial Reporting Lab of the Financial Reporting Council last week published two documents that give clear incisive guidance, with real life examples, dealing with:
- ‘Resources, actions and the future’ – practical advice to companies setting out the disclosures investors expect to see from companies during this time of uncertainty.
- ‘Going concern, risk and viability’ – the second gives guidance on going concern, risk and viability disclosures.
The three key areas that need attention and disclosure relating to going concern are:
- Is the company a going concern?
- Has the assessment considered factors relevant to COVID-19?
- Is the disclosure sufficiently detailed?
If you are wondering what Coronavirus (COVID-19) disclosures companies should be making in their financial statements, we have the answer. Our recently published survey of 22 public company financial statements focuses on their Coronavirus (COVID-19) disclosures.
Among the disclosures addressed in our report are topics such as:
- Emphasis of Matter
- Key Audit Matters in Audit Reports
- Going Concern/Viability
- Post Balance Sheet Events/Subsequent Events
This thirty-page report, is available on our website, and includes more detail of the types of disclosures that are prevalent at the moment and elaborates on the topics below. All this research is available to purchase for just €125+VAT, for immediate download.
For more on the Coronavirus (COVID-19) disclosures, please see our published report on our website here.
In our Publications Store, you will also find many complementary letters of representation templates that deal with the Coronavirus (COVID-19).