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  • What is the timeline for assessing going concern?

    Going concern is an assessment on whether the company will be still be operating a year from now. The question that should be asked is whether the company will have enough cash to meet their obligations (i.e. pay their debts) within one year from the date the financial statements are issued. Remember, going concern isn’t assessed as of the financial statement year-end, but rather, the date that they are issued.

  • What is the “going concern” basis of accounting and how is “going concern” disclosed in the financial statements?

    Financial statements are required to be prepared under the “going concern” basis of accounting, which means that unless otherwise stated, management does not see any major risks that would cause the entity to not continue to operate into the future. The “going concern basis” is the default basis the financial statements will be prepared under. If there is a risk, these risks must be disclosed, and it is up to the auditor to determine whether a “going concern” clause should be included in the audit opinion.