- Going concern
A going concern is a
businessthat functions without the intention or threat of liquidationfor the foreseeable future, usually regarded as at least within 12 months.
Use in Accounting
accounting, "going concern" refers to a company's ability to continue functioning as a business entity. It is the responsibility of the directors to assess whether the going concern assumption is appropriate when preparing the financial statements. A company is required to disclose in the notes to the financial statements whether there are any factors that may put the company's status as a going concern in doubt.
auditormust consider whether the use of the going concern assumption is appropriate, and whether there are material uncertainties about the entity's ability to continue to operate as a going concern that need to be disclosed in the financial statements. [ Auditing Practices Board, International Standard on Auditing 570 Going Concern. Paragraph 9]
Financial statements are prepared on the assumption that the entity is a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of operations. Different bases of measurement may be appropriate when the entity is not expected to continue in operation for the foreseeable future. [CICA Handbook Section 1000.58] Where a company is not a going concern, the break-up basis is used where all assets and liabilities are stated at
Net Realizable Value.
Use in Risk Management
If a public company reports that its auditors have doubts about its ability to continue as a going concern,
investors are likely to take that as a sign of increased risk. Some fund managers may be required to sell the stockto maintain an appropriate level of risk in their portfolios. A negative judgment may also result in the breach of bank loan covenants.
ASA 570 Going Concern
HKSA 570 Going Concern
List of auditing topics
* [http://www.abrema.net/abrema/going_concern_g.html Glossary of Accounting Terms page ("going concern assumption").]
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Look at other dictionaries:
going concern — going con·cern n: a business that is in operation Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. going concern … Law dictionary
going concern — noun A business currently operating (esp making a profit) and expected to continue to do so • • • Main Entry: ↑going * * * going concern UK US noun [countable] [singular going concern plural … Useful english dictionary
going concern — A successful and active business is a going concern … The small dictionary of idiomes
going concern — ► NOUN ▪ a thriving business … English terms dictionary
going concern — One of the fundamental accounting concepts. It is assumed that a company will continue in operational existence for the foreseeable future. Dresdner Kleinwort Wasserstein financial glossary * * * going concern going concern ➔ concern * * * An… … Financial and business terms
Going Concern — A term for a company that has the resources needed in order to continue to operate indefinitely. If a company is not a going concern, it means the company has gone bankrupt. Also known as Going Concern Value . In other words, this refers to a… … Investment dictionary
going concern — UK / US noun [countable] Word forms going concern : singular going concern plural going concerns a business that seems likely to continue to make a profit … English dictionary
going concern — /ˌgəυɪŋ kən sɜ:n/ noun a company that is actively trading (and making a profit) ♦ sold as a going concern sold as an actively trading company ♦ to sell a business as a going concern to sell a business as an actively trading company … Dictionary of banking and finance
going concern — noun A working business; a flourishing or profitable enterprise. If the bank does not act swiftly to push the CDS price back down, the regulator seizes the assets, wipes out shareholders and sacks the management. The bank is recapitalised as a… … Wiktionary
going concern — See a going concern … English idioms