All 18 Going Concern questions
More in Going Concern
Whose responsibility is the going concern assessment? What basis of accounting is used if an entity is not a going concern? What is the difference between going concern doubt and actual insolvency? Why is going concern important to users of financial statements? What is a support letter (comfort letter) in a going concern context? What are indicators that going concern may be in doubt? How does the auditor evaluate management's going concern assessment? What time period does the going concern assessment cover? What are mitigating factors in a going concern assessment? What disclosures are required when there is significant going concern doubt?
Advertisement
Auditing & Assurance › Going Concern

What is the going concern assumption?

Beginner

Answer

The going concern assumption is that an entity will continue in operation for the foreseeable future (at least 12 months from the reporting/approval date) and has neither the intention nor the need to liquidate or cease trading. Financial statements are normally prepared on this basis, affecting asset and liability valuation and classification.
Real-world example Assets are stated at cost less depreciation, not fire-sale values, because the company is assumed to be a going concern.

Common follow-ups: What time horizon does going concern cover? | How does it affect valuation?

Audit Report & Opinions ISA Standards Going Concern
All 18 Going Concern questions