The New Pressures for Going-concern Warnings
The pandemic has added complexity to the assessment of an
organization’s ability to maintain operations.
November 03, 2020
The purpose of a corporate board is to help management keep the organization going. That abstract idea has taken quite the concrete turn lately, with heightened attention over an organization’s ability to continue as a going concern.
Historically, going-concern warnings were the domain of audit firms, which for years have had to evaluate whether there was substantial doubt about a company’s ability to keep operating for the subsequent 12 months. Things began to get more complicated in 2017, with new accounting rules that required management to evaluate the company’s ability to continue as a going concern — and if substantial doubt did exist, also to disclose what management planned to do about it....