Accounting & Auditing

Management’s Going Concern Responsibilities Defined

October 2014

In August 2014, the Financial Accounting Standards Board (FASB) defined management’s responsibility to evaluate whether substantial doubt exists about an entity’s ability to continue as a going concern. Professional auditing standards require auditors to evaluate the going concern presumption, but previously there was a lack of guidance in generally accepted accounting principles for financial statement preparers. Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40):  Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, clearly requires management to perform a going concern evaluation, defines “substantial doubt” and clarifies management’s going concern disclosure responsibilities; these include principles for considering and disclosing the mitigating effect of management’s plans. The amendments apply to all entities, including not-for-profit organizations; they are effective for the annual period ending after December 15, 2016, and annual and interim periods thereafter, with early application permitted.


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