Handbooks | June 2020

 

Insight

Handbook: Going concern

New KPMG guide to ASC 205-40, with Q&As, interpretive guidance and examples.

Valerie Boissou

Valerie Boissou

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-1723

Kayla Futch

Kayla Futch

Senior Manager, Dept. of Professional Practice, KPMG US

+1 212-954-6455

Tim Phelps

Tim Phelps

Partner, Dept. of Professional Practice, KPMG US

+1 212 872 3249

Eliott Vines

Eliott Vines

Senior Manager, Dept. of Professional Practice, KPMG US

+1 214-840-2260


This KPMG guide explains how an entity’s management performs a going concern assessment and makes appropriate disclosures under ASC 205-40. Q&As, interpretive guidance and examples include timely insights into how the economic downturn from COVID-19 may affect going concern assessments.  

Applicability

  • All entities

Relevant dates

  • Effective immediately

Key impacts

  • The requirement to assess a company’s ability to continue as a going concern is a relatively new requirement – dating back to 2017. 
  • Since that time – up until recently – the global and domestic economic climate has been good to robust, making this assessment relatively easy for many companies. 
  • COVID-19 has changed the economic climate considerably, making the going concern assessment this coming quarter (or fiscal year-end) more challenging for some companies.

Report contents

  • Overview of going concern assessment
  • Step 1: Assess whether substantial doubt is raised
  • Step 2: Assess whether substantial doubt exists
  • Disclosures
  • Impact on other accounting matters
  • Risk assessment and ICFR
  • Auditor’s going concern assessments

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