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