As part of the process of preparing annual or interim financial statements, an entity’s management is required to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. Due to the widespread and significant impact to businesses resulting from the coronavirus, entities should consider the impact of the global health pandemic on their ability to continue as a going concern. In doing so, entities will need to evaluate the impact to operations (and, therefore, their ability to meet their obligations) from location and production closures, decreased demand for products or services, difficulties obtaining products or services, an inability to collect from customers on outstanding receivables, the ability to access additional financing because of liquidity issues, and other relevant factors.
Our white paper, Going concern: Management’s evaluation during coronavirus pandemic, will assist entities in evaluating whether there is substantial doubt about an entity’s ability to continue as a going concern and preparing the related footnote disclosures.
