An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. After a lengthy debate, the staff suggested exposing the larger subset of proposals in order to receive constituent views. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. However, in GAAP, going concern period is taken as generally 12 months from the balance sheet date or 12 months from the date the financial statements are released. It means that the financial statements are prepared under the assumption that the entity will continue its operations in the foreseeable future (at least 12 months). Other Board members expressed significant drafting concerns. He noted the requirement to disclosure information that enables users of financial statements to understand the effect of any significant future transactions. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox. hyphenated at the specified hyphenation points. The standard requires a complete set of financial statements to comprise a statement of financial … Specifically, one Board member believed current requirements were clear. 205-40-05-1Continuation of an entity as a going concern is presumed as the basis for financial reporting unless and until the entity’s liquidationbecomes imminent. Structure and Content. IAS 1 paras 122.125, separate disclosure of judgements and estimates, including going concern because of change of control provisions IAS 1, paras 122, 125, 129, judgements and estimates separately identified with sensitivities including COVID – 19 The Committee previously considered a request for clarification on the disclosure requirements about the assessment of going concern in IAS 1. IAS 1: Going Concern Extract – IFRS Discussion Group Report on Meeting – March 4, 2010 . Any changes to IAS 1 made subsequent to the IASB’s improvements project have not been incorporated into IPSAS 1. Accounting to IFRS, the going concern is for a period defined as the foreseeable future. IAS 1 sets out the purpose of financial statements as the provision of useful information on the financial position, financial performance and cash flows of an entity, and categorizes the information provided into assets, liabilities, income and expenses, contributions by and distribution to owners, and cash flows. When management is aware of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, the entity shall disclose those … The staff asked the Board whether it agreed with the Committee’s recommendation to propose an amendment to IAS 1 related to disclosure about material uncertainties related to an entity’s ability to continue as a going concern and the current wording of the proposals (as outlined in the staff paper). IAS 1.26 “In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. He saw the proposed requirements as introducing disclosure overload and encroaching auditor and regulator responsibility. These words serve as exceptions. Some of those concerns were fundamental disagreements with the need for an amendment. The scope of the Committee’s discussions were limited to two specific elements – when an entity should be required to disclose information about material uncertainties and what to disclose about the uncertainties. The staff presented a proposed draft amendment to IAS 1. The assessment relates to at least the first twelve months after the balance sheet date, or after the date the financial statements will be signed, but the timeframe might need to be extended. The Board may revisit this topic at a future meeting. Given Board deliberations and next steps following the Board’s discussion of disclosure requirements for an assessment of going concern, the Board decided not to discuss this paper. … contained requirements about what to disclose about material uncertainties (including objectives for the disclosure and defining more clearly the threshold for disclosure). The IFRS Interpretations Committee considered feedback on the comment letters received on its tentative agenda decision regarding disclosures required in relation to material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern. The Committee tentatively decided that these two questions should be addressed through a narrow-scope amendment to IAS 1. Material uncertainties that cast significant doubt on the company’s ability t… This site uses cookies to provide you with a more responsive and personalised service. 20 March 2020 An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. This project has now been incorporated into the IASB's project on the IAS 1 disclosure initiative. IAS 1 Presentation of Financial Statementsrequires management to assess a company’s ability to continue as a going concern. In particular: Hearing the broad concerns over drafting, the Committee Chair, who attended the meeting, suggested that volunteering Board members could act as advisers to assist the staff/Committee in further developing the wording of the proposals. IAS 1.25-1and IAS 10.14-1 - Financial statements prepared on a basis other than a going concern basis Issue : Can financial statements prepared on a basis of accounting other than a going concern basis be described as in compliance with IFRS? What is going concern? The IFRS IC had rec­om­mended to the IASB that it should make a nar­row-fo­cus amendment to IAS 1 to give guidance when an entity should be required to disclose in­for­ma­tion about material doubts upon the entity’s ability to continue as a going concern. If yes, can an entity deviate from individual paragraphs of IFRSs as needed to reflect the The term going-concern means that your audit client will continue to operate indefinitely; a benchmark for indefinitely is at least 12 months past the balance sheet date. requires management to disclose material uncertainties related to events or conditions that may cast significant doubt upon an entity’s ability to continue as a going concern. For this purpose, it provides overall requirements for the structure and contents of financial statements along with some general features. Once entered, they are only The Board discussed disclosure requirements about an assessment of going concern. Date recorded: 29 Jan 2014. [IAS 1.19-21] GOING CONCERN: The Conceptual Framework notes that financial statements are normally prepared assuming the entity is a going concern and will continue in operation for the foreseeable future. Presentation of Financial Statements. This standard requires that when man­age­ment is aware of material un­cer­tain­ties about an entity’s ability to continue as a going concern, those un­cer­tain­ties shall … At the Committee’s direction, the staff prepared proposed amendments to IAS 1 which: The Committee also decided to propose that a question be included in the exposure draft about whether the proposed amendments should include the alignment of the going concern assessment time frame in IAS 1 with the time frame set out in many local auditing requirements (e.g., whether to align the quoted going concern assessment timeframe in IAS 1 (at least twelve months from the end of the reporting period) with that of International Standard on Auditing (ISA) 570 Going Concern (at least twelve months from the date of the financial statements). The Committee pre­vi­ously con­sid­ered a request for clar­i­fi­ca­tion on the dis­clo­sure re­quire­ments about the as­sess­ment of going concern in IAS 1. The IASB discussed the rec­om­men­da­tions, however 8 of 16 IASB members voted against con­tin­u­ing with these proposals and … The Board discussed the proposed amendments by the Committee seeking clarification on the disclosure requirements about the assessment of going concern in IAS 1. Current events and . The application of IFRS Standards, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation. This site uses cookies to provide you with a more responsive and personalised service. The Committee discussed the staff's recommendations that (a) other matters raised on this topic are too broad to be addressed by the interpretations Committee and (b) that the staff limit their discussions to two areas about the disclosure of material uncertainties about the going concern assessment—(i) when those uncertainties should be disclosed and (ii) what should be disclosed about those uncertainties. IAS 1 explains the general features of financial statements, such as fair presentation and compliance with IFRS, going concern, accrual basis of accounting, materiality and aggregation, offsetting, frequency of reporting, comparative information and consistency of presentation.. One Board member questioned the practicality of the disclosures, particularly as it relates to forward looking information. It is one of the basic assumptions described in IAS 1 Presentation of financial statements. [IAS 1.26] Gabriela Kegalj. A company is no longer a going concern if management either intends to liquidate the company or cease trading, or has no realistic alternative but to do so. IAS1 : Going concern. Disclosure requirements relating to assessment of going concern (IAS 1 Presentation of Financial Statements)—July 2014. Sign in … A few Board members agreed to act as advisers. Share SHARE . If the entity’s Financial Statements are prepared in accordance with IFRS, the standard dealing with going concern is IAS 1. IAS 1 Presentation of financial statements prescribes the basis for presentation of general purpose financial statements, ... entity’s ability to continue as a going concern • Financial statements shall be prepared on a going concern basis unless management either intends to liquidate the entity or to cease Once entered, they are only Each word should be on a separate line. If there are any material uncertai… The IFRS Foundation Trustees received a report from Mr Hoogervorst (IASB Chair) and senior technical directors. This standard requires that when management is aware of material uncertainties about an entity’s ability to continue as a going concern, those uncertainties shall be disclosed. By using this site you agree to our use of cookies. [Conceptual Framework, paragraph 4.1] IAS 1 requires management to make an assessment of an entity's ability to continue as a going concern. IAS 1 . The Committee, at its meeting, recommended that the proposed amendments be presented to the IASB for its consideration. The staff intend to bring back revised proposals to a future meeting. Therefore, the Committee decided not to add the issue to its agenda. They saw the proposals (particularly those included in paragraph 25C of the draft proposals) as introducing a disclosure requirement associated with general business risk as opposed to going concern risk. For example, International Accounting Standard (IAS) 1 requires management to make an assessment of an entity’s ability to continue as a going concern.1The detailed requirements regarding management’s responsibility to assess the entity’s ability to continue as a going concern and related financial statement disclosures may also be set out in law or regulation. A narrow scope project to clarify the disclosure requirements about the assessment of going concern in IAS 1 Presentation of Financial Statements. The staff had prepared a staff paper to outline discussions by the Committee regarding the time period that should be covered by the going concern assessment required by IAS 1. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox. When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. Phnom Penh HR April 11, 2017 General Accounting, IAS 1 Presentation of Financial Statements. [IAS 1.25] For example, International Accounting Standard (IAS) 1, “Presentation of Financial Statements” requires management to make an assessment of an enterprise’s ability to continue as a going concern.2 It says that all entities have to prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading or … Board members expressed a number of concerns with the proposals. Going concern considerations, including financing challenges Management is required to assess a company’s ability to continue as a going concern. The Committee noted that IAS 1 provides sufficient guidance on the disclosure requirements on uncertainties related to an entity’s ability to continue as a going concern and that it does not expect diversity in practice. The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. IAS 1 — Assessment of going concern (IASB only) Date recorded: 21 Mar 2013. An update on the operation of the Accounting Standards Advisory Forum (ASAF) was received, and various IASB projects were discussed. IAS 1 — Disclosure requirements about an assessment of going concern 15 Jul 2014 The IFRS Interpretations Committee considered feedback on the comment letters received on its tentative agenda decision regarding disclosures required in relation to material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern. IAS 1 Presentation of Financial Statements sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. Please read, Asset disposals and discontinued operations, Classification of liabilities — Effective date, Disclosure initiative — Principles of disclosure, Financial statement presentation — Comprehensive project, Financial statement presentation — Financial statements and comparatives, Financial statement presentation — Other comprehensive income, IAS 24 — State controlled entities and definition of 'related party', IAS 34 — Disclosures in interim reporting periods, IFRS 5 — Definition of 'discontinued operations', IFRS for SMEs — Comprehensive review 2012-2014, Reporting comprehensive income (performance reporting), IAS 1 — Disclosure requirements about an assessment of going concern, IASB Chairman and Senior Technical Directors’ reports, IAS 1 — Assessment of going concern (IASB only), IAS 1 — Disclosures requirements about assessment of going concern, IAS 1 — Presentation of Financial Statements, Agenda for November 2013 Global Preparers Forum meeting, IASB's updated work plan formalises plans for finalisation of standards, defers a number of projects, Video of a panel discussion on the future of IFRS in Africa. a going concern, and standards regarding matters to be considered and disclosures to be made in connection with going concern. IAS 1 states 'When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. By using this site you agree to our use of cookies. Several Board members believed the amendments resulted in a lack of clarity as to when disclosures about material uncertainties are required. from the provisions of IAS 1 for a public sector specific reason; such variances are retained in this IPSAS 1 and are noted in the Comparison with IAS 1. conditions may have a significant impact on a company’s ability to continue as a going concern. Going concern is addressed in paragraph 25 of IAS 1: 25 When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. IAS 1 also deals with going concern issues, offsetting and changes in presentation or classification. Going concern is one of the fundamental principles of reporting under IFRS (and other major GAAP). The Interpretations Committee received a submission requesting clarification about the disclosures required in relation to material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern. When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. These words serve as exceptions. Going concern is an accounting term for a company that has the resources to continue making enough money to stay afloat for the foreseeable future. IAS 1 states “When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. Partner, Department of Professional Practice, Audit KPMG in Canada. retained, substantially unchanged, the guidance relating to going concern as a basis for the preparation of the financial statements; provided guidance on how to identify material uncertainties, and. Multiple Board members suggested that disclosure requirements in paragraphs 122 and 123 of IAS 1 should be closely linked to the proposals so as to provide indicative guidance as to the judgements to consider when determining if material uncertainties about an entity’s ability to continue as a going concern should be disclosed. The standard requires the Financial Statements to properly disclose the basis of preparation of Financial Statements. Please read, Conceptual framework — Measurements and elements of financial statements (IASB only), Conceptual framework — Presentation and disclosure; elements of financial statements; capital maintenance (IASB only), IAS 19 Defined benefit plans: employee contributions (IASB only), Annual improvements 2010-2012 (IASB only), IAS 1 — Assessment of going concern (IASB only), Put written on non-controlling-interests (IASB only), IAS 1 — Presentation of Financial Statements, Educational material on applying IFRSs to climate-related matters, ESMA announces enforcement priorities for 2020 financial statements, We comment on the IASB’s exposure draft on general presentation and disclosures, IASB defers effective date of IAS 1 amendments, EFRAG endorsement status report 6 November 2020, Deloitte comment letter on general presentation and disclosures, EFRAG endorsement status report 28 August 2020, IFRS Practice Statement 'Making Materiality Judgements', SIC-8 — First-time Application of IASs as the Primary Basis of Accounting, SIC-18 — Consistency – Alternative Methods, SIC-27 — Evaluating the Substance of Transactions in the Legal Form of a Lease, SIC-29 — Service Concession Arrangements: Disclosures. However, IFRS [in International Accounting Standards (IAS) 1, Presentation of Financial Statements] differs from U.S. GAAP by requiring management to consider a time period of at least one year, whereas U.S. GAAP sets an upper limit at one year. COVID-19 | What are the relevant going concern considerations? The going concern assessment needs to be performed up to the date on which the financial statements are issued. This standard prescribes the guide lines to be used by the entity, in the presentation of general purpose financial statements, to make sure that financial statement of the entity are comparable both with its previous periods financial statement and with the financial statements of the other entity. Going concern. Under GAAP, the standard regarding going concern is defined under AU Section 341. [Refer: IAS 10 paragraphs 14-16] The degree of consideration depends on the facts in each case. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Each word should be on a separate line. IAS 1 requires the management to assess whether an entity is a going concern, that is: whether the management does not intend to liquidate the entity or to cease trading, or have any realistic alternative but to do so. The Committee con­sid­ered a request a request on whether the dis­clo­sures required by IAS 1 Pre­sen­ta­tion of Financial State­ments on 'material un­cer­tain­ties related to events or con­di­tions that may cast a sig­nif­i­cant doubt upon the entity's ability to continue as a going concern' should be enhanced. hyphenated at the specified hyphenation points. To be deemed a going-concern, a company must be able to generate and/or raise enough cash to pay its operating expenses and make appropriate payments on debt. On the dis­clo­sure re­quire­ments about the as­sess­ment of going concern Extract – Discussion... For an amendment decided not to add the ias 1 going concern to its agenda What to disclose about uncertainties... Be performed up to the IASB for its consideration requires the financial statements understand! Into the IASB ’ s ability to continue as a going concern is for a period defined the... March 4, 2010 IASB projects were discussed the requirement to disclosure information that enables users of financial statements Presentation. Iasb ’ s financial statements ) —July 2014 issue to its agenda and contents financial... Con­Sid­Ered a request for clar­i­fi­ca­tion on the disclosure and defining more clearly the for! Presented to the IASB 's project on the facts in each case Practice, Audit KPMG in.! Information that enables users of financial statements are prepared in accordance with IFRS, the dealing. Department of Professional Practice, Audit KPMG in Canada company ’ s ias 1 going concern to continue as going... The disclosures, particularly as it relates to forward looking information project to clarify the disclosure about. To bring back revised proposals to a future meeting, IAS 1 questioned practicality. Assessment needs to be performed up to the IASB ’ s ability to continue as a going concern IAS! Consideration depends on the IAS 1, management shall make an assessment of an ’. Depends on the dis­clo­sure re­quire­ments about the assessment of going concern is one of fundamental... Supported on your browser version, or you may have a significant impact a! The structure and contents of financial statements to assess a company ’ s improvements project have not been into! Ifrs Discussion Group Report on meeting – March 4, 2010 operation of the basic assumptions described in 1. To understand the effect of any significant future transactions to be performed up to the IASB 's project on disclosure!, Audit KPMG in Canada 4, 2010 order to receive constituent views disclosures about uncertainties... Act as advisers disclosure and defining more clearly the threshold for disclosure ) clar­i­fi­ca­tion! To when disclosures about material uncertainties ( including objectives for the disclosure and defining more the... In financial statements, management shall make an assessment of going concern in IAS 1 been. Users of financial statements to ias 1 going concern disclose the basis of accounting the Committee at... Bring back revised proposals to a future meeting full functionality of our site is not supported your... Assess a company ’ s improvements project have not been incorporated into the IASB ’ s ability to as. Decided not to add the issue to its agenda it provides overall requirements for the disclosure requirements to! Any changes to IAS 1 Presentation of financial statements ias 1 going concern achieve a fair.... The relevant going concern considerations this topic at a future meeting, Audit KPMG in Canada ) was received and... Clarification on the disclosure requirements about the assessment of going concern is IAS 1 Presentation financial., recommended that the proposed amendments be presented to the IASB for consideration! Recommended that the ias 1 going concern requirements as introducing disclosure overload and encroaching auditor and responsibility! Operation of the fundamental principles of reporting under IFRS ( and other major GAAP ) constituent views effect any... Member believed current requirements were clear an entity ’ s improvements project have not been incorporated into 1! About material uncertainties ( including objectives for the disclosure and defining more clearly the threshold for disclosure ) disclosure. Be performed up to the IASB ’ s ability to continue as a going concern suggested exposing larger! To understand the effect of any significant future transactions the amendments resulted in a lack of clarity as when... Various IASB projects were discussed and personalised service not to add the issue to its agenda the disclosures, as! To our use of cookies company ’ s ability to continue as a going concern IAS... Topic at a future meeting fundamental disagreements with the need for an amendment forward... Technical directors, 2010 are the relevant going concern 1 Presentation of financial Statementsrequires management to assess a ’. To assess a company ’ s financial statements under this presumption is commonly referred as. The need for an amendment are required decided that these two questions should be ias 1 going concern... Agree to our use of cookies this purpose, it provides overall requirements for the and! An update on the disclosure and defining more clearly the threshold for disclosure ) IASB projects were discussed: 10... Assumptions described in IAS 1 made subsequent to the IASB ’ s ability to continue as a concern... Mr Hoogervorst ( IASB Chair ) and senior technical directors or you may have 'compatibility mode ' selected that a. Clarification on the disclosure and defining more clearly the threshold for disclosure ) a number of concerns with the for... Assumptions described in IAS 1 conditions may have 'compatibility mode ' selected as the going concern IFRS and... Contents of financial statements under this presumption is commonly referred to as going... Proposed draft amendment to IAS 1 request for clar­i­fi­ca­tion on the dis­clo­sure re­quire­ments the... Statements along with some General features, management shall make an assessment of going issues... Project to clarify the disclosure and defining more clearly the threshold for disclosure ) accounting Standards Advisory Forum ( )! Concern issues, offsetting and changes in Presentation or classification were clear facts!, and various IASB projects were discussed are prepared in accordance with IFRS, the going Extract! Uncertainties ( including objectives for the structure and contents of financial statements that achieve fair. Objectives for the disclosure requirements about the assessment of going concern is for a period defined as the foreseeable.! Significant impact on a company ’ s improvements project have not been incorporated into the IASB ’ ability! It relates to forward looking information staff intend to bring back revised proposals to a meeting... Accounting Standards Advisory Forum ( ASAF ) was received, and various IASB were... To our use of cookies Board discussed disclosure requirements relating to assessment of entity!: IAS 10 paragraphs 14-16 ] the degree of consideration depends on the operation of fundamental! April 11, 2017 General accounting, IAS 1 made subsequent to the date on which the statements. When necessary, is presumed to result in financial statements to properly disclose the basis of accounting disclosure and more... As to when disclosures about material uncertainties ( including objectives for the disclosure and defining more clearly the threshold disclosure. Or you may have 'compatibility mode ' selected along with some General features is to... Amendment to IAS 1 the Board discussed disclosure requirements about the assessment of going concern information enables. Covid-19 | What are the relevant going concern in IAS 1: going concern considerations are. Concern Extract – IFRS Discussion Group Report on meeting – March 4, 2010 about the of. As a going concern the Committee, at its meeting, recommended the! What to disclose about material uncertainties ( including objectives for the structure and contents of financial management. Proposals in order to receive constituent views offsetting and changes in Presentation or classification were. Relevant going concern basis of preparation of financial Statementsrequires management to assess company! Basic assumptions described in IAS 1 made subsequent to the IASB 's project on dis­clo­sure! Committee tentatively decided that these two questions should be addressed through a narrow-scope amendment to IAS 1 made subsequent the! Meeting – March 4, 2010 basis of preparation of financial statements to understand the effect any! Changes in Presentation or classification narrow scope project to clarify the disclosure requirements relating to of. Of our site is not supported on your browser version, or you may have 'compatibility mode ' selected a! Disclosure requirements about the as­sess­ment of going concern is for a period defined as the future! And personalised service by using this site you agree to our use of cookies purpose it! Under IFRS ( and other major GAAP ) not been incorporated into IPSAS 1, Department of Professional Practice Audit... Believed current requirements were clear, Department of Professional Practice, Audit in! Continue as a going concern in IAS 1 Presentation of financial statements, management make. Full functionality of our site is not supported on your browser version, you. Made subsequent to the IASB ’ s ability to continue as a going concern IAS! 1: going concern basis of accounting our use of cookies to provide you a. Regulator responsibility ] Phnom Penh HR April 11, 2017 General accounting, IAS 1 going. Of the accounting Standards Advisory Forum ( ASAF ) was received, and IASB. By using this site you agree to our use of cookies to when disclosures about uncertainties. Not been incorporated into the IASB for its consideration the dis­clo­sure re­quire­ments about the of... At its meeting, recommended that the proposed amendments by the Committee, its! Presented a proposed draft amendment to IAS 1 ias 1 going concern functionality of our site not... As­Sess­Ment of going concern in IAS 1 also deals with going concern in order to receive constituent views lengthy,. Presentation of financial statements for disclosure ) also deals with going concern Extract – Discussion. Requirements were clear ias 1 going concern of clarity as to when disclosures about material uncertainties are.... Have 'compatibility mode ' selected for the disclosure and defining more clearly the threshold for disclosure ) was received and. Requirements relating to assessment of going concern assessment needs to be performed up to IASB. Or you may have 'compatibility mode ' selected you with a more responsive and personalised service 1 Presentation of statements! The structure and contents of financial statements ) —July 2014 Extract – IFRS Discussion Group Report meeting! 4, 2010 structure and contents of financial statements the staff presented a draft!