AASB research into going concern disclosures

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21 Oct 2021

The Staff of the Australian Accounting Standards Board (AASB) has published 'Going Concern Disclosures: A Case for International Standard-Setting'.

The paper analyses feedback received from a range of Australian and international stakeholders over the period of July 2020 – March 2021, including financial statement preparers, auditors, regulators and users. The question asked was whether the current going concern reporting requirements in IAS 1 Presentation of Financial Statements are sufficient in their current form or whether it is a matter that needs to be addressed by the IASB.

In relation to the adequacy of current going concern disclosures, feedback indicated that there are issues surrounding inconsistency and inappropriate interpretation of the current requirements. Additionally, concerns were raised around the diversity in practice regarding the information disclosed in circumstances when the financial statements are prepared on a going concern basis, but management is aware of events or conditions that may cast significant doubt on this judgement. Respondents also suggested that the development of guidance would be useful to ensure consistency and comparability of financial statements when the entity is no longer a going concern.

Overall, based on the findings presented, the paper recommends that the IASB revisit IAS 1 to develop specific examples and guidance for preparers on how to assess and disclose going concern matters. The authors also recommend that the IASB initiate a research project to better understand the extent of underlying considerations regarding the preparation of financial statements on a non-going concern basis.

Please click to access the full paper on the AASB website.

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