Going concern
Going concern is the assumption that a company will keep operating for the foreseeable future. If there is substantial doubt about that, management must disclose it and the auditor adds a paragraph to the report.
Under US GAAP management looks one year from the date the financial statements are issued. Signs of trouble include recurring losses, loan defaults, loss of a key customer and negative operating cash flow.
Example. A client has defaulted on its bank loan and has no refinancing plan. Unless management's plans remove the doubt, the auditor adds a going concern paragraph.
By Binod Raj Singh, CPA (licensed in Montana) · Updated for the 2026-2027 exam windows · Last updated 2026-11-05