Guidance on the Going Concern Basis of Accounting, Solvency & Liquidity Risks

The Financial Reporting Council (FRC) has issued updated guidance on the Going Concern Basis of Accounting and Related Reporting, with particular emphasis on assessing solvency and liquidity risks. This revised guidance, which replaces the 2016 edition, provides essential support for directors when determining whether the going concern basis is appropriate for preparing financial statements, ensuring businesses can continue to operate in the foreseeable future.

Key Aspects of the Guidance

The guidance covers several important areas, including:

Assessment of Going Concern: Directors are required to assess the appropriateness of using the going concern basis, taking into account material uncertainties related to solvency and liquidity.

Solvency and Liquidity Risks: The guidance offers detailed advice on understanding and managing risks that could affect a company’s ability to continue its operations, particularly in the face of financial uncertainty.

Disclosure Requirements: Clear guidance is provided on how companies should disclose material uncertainties and associated risks in their financial statements.

Updates: Reflecting recent changes in accounting and auditing standards, the updated guidance gives more detailed information on how directors should approach assessments and disclosures, particularly when significant judgement is involved.

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FRC Updates Guidance on Going Concern & Reporting

The FRC’s updated guidance is designed to help companies navigate a complex and evolving reporting landscape, especially given ongoing economic uncertainties such as geopolitical challenges and the effects of the Covid-19 pandemic.

To know more, click the link https://media.frc.org.uk/documents/Guidance_on_the_Going_Concern_Basis_of_Accounting_and_Related_Reporting.pdf

Expert Guidance on Going Concern & Financial Reporting

If you need support with the updated Guidance on the Going Concern Basis of Accounting and Related Reporting, or wish to discuss further, please contact info@actaudit.london or your usual ACT contact.