Accountants like multiplying and diversifying their accounting terms, no doubt to make life complicated for users and accountants themselves. This makes accounting opaque and more scientific as evidenced by the way the two accounting standard boards write their standards. The IFRS exceed all expectations in IFRS 11 where they invent six accounting terms with similar…
As you can see, going concern is complicated and depends on judgement: judgement about the future, about whether the company can meet its obligations. And this judgement centres on doubt. To stay consistent with their prior behaviour, the two accounting bodies use different adjectives to describe the doubt in question. In IFRS it is ‘significant…
The ICAEW (Institute of Chartered Accountants in England and Wales) go out of their way not to call going concern anything. And they succeed most of the time. For instance they get around it by using this trick: “Accounts are usually prepared on the basis that the business is a ‘going concern’.” [1] This way…
A basis or a focus However others go right in and announce that going concern is a basis: “An entity prepares financial statements on a going concern basis…” [1] End of discussion, clear and emphatic. But it is the IFRS that uses going concern as a basis the most. In one of their explications they…