IOSCO emphasized the importance of going concern disclosure by public companies during the COVID-19 pandemic, particularly as it relates to the preparation of annual financial statements and the annual audit. IOSCO welcomed the International Accounting Standards Board's recently published educational material, "Going Concern - A Focus on Disclosure."
On annual financial statements, IOSCO stressed that an entity must identify material uncertainties that cast "significant doubt on the entity's ability to continue as a going concern." For material uncertainties that do not cast significant doubt, IOSCO said that management must disclose "complete information about significant judgements" that led to any executive determination.
With regard to annual audits, IOSCO reminded auditors of their responsibility to report on "Key Audit Matters" that, due to the pandemic, may now include going concern, material uncertainties and significant business judgments. IOSCO stated that if an entity does not adequately disclose material uncertainty, then the auditor should express a "qualified opinion or adverse opinion."
Primary Sources
- IOSCO Press Release: IOSCO Statement on Going Concern Assessments and Disclosures during the COVID-19 Pandemic
- IFRS Report: Going Concern - a Focus on Disclosure
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