Auditor’s Responsibility for Assessing Going Concern

In auditing, going concern is identified as an entity’s capability to continue operating as a business entity. It is the auditor’s responsibility to evaluate the company’s financial statements to assess whether or not the going concern assumption is appropriate. An entity is obligated to include a disclosure in the footnotes of the financial statement stating if there is substantial doubt of the company to continue as a going concern.
According to the Public Company Accounting Oversight Board, AU 341 describes the requirements for the auditor’s evaluation of an entity’s going concern. This standard states that an auditor’s responsibility is to evaluate if there is substantial doubt about an entity’s capability to carry on as a going concern for the next year. The period of substantial doubt is not to exceed twelve months. This evaluation is based upon any evidence that he or she has accumulated during the normal course of the audit. If there is substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time not to exceed one year, the auditor should review management’s plan to remedy the problems. If the substantial doubt goes unresolved, the auditor should add an explanatory paragraph to the audit report.
In the event that an auditor receives a request to reissue his or her evaluation of going concern and remove the explanatory paragraph, one can refer to the PCAOB’s AU Section 9341 for the interpretations of AU 341. These inquiries usually arise when the circumstances that caused substantial doubt for the company’s ability to continue as a going concern have been solved. AU 9341 interprets Section 341 by stating that the auditor is not indebted to reissue the report just because of the request. If the auditor does decide to release a new report, he or she must fulfill certain requirements in order to decide if a new report should be reissued minus the explanatory paragraph that was present in the original report. Because of recent financial disasters, the PCAOB has considered making amendments to the current going concern standard. The Board proposes that a new standard of going concern offers supplementary reasoning for the important details involving the auditor’s evaluation of going concern. The Board also suggests that the new standard improve the auditor’s responsibilities, as well as advance the reporting of the auditor’s findings regarding the evaluation of going concern. Other proposed changes made to the going concern requirements in accordance with IFRS, state that in an auditor’s evaluation of going concern, the substantial doubt should be able to exceed the twelve-month limit. The auditor should take into consideration information about the future that would require them to look beyond the twelve-month limit. International views on going concern are expressed in ISA 570. This standard isignificantly contrasts to AU 341. Instead of the auditor making his or her own assessment about an entity’s ability to continue as a going concern, he or she is required to evaluate management’s going concern assessment. The auditor’s evaluation will be for the same time period as that of managements. If the time period is less than the required twelve months, the auditor must request that management extend the time period to be at least twelve months. If management inappropriately prepares financial statements under the going concern assumption, the auditor should issue an adverse opinion in the auditor’s report. The objective of this paper is to consider the current and proposed standards of evaluating an entity’s going concern, identify who supports and does not support the proposed changes, and to compare and contrast these with international standards.
Economist, John R. Commons, traced the first documented term of “going concern” back to 1620. Over time the term "going concern" has been used in books, court cases, accounting regulation and standards. The definition of going concern has evolved into its current meaning through the help of people such as Commons and other professionals and scholars.
The term "going concern" was first used in 1620 in a lawsuit in which the value of assets was in dispute. The term's definition gained recognition by the efforts of Chief Justice John Marshall and Sir Edward Coke in the court case, Joliffe v. Brode. Marshall and Coke defined going concern as the intangible and tangible qualities of a corporation. They related these intangible qualities back to the charter of a corporation and the articles of incorporation, which were viewed as the promises that the company makes indicating how the management of the company will act with regard to the company, its employees, and people who rely on the decisions of the company. The tangible qualities relate to the actual people that comprise management upholding the behaviors they promised in the articles of incorporation. These intangible and tangible qualities came to be known as a going concern. In the court case, Joliffe v. Brode, the court decided that the value of going concern was greater than the book value of the asset because the asset could be used to generate excess income through future operations.
In 1892 Lawrence R. Dicksee provided the first published description and rationale for the term going concern in his book, Auditing: A Practical Manual for Auditors. Dicksee came to a conclusion on going concern by looking at the life of the owner of a proprietorship or the founder of a company. He stated the obvious fact that businesses may, and commonly do, live and continue with business long after its founder or owner has passed away. When the original owner or founder does finally pass away, it requires the business to revalue its assets and Dicksee refers to this valuation as a "going concern".
In 1909 Henry Rand Hatfield published Modern Accounting: It's Principles and Some of It's Problems that included a discussion on the going concern assumption. A few years later, in 1927, Hatfield published another book, Accounting: It's Principles and Problems, that distinguished going concern as being generally accepted. He referred to the company as the "going concern" and states that the expenses involved in organizing a going concern, or company, are just as much considered assets of the going concern as real estate, machinery, or the stock in the trade. His notion of going concern being "generally accepted" state that the generally accepted rule is that assets should be valued and shown on the financial statements at their value to the "going concern".
In 1953, the Committee on Accounting Procedure (CAP), a branch of the American Institute of Accountants, published Accounting Research Bulletin (ARB) 43, Restatement and Revision of Accounting Research Bulletins. The bulletin included a short discussion on the going concern assumption in Chapter 3, Section A, "Current Assets and Current Liabilities". Chapter 3 of ARB 43 assumes that the financial statements of a "going concern" are prepared with the idea that the company will continue business into the future. This assumption also assumes that the business conducted in the future will extend beyond one year. It relates the current assets and liabilities to the definition of going concern because when looking at the financial statements of a company and deciding whether they will continue in business, ARB 43 looks at the debtor's ability to pay their obligations from the proceeds of current assets and not whether they will be able to pay the obligations if the company is forced to liquidate. ARB 43 was the first piece of literature that gave a definition and explanation of the going concern assumption that was written by a group of accountants and not just a publication by scholarly individuals.
The Financial Accounting Standards Board (FASB) issued Statements on Financial Concepts (SFAC) number 1 that defines the going concern assumption in footnote 10 of paragraph 42. The statement was released in 1978. Paragraph 42 echoes the thoughts of the CAP by stating "investors and creditors ordinarily invest in or lend to enterprises that they expect to continue in operation - an expectation that is familiar to accountants as the "going concern" assumption". This definition is very similar to the one we saw included in ARB 43 in the 1950s. These two pieces of literature look at the business in the long run when determining whether it will continue for a substantial amount of time.
FASB's SFAC 1 was followed in 1989 by Statements on Auditing Standards 59, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern. This was the first standards that placed the decision of an entity's ability to continue as a going concern in the hands of the auditor. Paragraph 2 states "The auditor has a responsibility to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, not to exceed one year beyond the date of the financial statements being audited". SAS 59 was later combined with AU section 341, which is where auditors and accountants receive the most recent explanation of going concern and its relationship to the auditor.
Now looking to the most recent standards published, within the last five years, we see FASB's Statement on Financial Accounting Standards, Going Concern in 2008 and the exposure draft on the standard issued by FASB in 2011. The exposure draft issued shortly after the standard is an effort by the FASB to create a standard that is similar to the international standard on going concern. The international standard and the exposure draft issued by FASB require the auditor to make an assessment, based on management's findings and preparation of the financial statements, to decide whether they will in fact continue in the future and the financial statements accurately show that, or if they do not management and the auditor need to fix them.
Over time we see the definition and explanation of going concern evolve into what we know today. It seems that from the 1600s up until now, all professionals, scholars, and accountants believe that the value of going concern is more important than the value of any one individual asset. It has also become more important to the profession in that it used to not be required at all, it was just a mere thought in the company's mind, but now we devote a single individual to assessing an entity's ability to continue as a going concern.
ISA 570
ISA 570 deals with the auditor’s responsibilities in the audit of financial statements relating to management’s use of the going concern assumption in the preparation of the financial statements. Some financial reporting frameworks have an explicit requirement that says that the management of an entity is required to make an assessment of an entity’s ability to continue as a going concern (IAS 1). Even if there is no explicit requirement in other financial reporting frameworks, the preparation of the financial statements requires management to assess the entity’s ability to continue as a going concern. Therefore, management must assess the entity’s ability to continue as a going concern whether or not there is an explicit requirement.
Management’s assessment includes making a judgment at a certain point in time about uncertain future outcomes of events or conditions. Several factor influence that judgment: (1) the degree of uncertainty associated with the outcome of an event or condition increases significantly the further into the future an event or condition or the outcome occurs, (2) the size and complexity of the entity, the nature and conditions of its business, and the degree to which it is affected by external factors, and (3) any judgment about the future is based on information that is available at the time the judgment is made. The auditor must obtain sufficient appropriate audit evidence about the appropriateness of management’s use of the going concern assumption in the preparation of the financial statements and to conclude whether there is a material uncertainty about the entity’s ability to continue as a going concern. According to ISA 200, the auditor is not able to predict future events or conditions. Also, it says that the potential effects of inherent limitations on the auditor’s ability to detect material misstatements are greater for future events that could cause an entity to stop to continue as a going concern. The auditor must also determine any implications for the auditor’s report. When an auditor is performing risk assessment procedures, he/she must consider whether there are events or conditions that may cast significant doubt on whether an entity will be able to continue as a going concern. During this time, the auditor needs to figure out whether or not the management has performed a preliminary assessment of the ability to continue as a going concern. IF management has done the assessment, the auditor should discuss with management and determine if management has identified any events that may cause significant doubt of the ability to continue as a going concern. If management has not performed the assessment, the auditor needs to discuss with management the basis of the intended use of the going concern assumption and ask management about any possible events that may occur in the near future that would inhibit the entity’s going concern. Throughout the audit, the auditor should remain alert for possible events that may cause doubt on an entity’s going concern ability.
Evaluating Management’s Assessment The auditor should evaluate management’s assessment of the entity’s ability to continue as a going concern. When evaluating their assessment, the auditor must cover the same time period used by management. If the time period used by management to make their assessment is less than twelve months from the date of the financial statements (ISA 560), the auditor will request management to extend their assessment period to at least twelve months from that date. While reviewing their assessment, the auditor needs to know about any subsequent events or conditions that the management may know about. If there are events that would harm an entity’s ability to continue as a going concern, the auditor will need to gather more audit evidence and perform more analytical procedures. The auditor should review management’s plans on how they will overcome these events. For example, an auditor could analyze the reliability of the underlying data of a cash flow forecast and determine whether there is adequate support for the assumptions underlying this forecast. Auditors need to consider whether any additional information has become available since the date of management’s assessment. Finally, the auditor could request written representations from management and those charged with governance, regarding their plans for future action and whether these plans are feasible.
Audit Conclusions and Reporting Based on the audit evidence obtained, the auditor should conclude whether, in their judgment, a material uncertainty exists related to events that, individually or in the aggregate, may cast significant doubt on the entity’s ability to continue as a going concern. A material uncertainty occurs when the magnitude of it possible impact and likelihood of occurring is such that it needs to be appropriately disclosed in the financial statements. The disclosure should discuss the nature and implications of the material uncertainty. If the auditor concludes that the use of the going concern assumption is appropriate in the circumstances but a material uncertainty exists, the auditor should determine whether the financial statements adequately describe those events and that they clearly disclose that there is a material uncertainty related to those events. If adequate disclosure is made in the financial statements, the auditor should express an unmodified opinion and include an emphasis of matter paragraph in the auditors report to highlight the existence of the material uncertainty and draw attention to the note in the financial statements that discloses the matter. If adequate disclosure is not made in the financial statements, the auditor should either express a qualified opinion or adverse opinion. In the auditor’s report, the auditor must state that there is a material uncertainty that may cast significant doubt on an entity’s ability to continue as a going concern. If the financial statements have been prepared on a going concern basis but, according to the auditor’s judgment, management’s use of the going concern assumption was inappropriate, the auditor must assess an adverse opinion. If management is unwilling to make or extend its assessment, the auditor may issue a qualified opinion or a disclaimer because it may not be possible for the auditor to obtain sufficient appropriate audit evidence regarding the use of the going concern assumption in the preparation of the financial statements.
Differences between ISA 570 and AU 341 The main difference between these two standards lies with who must make the assessment of the ability of the entity to continue as a going concern. Under ISA 570, the management must make this assessment and the auditor must review their assessment. However, under AU 341, the auditor must make the assessment of going concern. The auditor considers whether the results of his procedures performed in planning, gathering the appropriate evidence, and completing the audit identify conditions and events that, when considered in the aggregate, indicate that there could be substantial doubt about the entity’s ability to continue as a going concern.
Another difference occurs between ISA 570 and AU 341 when defining a “reasonable period of time” for an entity to continue as a going concern. Under ISA 570, the auditor’s evaluation will cover the same time period as management’s assessment covers. If that period is less than twelve months, the auditor must ask management to extend the period. Under AU 341, the auditor currently determines whether there is substantial doubt about a client’s ability to continue as a going concern over a time period not to exceed twelve months.
A third difference between the standards arises due to the amount of guidance provided by the standard. AU 341 is rules-based and provides the auditor with guidance on how to perform the audit. Conversely, ISA 570 is principles-based and provides the auditor with little guidance regarding how to evaluate management’s assessment. Finally, differences occur between the standards on what type of opinion should be expressed due to certain conditions.
Proposed Changes The PCAOB and FASB have recognized the need for a change in the current going concern standards. The standard-setters in each organization have been considering the opinions of different constituencies and how the new regulations will affect investors and the accounting profession. The PCAOB specifically has been working toward listening to its two advisory boards, the Standing Advisory Group and Investor Advisory Group, to update and approve revisions to its going concern standards. The PCAOB has also been monitoring FASB’s risks and uncertainties project (former going concern project). Any changes that the PCAOB makes, it will definitely take into consideration new accounting requirements made by the FASB. According to the PCAOB website, the Investor Advisory Group (IAG) is a group under the PCAOB that provides views and advice to the Board on broad policy issues, and other matters that affect investors and are related to the work of the PCAOB. The Board relies on the advice of the IAG for insight on how to fulfill its mission to protect investors. On March 28, 2012 the Investor Sub Advisory Group put going concern on the top of their agenda plan. The IAG then issued its going concern considerations and recommendations. The IAG first questions the definition of going concern in the generally accepted auditing standards (GAAS). The definition is outlined in International Accounting Standards No. 1 in paragraph 25 and 26 which state:

“25 When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, the entity shall disclose those uncertainties.

26 In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The degree of consideration depends on the facts in each case. When an entity has a history of profitable operations and ready access to financial resources, the entity may reach a conclusion that the going concern basis of accounting is appropriate without detailed analysis. In other cases, management may need to consider a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing before it can satisfy itself that the going concern basis is appropriate.”

GAAS states in AU 508.11 that the going concern report is a report with supplementary additional information. In AU 341 the auditor’s responsibility is to determine if there is substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time, not exceeding 12 months. The auditor bases his evaluation off knowledge of relevant conditions and events that existed prior to the auditor’s report date. The IAG has problems with both of these definitions. First the language “substantial” and “significant” are extremely high expectations with the actual knowledge that can be attained. The language also insinuates that if the company isn’t liquidating or ceasing business then there is a going concern. This means the auditor is less likely to give an advance warning. It also means that management is less likely to give investors early warning disclosures. Changing the language in the definition to a “more likely than not” test is the IAG’s first proposal to improving going concern definition. IAG’s second proposal is they believe the auditor’s assessment should not be limited to just 12 months from the balance sheet date like the current standard is. They believe the auditor should take into consideration available information about the foreseeable future, which is generally, but not limited to 12 months from the end of the reporting period. The IAG stated that, “Certain events that are expected to occur or are reasonably foreseeable beyond 12 months that would materially affect the assessment are considered part of the foreseeable future. The time frame beyond 12 months is limited to a practical amount of time thereafter in which significant events or conditions that may affect the evaluation can be identified.” The IAG thinks the 12 month period would greatly benefit investors and transparency in financial statements and disclosures. The IAG believes that it is both the management team and the independent auditor who should be responsible for disclosing going concern. It is management’s duty to initially make the assessment, but if they are not honest, then it is the auditor’s responsibility to add an explanatory paragraph in the auditor’s report explaining the going concern issue. Currently, GAAS does not require the auditor to give the significant reasons, assumptions, or basis for concluding a company may not be a going concern. IAG believes that GAAS should be more explicit with its explanation and add more significant considerations that went into his or her conclusion that an entity may not continue. IAG also believes that FASB should have better requirements for footnote disclosures than are currently in GAAP. The IAG believes that companies should be required to disclose information regarding their financial flexibility, as was originally proposed during the SOP 94-6 project. As set forth in the SOP 94-6 exposure draft:

“26. Notes to financial statements should include a discussion of management's expected course of action when it is determined that it is at least reasonably possible that the entity will not have the ability over the near term to pay its expected cash outflows without taking certain actions. Such actions include entering into new credit agreements, modifying or renewing existing credit agreements, and other significant actions.”

To summarize, the IAG believes FASB should change the standard so “reasonably likely” standard triggers a company’s disclosure of an entity’s ability to continue as a going concern. A supplementary paragraph from the independent auditor should then be triggered by the higher threshold of “more likely than not.” Management could then provide investors with red flags regarding risks, before the more serious report was issued by the auditor. The current standard does not set forth the specific objectives of what the standard expects the auditor to achieve; it does not require the auditor to design any part of the audit specifically to look for evidence with respect to going concern. There is also no requirement to represent to the auditor that the entity is a going concern. There is no requirement for the auditor to gain an understanding of, and evidence with respect to, management’s key assumptions with respect to their plans for addressing and mitigating the risks associated with the business that may result in it being more likely than not it will fail. On top of that, there is no requirement for the auditor to conclude as to whether those key assumptions provide a reasonable basis for management’s conclusion that the company is a going concern. The IAG has several ideas of how the current standard should be amended. First the standard should include a statement of basic objectives the board expects auditors to achieve; the auditor should be required to design the audit to obtain sufficient and competent evidence with respect to whether it is more likely that not that the company being audited is a going concern.
And finally, with respect to management's plans for mitigating the likelihood and entity may not longer be a going concern, the auditors should be required to:
a. Gain an understanding of the plan.
b. The auditors should obtain a list of, and understand the key assumptions underlying the plan.
c. The auditors should gain evidence with respect to whether the key assumptions are realistic as well as complete.
d. The auditor should consider whether the key assumptions and data in the plan are consistent throughout the plan.
e. The auditor should consider whether there are any key omissions that would have a material impact on the plan and the ability of the entity to continue as a going concern.
f. The auditor should consider factors specific to the industry, or competitors that may impact management's plan.
g. The auditor should consider past historical trends of the company, such as trends in cash flows and cash cycles, operating costs, revenues, and realization of asset values when assessing management's plan.

The Standing Advisory Group (SAG) had its previous meeting on March 17, 2012. In the meeting the SAG was asked to address the PCAOB’s current going concern standard. SAG member Gaylen Hansen, Director of Accounting and Auditing Quality Assurance, Ehrhardt Keefe Steiner & Hottman, favors a “reasonably possible” standard. He also thinks that the time horizon should also be changed. He does not necessarily think that this time horizon should be more judgmental and not a set in stone timeline. The SAG is looking for earlier warning signs for investors. They think that management’s disclosures in the footnotes could aid investors. The SAG thinks that the focus must be on disclosures around material uncertainties, and auditor opinion on the disclosures. The opinion on going concern is not black and white and shouldn’t be. Current SAG members said that the PCAOB must work with FASB on this issue. It should happen in two stages: first, FASB must determine what it is going to do with company representations and, second, what the PCAOB will determine what the auditor needs to do to be satisfied with management’s representation. The FASB took going concern off its current agenda, but the investors want answers now.
On October 9, 2008, the FASB issued an exposure draft regarding the issue of going concern when preparing financial statements, as well as management’s responsibility to assess going concern. Prior to the issuance of the exposure draft, there was no guidance within GAAP for management to assess going concern. Because of this lack of guidance, the burden of assessing going concern fell mainly upon the auditors. The FASB desired to identify necessary steps that management should take to assess going concern each year, in addition to the auditors’ assessments. The goal of the FASB in issuing the exposure draft was the bring the AICPA’s AU 341 guidance under a new GAAP standard, while also aligning that standard with International Accounting Standard (IAS) 1 in an effort towards convergence of GAAP and IFRS.
In the exposure draft, the FASB stated that the new standard would be worded the same as AU 341, with the exception of three modifications. The first modification that would have been made in the new standard was to change the timeline for which the going concern should be evaluated. In AU 341, auditors are expected to “evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time, not to exceed one year beyond the date of the financial statements being audited” (paragraph .02). When assessing going concern, IAS 1 requires an entity to evaluate “all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period” (paragraph 26). The FASB decided to include in the exposure draft wording similar to IAS 1 regarding the timeline for considering going concern so that there would not be a “bright line time horizon” for when to stop considering events that may affect going concern.
The other two modifications from the AU 341 guidance in order to have the new standard align with IAS 1 were to state that “all available information” should be used when considering an entity’s ability to continue as a going concern, and also to state that it is necessary for an entity to inform users when the financial statements are not prepared on a going concern basis.
After issuing the exposure draft on October 9, 2008, the FASB accepted comment letters until December 8, 2008. According to the FASB’s website, the board received twenty nine letters from CPA firms, State Societies of CPAs, and other groups such as the American Institute of Certified Public Accountants (AICPA), and the Institute of Management Accountants (IMA). The comments within the letters ranged from acceptance of the exposure draft, to vehement opposition of merging AU 341 with IAS 1. KPMG LLP wrote a comment letter, dated December 8, 2008, in which the firm stated that it agreed with the proposed exposure draft and felt that by changing the timeline to “at least, but not limited to, twelve months,” the new standard would help to identify more scenarios where an entity should not be considered a going concern.
While the letter from KPMG LLP depicts a firm that is satisfied with the FASB’s exposure draft regarding going concern, the majority of the comment letters received by the FASB were opposed to the new changes being made with the exposure draft. Most of the opposition to the exposure draft came from parties who felt that by imposing the new timeline for evaluating going concern, the FASB would be allowing for more litigation to be brought against accountants and auditors who may not consider future events that are beyond their understanding at the time when the going concern decision is made. Additionally, opponents of the exposure draft complained that the new timeline was asking for management and auditors to consider the sustainability of an entity over its lifetime, rather than over a specified period of time, which is the basis for assessing an entity as a going concern.
In mid-February of 2009, the FASB board members met to discuss the comment letters received regarding the going concern exposure draft. After deciding to address the concerns regarding the timeline for assessing going concern, the board members directed the staff to write a final statement for the new standard; however, the board members were forced to reconvene on June 3, 2009, after receiving more feedback from parties that were interested in the going concern exposure draft. As a result of the second meeting, the board members decided to increase the scope of the project to include defining the term “substantial doubt” when considering an entity’s ability to continue as a going concern, increasing the requirements for disclosing short and long-term based risks for the entity, and explaining when it is appropriate for an entity to use a liquidation basis of accounting.
From June 2009 through March 2010, the FASB did not issue any other exposure drafts or standards related to the going concern topic. On March 31, 2010, the board members met again to discuss developments to the proposed standard. At this meeting the board decided that it would not define the term “going concern” in its standard, but rather would identify instances where management must make disclosures regarding the reasonable probability that the entity would no longer be able to pay off its debt as it comes due unless it took drastic action, such as disposing of assets, restructuring debt, issuing equity, or changed its operations. In addition, the board decided that the new standard would include information about when and how to use liquidation based accounting, such that if liquidation of an entity is imminent, the financial statements will reflect the amount of cash that the entity expects to receive for its assets or pay out for its liabilities. The board decided to let the staff work on this new information and it would reconvene again in the future.
When the board met in October 2011, it decided again to change the scope and objective for the project. The board concluded that it would not yet decide whether it wanted to issue a new standard proposing that management is responsible for assessing going concern, rather than leaving the evaluation to external auditors. The board felt that there was too much confusion regarding AU 341 of the AICPA and the auditing guidance that was being developed by the PCAOB. With the going concern debate set aside for the time being, the board decided to continue work on the new standards for liquidation accounting.
By January of 2012, the board concluded that it would not require management to assess whether the entity had substantial doubt regarding its ability to continue as a going concern. Rather, the board felt that it would be more useful to users and investors if management concerned itself with making continuous disclosures about the entity’s risks and uncertainties in lieu of simply issuing a doubt about continuing as a going concern. The board then directed the staff to begin developing information to address this topic. Additionally, in February of 2012, the board asked the staff to being drafting a proposed Accounting Standards Update exposure draft with regards to the liquidation basis of accounting rules.