Going Concern

AUD tests this as a chain of decisions: first identify conditions and events (recurring losses, negative working capital, loan default, denial of trade credit) raising substantial doubt, then weigh management’s plans to judge whether the doubt is alleviated. The “tell” is the look-forward window—under current US GAAP it runs one year from the date the statements are issued (or available to be issued), set by the applicable framework, not the balance-sheet date (older banks still teach the legacy “one year past the balance-sheet date”). If doubt remains but disclosure is adequate, add the dedicated “Substantial Doubt About the Entity’s Ability to Continue as a Going Concern” section even though the opinion stays unmodified.

The classic trap is confusing this with subsequent events: going-concern conditions often arise from post–year-end events, but they trigger a report section, not the recognized/nonrecognized split. Likewise, doubt alone never forces a qualified or adverse opinion—inadequate disclosure does, and refusal to disclose management’s plans (a pervasive scope limitation) points toward a disclaimer. Remember: doubt disclosed correctly = clean opinion plus a separate section.