Going concern warnings were proven inadequate in the 2007-2009 global credit crisis when auditors failed to flag risks at banks that collapsed or required government bailouts.
A company's going concern status underpins every financial statement it prepares, with assets priced based on the assumption that the firm will survive to realize the assets' value. When the company is in danger of failing, its assets have to be re-priced based on what they would be worth in a liquidation.
Even before a company is in imminent danger of liquidation, there may be uncertainties about its going concern status, FASB said in a release. Accounting standards now have no guidance for managers on disclosing those uncertainties. (Reporting By Dena Aubin; Editing by Kim Dixon and David Gregorio)
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