The following are examples of events or conditions that, individually or collectively, may cast significant doubt about the going concern assumption.

This listing is not all-inclusive nor does the existence of one or more of the items always signify that a material uncertainty exists.

Financial

  • Net liability or net current liability position.
  • Fixed-term borrowings approaching maturity without realistic prospects of renewal or repayment.
  • Indications of withdrawal of financial support by creditors.
  • Negative operating cash flows.
  • Adverse key financial ratios.
  • Substantial operating losses.
  • Discontinuance of dividend payments.
  • Inability to pay creditors on due dates.
  • Inability to comply with the terms of loan agreements.
  • Change from credit to cash-on-delivery transactions with suppliers.

OperatingĀ 

  • Management intentions to liquidate the entity.
  • Loss of key management without replacement.
  • Loss of a major market, key customers, franchise, license, or principal suppliers.
  • Labor difficulties.
  • Shortages of important supplies.
  • Emergence of a highly successful competitor.

Other

  • Non-compliance with statutory requirements.
  • Pending legal or regulatory proceedings against the entity leading to legal claims.
  • Changes in law expected to adversely affect the entity.
  • Uninsured or underinsured catastrophes when they occur.