Going concern

Going concern is the fundamental assumption that an organization will remain in operation for the foreseeable future, typically defined as at least twelve months from the balance sheet date. It assumes the entity has neither the intention nor the necessity to liquidate its assets or cease trading.

In practice

Auditors evaluate management's cash flow forecasts and debt obligations to determine if there is substantial doubt about the company's ability to survive. If a significant risk of failure exists, the auditor must require a specific disclosure in the financial statements or issue a modified audit opinion.