24 March 2021

IOSCO Statement on Going Concern Assessments and Disclosures during the COVID-19 Pandemic

In light of current uncertainty resulting from the COVID-19 pandemic, we remain fully committed to the development, consistent application and enforcement of high- quality accounting standards which are of critical importance to the proper functioning of the capital markets—especially in times of uncertainty.

IOSCO’s objectives include investor protection, maintaining fair, efficient and transparent markets and seeking to address systemic risks. The application of accounting standards must result in issuers providing clear, relevant and representationally faithful information to allow investors to make informed investment decisions.
The responsibility for developing and maintaining high-quality standards resides with the International Accounting Standards Board (IASB), and we welcome their recent educational material on the topic of going concern disclosures which may be particularly relevant for some companies adversely affected by COVID-19 conditions. In addition to items raised in our previous statements, this topic is likely to be relevant for a larger number of public companies for 2020 and 2021 financial reporting periods in many jurisdictions.

Implications for the preparation of annual financial statements

It is important for investors to receive high-quality information about the existence of material uncertainties that may cast significant doubt on an entity’s ability to continue as a going concern. As discussed in the education material, it is important for entities to clearly identify uncertainties that cast significant doubt on the entity’s ability to continue as a going concern. In addition, when management has determined that material uncertainties do not cast significant doubt on the ability of an entity adversely affected by COVID-19 conditions to continue as a going concern, it is important for investors to receive complete information about the significant judgements that may have been exercised in arriving at management’s determination. This is particularly the case in situations where judgments about the ability of management to execute plans to mitigate the effects of material uncertainties are important to the conclusion that there is not significant doubt about the entity’s ability to continue as a going concern....

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