This is part two of our blog on Going Concern for SMEs. Last week we highlighted the fact that the ACCA have recently (April 2026) issued a Technical Factsheet to assist small and medium entities and their advisor firms to comply with the requirements of FRS 102. The Factsheet is called ‘Going concern for SMEs’.
The Factsheet provides some examples of going concern scenarios to consider along with a very useful table of with a non-exhaustive list of examples of material uncertainties related to going concern for Directors and their advisers to consider:
| Issue | Reason why it is a going concern |
| The balance sheet shows a net current liabilities (or net liabilities) position | This indicates the entity may be unable to meet debts as they fall due |
| The bank does not renew borrowing facilities | A lack of cash makes it difficult for a company to pay suppliers, employees and other liabilities as they fall due |
| The company has breached a loan agreement | Breaches of a loan agreement may trigger immediate repayment, hence placing additional pressure on the cash flow of the business |
| Staff are not paid on time | This indicates a lack of working capital and potential loss of employee goodwill |
| Legal claims have been brought against the entity | If successful, these may result in significant cash outflows, thus placing additional pressure on working capital |
| Loss of key staff | This may make it difficult for the entity to trade |
| Changes in laws and regulations | Such changes may make it costlier for the business to comply, and the costs of compliance may be more than the company can realistically afford |
| Changes in laws and regulations | Such changes may make it costlier for the business to comply, and the costs of compliance may be more than the company can realistically afford |
| Failure to obtain credit from suppliers | This indicates a bad credit rating, which usually arises from a failure to pay liabilities |
| Missing payments to HMRC or an equivalent taxation authority | Payments to HMRC or an alternative tax authority should be prioritised, and any missed payments may indicate the company has a lack of working capital |
| Negative cash flows | This indicates overtrading |
All the templates on our website have had a refresh as of June 2026 and the letters of engagement have had a new paragraph added for the potential use of artificial intelligence and machine learning on client assignments along with auto enrolment for payroll assignments. There is a bulk discount (five templates for the price of four) for purchases of five or more templates when purchased in a single transaction.
If you need an up-to-date engagement letter, there is a search bar near the bottom of our home page (www.jmcc.ie) to quickly look up the item you need. More details see here.
For those of you still in the process of ISQM 1 implementation, please see our ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie.
We typically tailor our training and brainstorming sessions to suit each firm’s unique requirements.
Publications:
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- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
- To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together
