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 Financial Reporting Council (FRC) have already issued their own guidance on going concern but it does not cater for small and micro-entities. So the ACCA are filling the gap.
The Factsheet points out that all companies (including those that are audit exempt) are obliged to carry out an assessment of their ability to continue in operational existence for the foreseeable future. The term ‘foreseeable future’ is not defined in accounting standards but is taken to mean at least (but not limited to) 12 months from the date of approval of the financial statements.
There are only two circumstances in which an entity does not prepare financial statements on a going concern basis:
When carrying out its assessment of going concern, management is required to take into account all relevant facts and circumstances at the date of approval of the financial statements.
‘Relevant facts and circumstances’ may need careful thought, for example these three important criteria (which are not a complete list of variables to consider):
- Availability of cash
- State of the industry
- Renewal of borrowing facilities
Several other indicators will also be needed by Directors to make their going concern assessment including (bit not an exhaustive list):
- budgets and forecasts;
- interim management information (e.g. management accounts);
- likelihood of borrowing facilities (e.g. overdrafts) being renewed;
- current headroom with borrowing facilities;
- overall state of the market in which the company operates;
- potential impact of any ongoing litigation claims or potential outcome of contingent liabilities; and
- support available from a group (e.g. a parent entity).
More on this topic next week.
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.
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