FASB has an outstanding exposure draft on a proposed standard on management’s responsibility to evaluate a company’s ability to continue as a going concern. The proposed guidance changes the responsibility of assessment to management and the time horizon for management’s evaluation from “a reasonable period of time not to exceed one year” to a period that is “at least, but is not limited to, 12 months” from the end of the reporting period.
The Board is currently in redeliberations and is considering broadening the scope of the project to enhance disclosures on short-term and long-term risks for which there is a more-than-remote likelihood of occurrence. In addition, the Board plans to address (1) defining substantial doubt in terms of the entity’s ability to continue as a going concern and (2) when it would be appropriate to apply the liquidation basis of accounting. The FASB project plan indicates a final standard is expected in 2010. Those interested can monitor the status of this project at http://www.fasb.org/. You can find the exposure draft at www.fasb.org/ed_going_concern.pdf