Term · Risks & Red Flags
Going-Concern Note
In briefA going-concern note names material uncertainties or significant doubt about a company's ability to continue as a going concern. It is among the strongest individual warning signals because it rests on an audited assessment, not on a presumption.
Definition
A going-concern note describes material uncertainties or significant doubt about a company's ability to continue its operations. The wording and type of audit opinion must be read carefully.
How it is calculated
Formula. No metric. Review management disclosures, liquidity planning, financing, and the auditor's report together.
Why it matters for small caps
The strongest single warning signal in the entire process — a formal, audited assessment, not a presumption.
Common misreadings
- The note is not an automatic insolvency verdict. Conversely, an unqualified audit opinion is no guarantee of future solvency.
In the process
Frequently asked
What is a going-concern note?
It is a note in the financial statements or audit report indicating doubt about the company's continuation as a going concern. The wording and type of audit opinion must be read carefully.
How should a going-concern note be reviewed?
You consider management disclosures, liquidity planning, financing, and the auditor's report together. Only this overall picture shows how serious the situation is.
Does a going-concern note mean certain insolvency?
No, it is not an automatic insolvency verdict. Conversely, an unqualified audit opinion also does not guarantee future solvency.
Related terms
Sources
Primary
IFAC/IAASB – Auditor Reporting on Going Concern
https://www.ifac.org/content/auditor-reporting-going-concern
https://www.ifac.org/content/auditor-reporting-going-concern
Methodology
IFRS Foundation – IAS 1 Presentation of Financial Statements
https://www.ifrs.org/issued-standards/list-of-standards/ias-1-presentation-of-financial-statements/
https://www.ifrs.org/issued-standards/list-of-standards/ias-1-presentation-of-financial-statements/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.