Accounting and auditing standards for going concern achieved greater harmony when the AICPA Auditing Standards Board (ASB) issued Statement on Auditing Standards (SAS) No. 132, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern.
SAS No. 132 supersedes SAS No. 126 of the same title and will be effective for:
- Audits of financial statements for periods ending on or after Dec. 15, 2017; and
- Reviews of interim financial information for interim periods beginning after fiscal years ending on or after Dec. 15, 2017.
The primary objective in the development of SAS No. 132 was to consider the accounting provisions of the FASB accounting standard that was issued in 2014 and the GASB accounting standard for state and local governments.
SAS No. 132 was written to be neutral regarding accounting frameworks so that it can be applied to audits of financial statements prepared under different financial accounting frameworks. However, in discussing certain concepts, reference to certain accounting terms is necessary. To better explain and illustrate those concepts, the ASB used terminology that is more commonly used in the United States, such as terminology from the FASB standards and GASB statements (e.g., substantial doubt).
The ASB retained several concepts from SAS No. 126, including a requirement for the auditor to separately conclude whether there is substantial doubt about an entity's ability to continue as a going concern, among other matters. The ASB believes the most significant changes to the existing auditing standards resulting from the issuance of SAS No. 132 are related to:
- Auditors' objectives and related conclusions.
- Financial support by third parties or the entity's owner-manager.
- Period beyond management's assessment.
- Use of emphasis paragraphs when substantial doubt is alleviated.
- Interim financial information.
- Financial statements prepared in accordance with a special-purpose framework.