PwC supports the board's efforts to add guidance to US GAAP to provide consistency in determining when and how management should assess going concern uncertainties.
In our comment letter on the FASB's proposed ASU, Presentation of Financial Statements (Topic 205): Disclosures of Uncertainties about an Entity's Going Concern Presumption, we support the board's efforts to add guidance to US GAAP to provide consistency in determining when and how management should assess going concern uncertainties and when to make related disclosures. Our letter also outlines specific recommendations that we would like the board to consider.
The proposal includes a more likely than not disclosure threshold, which implies a precise point (greater than 50%). We recommend that the threshold be defined as a range as this would encourage prepares to consider qualitative and quantitative factors.
As written, the requirement to evaluate and disclose whether there is substantial doubt about an entity’s ability to continue as a going concern would apply only to SEC filers. We do not believe the standard should draw a distinction between public and private company preparers' responsibilities related to going concern disclosures.
There are areas in which the proposal will create inconsistencies with current auditing standards. Differences between the accounting and auditing standards would create operational challenges and confusion for users. Therefore we encourage the FASB to continue to work with the PCAOB and ASB to ensure that the accounting and auditing standards are compatible.