Context-specific indicators to guide the judgement of a going concern for a company in business rescue
CITATION: Lamprecht, C. & Van Wyk, H. A. 2020. Context-specific indicators to guide the judgement of a going concern for a company in business rescue. Journal of Economic and Financial Sciences, 13(1):a483, doi:10.4102/jef.v13i1.483.
The original publication is available at https://jefjournal.org.za/
Publication of this article was funded by the Stellenbosch University Open Access Fund.
Orientation: Annual financial statements are normally prepared based on the going concern assumption that a company will continue to exist in the foreseeable future and that it has neither the intention nor the need to enter liquidation or to cease trading. Research purpose: To establish indicators of a going concern in the context of a South African listed company under business rescue. Motivation for the study: Current research is lacking in business rescue context-specific indicators of a going concern. Research approach/design and method: A grounded theory method was followed by using a qualitative systematic interpretive literature review to identify possible indicators of a going concern in the context of a South African listed company under business rescue. Main findings: In the context of a listed company under business rescue, financial distress, state of commercial and technical solvency and the foreseeable future are important indicators of its going concern status to be considered in combination with the particular business rescue aim pursued and stage of implementation of a business rescue plan. Practical/managerial implications: The indicators would assist preparers and auditors of financial statements to assess appropriately the financial reporting assumption in a business rescue context. Contribution/value-add: The findings provide guidance to preparers and users of financial statements and auditors by showing context-specific indicators of a going concern for use when preparing the financial statements of a South African listed company under business rescue.
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