In our latest report, Going Concerns: A Twenty- Year Review, we examine the trends and statistics of going concerns (opinions qualified by an uncertainty regarding the going concern assumption) filed with the Securities and Exchange Commission since 2000.
Leveraging the Audit Analytics Audit Opinions database, this report analyzes going concern totals and percentages of total opinions by year, with a further breakdown of new and repeat going concerns, as well as the issues which undermine these assumptions.
As shown below, the analysis found that going concerns peaked in fiscal year (FY) 2008 with a total of 3,358 going concern opinions. Thereafter, the number of going concerns decreased for eleven consecutive years to an estimated total of 1,782 for FY 2019 – the lowest amount over the twenty-year period analyzed.
The number of going concerns for FY 2019 is expected to be three less than
the amount received for 2018. This decrease, however, is not due to improved company
performance, but company attrition from the prior year’s going concern population either due to a company’s termination of registration with the SEC, going private, or going out of business.
New going concerns (a going concern filed without one filed the year prior) most recently peaked in 2007 and decreased most years thereafter. As of November 13, 2020, the SEC received 462 new going concerns for FY 2019, with an estimated total amount of 515 new going concerns for 2019. Therefore, it appears that new going concerns will experience an increase for the first time since 2014, though the total of 515 represents the fourth lowest amount during the nineteen years reviewed.
A review of the going concerns for fiscal year 2019 revealed that the most common reason for apprehension regarding a company’s ongoing viability is the company’s operating losses.
For more information about Audit Analytics or this analysis, please contact us.
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