Going Concern Basis of Accounting (Ref: Para. 2)
Considerations Specific to Public Sector Entities
- Management’s use of the going concern basis of accounting is also relevant to public sector entities. For example, Australian Accounting Standard AASB 101 addresses the issue of the ability of public sector entities to continue as going concerns.[9] Going concern risks may arise, but are not limited to, situations where public sector entities operate on a for‑profit basis, where government support may be reduced or withdrawn, or in the case of privatisation. Events or conditions that may cast significant doubt on an entity’s ability to continue as a going concern in the public sector may include situations where the public sector entity lacks funding for its continued existence or when policy decisions are made that affect the services provided by the public sector entity.