Financial Management
Going-Concern Indicators
Key indicators feeding the going-concern assessment.
Why the Going-Concern Assessment Is Pivotal
The going-concern assumption underlies the entire basis of preparation, and where it is in doubt the AGSA expects management to disclose the material uncertainty and the measures to address it. For municipalities and entities under financial pressure, a credible going-concern assessment is also the gateway to MFMA financial-recovery interventions. AuditPro Core consolidates the key indicators feeding the going-concern assessment so the conclusion rests on a structured body of evidence rather than management optimism.
The Numbers
AuditPro Core renders this view from your tenant's live, tamper-evident records. The figures below are illustrative sample data.
Indicators Red
4 of 9
material concern
Current Ratio
0.78
below 1.0
Net Cash Position
−R 92 m
deficit
Accumulated Surplus
R 1.2 bn
still positive
Indicator Status (1=Red, 2=Amber, 3=Green)
Indicator Detail
| Indicator | Value | Benchmark | Rating |
|---|---|---|---|
| Current Ratio | 0.78 | ≥ 1.0 | Red |
| Cash Coverage | 1.4 mo | ≥ 1 mo | Amber |
| Collection Rate | 87.6% | ≥ 92% | Amber |
| Creditor Days | 34 days | ≤ 30 | Red |
| Operating Result | −R 92 m | ≥ 0 | Red |
Figures shown are illustrative sample data for demonstration. AuditPro Core renders these views from your own tenant's live, tamper-evident records.
Going-concern basis
Financial statements are prepared on the assumption the entity will continue operating for the foreseeable future. If that assumption is not appropriate, the measurement basis itself changes, making the assessment fundamental.
Financial indicators
Indicators include negative working capital, deteriorating cash coverage, mounting creditor arrears and net liability positions. No single indicator is decisive; the assessment weighs them together.
Mitigating actions
Where indicators point to doubt, management must evidence realistic mitigating actions such as a funded budget, recovery plan or guaranteed support. Disclosure of the uncertainty and the response is what auditors test.
How AuditPro Core Bridges the Gap
- Continuous monitoring: liquidity, debtor, creditor and budget indicators are aggregated into one going-concern view that updates as the underlying data moves.
- Exception workflow: indicators breaching defined thresholds are escalated so the assessment and any disclosure are prepared deliberately.
- Audit-ready export: the indicator set and supporting analysis export as the evidence base for the going-concern note and the audit file.
- Traceability to source: each indicator drills back to the financial data behind it, so the conclusion is defensible to the AGSA.
Key Takeaways
- Going concern sets the measurement basis, so the assessment is fundamental.
- Weigh indicators together; no single metric decides the conclusion.
- Where doubt exists, evidence realistic mitigating actions and disclose the uncertainty.
- A structured indicator file is the gateway to financial-recovery support.
See This on Your Own Data
AuditPro Core renders this dashboard from your tenant's live, tamper-evident records — every figure traceable to source.