The Financial Accounting Standards Board issued two separate but related exposure drafts proposing standards on going concerns and subsequent events.

The proposed statement on going concern would require that management of a reporting entity consider all available information about the future, which is at least, but not limited to, 12 months from the end of the reporting period, when assessing whether a going concern assumption is appropriate.

Prior to the issuance of this proposed statement, the time horizon for the going concern assessment was limited to one year beyond the date of the financial statements. The proposed statement also would require disclosures when either the financial statements are not prepared on a going concern basis or there is substantial doubt as to an entity's ability to continue as a going concern. FASB believes this guidance belongs in the accounting literature because it is management's responsibility to assess the ongoing viability of the reporting entity.

The proposed statement on subsequent events establishes general standards of accounting for and disclosure of events that occur subsequent to the balance sheet due date but before financial statements are issued or available to be issued. The board added the notion of available to be issued to consider situations in which financial statements may not be widely distributed after the financial statements are prepared, as may be the case with some nonpublic entities.

The proposed statement also would require disclosure of the date through which management has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or the date the financial statements were available to be issued. That disclosure would alert all users of financial statements that management has not evaluated subsequent events after that date.

FASB is asking for comments on the proposals to be sent by Dec. 8, 2008. For more information, visit


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