Strong Enough to Last
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Small business owners rarely think about going concern. They think about survival. They think about paying staff, keeping SARS off their backs, managing suppliers, and making sure the doors stay open tomorrow. Yet going concern sits at the heart of every financial statement you prepare. It shapes how assets are valued, how liabilities are classified, and how outsiders judge the stability of the business.
For Chartered Business Accountants in Practice, going concern is not simply a disclosure requirement. It is your opportunity to protect clients from unnecessary risk, strengthen their financial future, and position yourself as the expert who keeps their business on the right side of regulators, creditors, and investors. It is also a powerful way to build advisory revenue, because clients are willing to pay for guidance that keeps their business stable and future focused.
Why Going Concern Matters
Going concern means the business is expected to continue operating for at least the next twelve months. This is not an optimistic assumption. It is a formal assessment of whether the business can actually meet its financial obligations, generate sustainable cash flow, and avoid liquidation.
For small entities with tight margins, irregular cash cycles, and heavy dependence on a few key customers, this assumption can be fragile. That is why they rely on you. You are the one who sees the red flags long before management does. You see when cash is tight, when expenses are creeping up, when SARS penalties are piling, and when the owner is injecting money every month just to keep the business running.
If going concern is questioned and you raise it early, you save the client from crisis. You protect them. And when clients see you doing that kind of work, they are far more willing to pay for ongoing advisory support.
Warning Signs You Cannot Ignore
Small businesses usually reveal their financial stress through clear indicators. The most common include:
• Negative operating cash flow
• Ongoing trading losses
• Exceeded overdraft limits
• Overdue SARS balances with no repayment plan
• Suppliers not being paid on time
• Reliance on shareholder loans to stay operational
There are also operational indicators that matter just as much:
• Losing a major customer
• Losing premises or essential equipment
• Key staff or directors resigning
• Regulatory issues affecting the ability to trade
• Pending litigation that could drain cash reserves
These indicators are not just accounting concerns. They are business survival concerns. This means they are opportunities for you to step in as a strategic advisor. You can help clients assess the impact, plan ahead, and take corrective action long before the financial statements are finalised.
Helping Management Prepare the Assessment
Although you guide the process, management is responsible for assessing going concern. But most small business owners do not know where to start. That is where your skill becomes indispensable.
A proper going concern assessment includes:
• A cash flow forecast for the next twelve months
• Expected revenue and realistic expense projections
• Debt obligations such as loan repayments and leases
• The availability of finance or credit facilities
• Contingency actions if risks materialise
• Confirmation of financial support from owners if the business relies on it
When you help clients prepare this assessment, you are not only meeting a compliance requirement. You are equipping them to make informed decisions, anticipate problems, and avoid unnecessary shocks. This is the kind of work clients value because it prevents crises and keeps their businesses stable.
What Must Be Disclosed
If the going concern assessment reveals material uncertainty, the financial statements must disclose it. Clients often see this as a negative. In reality, it builds credibility. Transparent disclosure gives stakeholders a clear picture of risk. It also shows that the practitioner is acting with integrity and professional care.
Disclosures must explain:
• The uncertainty
• Why it exists
• How it could affect the entity
• What management plans to do about it
If it becomes clear that the entity is not a going concern, the basis of preparation must be adjusted. This is rare, but when it happens, it is critical for the practitioner to ensure that assets and liabilities are valued appropriately and that the statements do not mislead users.
The Independent Review Perspective
In Independent Review engagements, going concern is unavoidable. You must evaluate management’s assessment, inquire about risks, and review forecasts. If disclosure is missing when it should be presented, you may need to modify your conclusion.
This is not about being punitive. It is about protecting both the client and yourself from future disputes. A poor going concern assessment can harm creditors, investors, and business partners. It can also expose you to liability. A sound assessment protects everyone.
Turning Going Concern into a Billable Service
Going concern work does not need to be limited to year end. When you position it correctly, it becomes a valuable service your clients are willing to pay for.
Here are specific offerings that work well in small practices:
• Cash flow forecasting and monitoring
• Quarterly financial health reviews
• Assistance with bank negotiations
• Business continuity planning
• Cost reduction analysis
• Analysis of funding or restructuring options
• Scenario planning for high risk clients
Small business owners want peace of mind. They want someone who can tell them early when they are drifting into danger. When you provide this support, you increase your value and the client relationship deepens.
Final Thoughts for Practitioners
Going concern is often treated as a technical disclosure, yet it is one of the most practical tools you have to protect your clients and build your advisory services. When you use it properly, you help small businesses stay open, stay compliant, and stay competitive. You promote economic stability. You support entrepreneurship. You strengthen South Africa’s business sector.
You are not just producing financial statements. You are guiding business owners through uncertainty and helping them build something that lasts. That is the real power of going concern work. And it positions you exactly where you should be, as the trusted expert your clients depend on.
