The going concern principle - An accounting concept and its application by preparers of financial statements

In recent years, major accounting scandals and an increasing number of bankruptcies have questioned the validity of the going concern principle. The current financial and economic crisis has even worsened this trend. Despite increased uncertainties, management and auditors are obliged to provide a reliable assessment of the appropriateness of the going concern assumption. This paper highlights rules and regulations and their interrelation and relationship to the going concern principle. In addition, an analysis of the annual reports of the DAX30 companies (fiscal years 2007 and 2008) provides insights into their compliance with standards. Finally, the relevance of the going concern principle for external audits is demonstrated.