Going concern

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-01

// THE SHORT ANSWER

Accounts are prepared on the going-concern basis when the business is expected to keep trading for the foreseeable future, which is what lets its assets be carried at their ordinary book values rather than at what they would fetch in a break-up sale. When an auditor or reviewer draws attention to a material uncertainty about that, they are saying the business's survival depends on something not yet certain — very often the bank's continued support. A credit desk reads that note first, because it frequently describes the facility the bank is being asked to renew.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.