TheCorporateCounsel.net

When Audit Analytics last looked at the universe of going concern opinions, it found that they reached an all-time low in 2020, but according to the firm’s latest report, 2021 was a very different story. Here’s an excerpt with the highlights:

The number of companies that received a going concern opinion during fiscal year (FY) 2021 increased to1,674, around the number of going concerns last seen in FY2016. The percentage of companies that received a going concern opinion during FY2021 was 21.3%, higher than the 18.4% seen in FY2020. Going concern opinions have been declining since they peaked during FY2008 with 2,853 – during the height of the financial crisis. FY2008 also saw a high of 28.3% of companies that received a going concern opinion.

The report says that the percentage of non-accelerated filers reporting a going concern qualification rose by 3.9%, while the percentage of large accelerated filers included in this group increased by 0.7%. Those were the largest increases experienced by those groups of companies in more than a decade. In contrast, going concern qualifications among accelerated filers declined by 5.6% – which was the biggest decline among the members of that group in 15 years.

The report’s most jarring statistic is that while the number of newly public companies increased by 54% last year, the number of going concern opinions issued to those companies increased by 148% over the prior year and was the driving force behind the overall increase in the number of going concern opinions.

– John Jenkins