Solvency and going concern

Abstract

How do effective directors ensure they ask the right questions about solvency and going concern? Based on a framework of global corporate governance best practice, which can be used in all organisations anywhere in the world, this chapter of Questions To Ask (QTA) in the boardroom gives a high-level but succinct introduction to solvency and going concern. All directors should ensure that there is complete clarity and transparency with regards to the solvency and going concern of the entity they serve. The chapter considers the details of solvency and the situations where directors are required to declare solvency. It describes the various solvency and going concern tests directors should be aware of and the differences between solvency and going concern. It also looks at the executive management’s assessment of solvency and going concern and the questions a board should ask of management. The chapter’s introduction leads into outlining the key Questions To Ask in the boardroom, giving the reader further insight into how to initiate discussions about the practical details requiring the attention of the board.