Going Concern in Jamaica: What CEOs and Boards Need to Know

What does going concern mean in an auditor’s report? A practical explanation for Jamaican CEOs, CFOs and boards dealing with liquidity and financial uncertainty.

“Going concern” is one of those accounting expressions that sounds considerably calmer than the issue it describes. At its core is a very practical business question: does the company have a reasonable basis for continuing to operate and meet its obligations into the foreseeable future?

Profit alone cannot answer that question. A company can report revenue growth and still struggle with cash, debt repayments, refinancing or working capital. In the same way that a successful flight still needs enough runway to land safely, a viable business needs sufficient financial runway to continue operating.

Going concern is addressed by ISA 570. The IAASB has also issued a revised version that strengthens the auditor’s evaluation of management’s assessment and becomes effective for periods beginning on or after December 15, 2026.

A going-concern warning is not the same as saying the company will fail

That distinction is critical. The existence of material uncertainty does not automatically mean an organisation is insolvent or destined to close. It means circumstances exist that are important enough to create significant uncertainty about the company’s ability to continue as a going concern.

The Jamaican market has produced several recent examples. In July 2026, the Business Observer reported that EduFocal’s auditors had drawn attention to material uncertainty over its ability to continue as a going concern. At December 2025, the group reportedly had an equity deficit of J$163.02 million and only J$104,315 in cash, while the auditor’s opinion itself was not modified in respect of the going-concern matter.

That is the kind of distinction boards need to understand. Additional going-concern reporting is important, but it is not interchangeable with a qualified or adverse opinion.

Management’s forecast becomes part of the story

Going concern forces management to look forward. Forecast cash flows, financing arrangements, debt covenants, expected revenue, cost reductions and planned capital raises can all become relevant to the assessment.

The Business Observer illustrated this particularly clearly when reporting on United Oil & Gas and its Jamaican exploration interests. The company acknowledged material uncertainty because future operations depended on obtaining funding or securing a partner for its Jamaican licence. In plain business language, the company had a plan, but key parts of that plan had not yet been secured.

This is why optimistic forecasts are not enough. A board should understand what assumptions support management’s position and how the company performs if those assumptions are weaker than expected.

Stress-test the runway

Suppose management’s forecast assumes a major receivable will be collected in 60 days. What happens if it takes 120? If refinancing is expected by January, what happens if negotiations continue until April? If revenue growth of 15 per cent is necessary to remain within covenant limits, what happens at 5 per cent?

Those are not pessimistic questions. They are the financial equivalent of testing a bridge under pressure before allowing traffic across it. Management should know which assumptions are most important and what contingency plans exist if they fail.

The audit committee should also understand the relationship between the company’s going-concern assessment and the auditor’s work. Management is responsible for assessing the company’s ability to continue and preparing the financial statements appropriately. The auditor evaluates that assessment and its implications for the audit and auditor reporting.

The boardroom question

Ask management: “Which two or three assumptions are most critical to our ability to continue operating comfortably over the assessment period, and what is Plan B if they do not happen?”

That discussion is far more valuable before year-end than after the auditor has raised the issue.

If financial uncertainty, financing arrangements or going-concern considerations are becoming part of your reporting environment, speak with our audit team about your external audit requirements.

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