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ASC 275 requires that financial statements include disclosures about the risks and uncertainties existing as of the date of the financial statements with respect to:
  • The nature of the reporting entity’s operations (see FSP 24.3.1)
  • The use of estimates in preparing the financial statements (see FSP 24.3.2)
  • Certain significant estimates (see FSP 24.3.3)
  • Current vulnerability related to certain concentrations (see FSP 24.3.4)
These required disclosures apply to all reporting entities that issue financial statements prepared in accordance with US GAAP.
The assessment of a reporting entity’s ability to continue to operate as a going concern also falls under the umbrella of risks and uncertainties. Going concern is a specific uncertainty related to the assumption that a reporting entity is viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. ASC 205-40, Presentation of Financial Statements – Going Concern, provides management with direct guidance on going concern assessments and disclosures.
The disclosure requirements do not encompass risks and uncertainties that may be associated with the following:
  • Management or key personnel
  • Proposed changes in government regulations or accounting principles
  • Internal control deficiencies
  • Impacts of acts of war, God, or sudden catastrophes
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