A going concern opinion is an auditor’s formal statement that there is substantial doubt about a company’s ability to continue operating for the next twelve months. It is among the most consequential disclosures in financial reporting — and one of the most misread by investors encountering it for the first time. What It Is Financial statements are prepared on the assumption that the entity will continue as a going concern — that it will remain in business long enough to realize its assets and fulfill its obligations in the ordinary course of operations.

A material weakness and a significant deficiency are both deficiencies in a company’s internal controls over financial reporting — but they sit at different points on the severity scale, and the consequences of each are substantially different. What They Are Internal controls over financial reporting (ICFR) are the processes a company uses to ensure that its financial statements are accurate. Auditors and management evaluate these controls under frameworks like COSO and standards like PCAOB AS 2201 (for U.

SAB 99 — Staff Accounting Bulletin No. 99, issued by the SEC in 1999 — established the authoritative framework for assessing whether a misstatement in financial statements is material and therefore requires correction or disclosure. It is the document that killed the “5% rule” as a reliable safe harbor. What It Is Before SAB 99, a widespread informal practice held that misstatements below 5% of net income were automatically immaterial and could be left uncorrected.