ACCA Audit and Assurance (F8) Practice Exam

Which factor is NOT typically considered when assessing going concern?

1. Loss of key managers

2. Legal proceedings/non-compliance

3. High employee satisfaction

4. Negative cash flows

The correct answer is: High employee satisfaction

When assessing an entity's ability to continue as a going concern, factors typically focus on the potential risks and challenges that could threaten its viability. Loss of key managers, legal proceedings, and negative cash flows are critical issues that can directly affect the operational and financial stability of the organization. In contrast, high employee satisfaction, while important for overall organizational health, is not typically a direct factor in assessing going concern. While it may contribute to productivity and morale, and thus indirectly support the organization’s stability, it does not signal financial distress or operational challenges in the same way that the other factors do. Therefore, high employee satisfaction stands apart as not being a primary consideration in the context of going concern assessments, which prioritize immediate risks over the aspects of internal morale or employee sentiment.