UK directors must consider all available information about the future covering at least, but not limited to, 12 months from the date the accounts are approved, not 12 months from the year end. The approval date is used because the going concern judgement is made, and the accounts are relied on, from that day. Where a loan maturity, covenant test or contract expiry sits just beyond the 12 months, the assessment should run further.

What exactly does the rule say?

FRS 102 paragraph 3.8 requires management, when assessing whether the going concern assumption is appropriate, to take into account all available information about the future, which is at least, but is not limited to, 12 months from the date when the financial statements are authorised for issue. The FRC’s February 2025 going concern guidance notes that FRS 105 paragraph 3.3 sets the same minimum for micro entities.

The phrase “foreseeable future” in paragraph 2.30 of FRS 102, which says accounts are normally prepared on the assumption that the entity will continue in operation for the foreseeable future, is therefore given a floor. It is not a cap. The FRC guidance states that the minimum does not mean the outlook should be limited to 12 months. The general approach to the assessment itself is covered on our going concern assessment page; this page deals only with the period.

Why is the period measured from approval rather than the year end?

Three features of the standards point to the approval date.

  • Events up to signing count. FRS 102 paragraphs 32.2 and 32.3 treat everything that happens between the year end and the date the accounts are authorised for issue as events after the end of the reporting period. Paragraph 32.7A then forbids the going concern basis if, after the year end, management decides to liquidate or cease trading or has no realistic alternative. The basis of preparation is fixed at the date of approval, so the look forward starts there too.
  • Readers rely on the accounts from that date. A lender or supplier reading accounts signed nine months after the year end needs comfort about the year after signing, not about a period that is already mostly over. Paragraph 32.9 requires the accounts to disclose the date they were authorised for issue and who authorised them, so a reader can see the starting point.
  • UK auditing standards say so. ISA (UK) 570 paragraph 14-1 requires the auditor to ask management to extend an assessment that covers less than twelve months from the date of approval of the financial statements.

This is a UK feature. The FRC guidance points out that IFRS (through IAS 1 paragraph 26) sets the minimum as at least 12 months from the end of the reporting period, but because UK auditing standards look 12 months from authorisation, the effective minimum in the UK is 12 months from the date of authorisation for all companies, including those using IFRS or FRS 101.

How does a late approval change the period?

Illustration only. A company has a 31 March 2026 year end. If the board approves the accounts on 30 June 2026, the minimum assessment period runs to 30 June 2027. If the accounts slip and are approved on 15 December 2026, the period runs to at least 15 December 2027, more than 20 months after the balance sheet date. A forecast prepared in the summer that stops at 31 March 2027 would leave a gap of almost nine months and would need extending before signing.

Delay also draws attention. ISA (UK) 570 paragraph 26 requires the auditor to ask why there has been a significant delay in approval and, if the delay may relate to going concern, to perform further procedures. ICAEW’s guidance for FRS 102 preparers notes that in rare cases delaying completion may resolve an uncertainty, for example while waiting for formal approval of refinancing, and that management may use filing extensions where available. Every week of delay pushes the assessment end date out by a week, so forecasts must be refreshed as signing moves.

When should directors look further than 12 months?

Both FRS Factsheet 13 and the FRC guidance say a longer period may be more appropriate if significant events or conditions are identified beyond the minimum, giving as examples large debt repayments, debt covenant tests, significant capital commitments and expiry dates for key contracts or licences. Choosing the period is a matter of judgement for the directors, who must consider all available information about the future.

Typical triggers in owner managed and mid sized companies are:

  • a bank loan or invoice finance facility expiring in month 13 or 14;
  • a lease break, rent review or dilapidations bill shortly after the 12 months;
  • the end of a single major contract or licence;
  • a deferred HMRC liability or time to pay arrangement with a balloon payment;
  • a shareholder loan that the lender has said will be recalled at a known date.

The auditor will ask about such items. ISA (UK) 570 paragraph 10-4 requires the auditor to inquire of management about events or conditions beyond the period of the assessment that may cast significant doubt on going concern, and to ask management to evaluate any that are identified. Paragraph A6-2 says that beyond inquiry, the auditor has no responsibility to perform other procedures to find such events.

What does the auditor do if the directors looked at a shorter period?

ISA (UK) 570 paragraph 13-1 requires the auditor to cover the same period as management. If that is less than twelve months from approval, paragraph 14-1 requires a request to extend it. If management will not make or extend the assessment, paragraph 15-1 requires the auditor to discuss it with management and, where appropriate, those charged with governance, to consider the effect on the audit and to decide whether there is a significant deficiency in internal control.

For smaller companies, the evidence does not have to be a full forecast. Paragraph A11-4 says formal cash flow forecasts and budgets for the period ending one year from approval may not be needed, and alternative evidence may be acceptable for entities with uncomplicated circumstances. Paragraph A12 adds that the request to extend may be satisfied by discussion, inquiry and inspection of supporting documents such as orders received for future supply. More on the auditor’s side is in going concern and the auditor.

How is this different from a viability statement?

Companies reporting under the UK Corporate Governance Code also give a longer term viability statement. The FRC guidance describes this as an assessment of prospects taking into account principal risks, including solvency and liquidity risks, over a period that is usually longer than the going concern assessment period. It also says the period for assessing solvency and liquidity risks will usually be longer than 12 months from authorisation and will often be longer than the going concern period. The two must be consistent, but the going concern assessment is the shorter, minimum test that applies to every company.

What should the accounts say about the period?

Paragraph 3.8A of FRS 102 requires a company using the going concern basis to say so and to confirm that management has considered information about the future as set out in paragraph 3.8. From accounting periods beginning on or after 1 January 2026, paragraph 1AC.2C requires small companies to give the same disclosure. Factsheet 13 adds that where a longer period has been chosen, or setting the period involved significant judgement, the disclosure should identify the period covered and the reason for choosing it.

A short, specific note works best, for example: “The directors have prepared cash flow forecasts covering the period to 31 March 2028, beyond twelve months from the date of approval, because the company’s bank facility is due for renewal in February 2028.”

What mistakes come up most often?

  • Forecasting 12 months from the year end and treating that as compliant.
  • Not rolling the forecast forward when the signing date moves.
  • Stopping at the budget year end when a facility expires a month later.
  • Relying on a parent letter of support that covers a shorter period than the assessment.
  • Giving a boilerplate disclosure that does not mention the period at all.
  • Confusing the assessment period with the 12 month test for classifying debt as current, which runs from the balance sheet date. See breached loan covenants.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.