Going Concern Opinions Neared Record Low in 2024

The number of companies that received a going concern opinion for fiscal year 2024 fell to the second-lowest level in the past 20 years. That is the headline finding of Going concerns: a 20-year review, Ideagen Audit Analytics's annual analysis of trends in going concern opinions.  In 2024, 1,375 companies (20.4 percent) received an audit opinion that included a going concern paragraph, a decrease of approximately 16 percent from 2023. The lowest number of going concern opinions was issued in fiscal year 2020 when 1,322 companies (slightly under 20 percent) received such an opinion. Total going concern opinions peaked at 2,853 in FY2008 during the financial crisis. Ideagen’s analysis is based on companies that file annual reports with the SEC (e.g., Form 10-K and Form 20-F filers), excluding registered investment companies.

The auditor is required to evaluate whether there is substantial doubt about the company’s ability to continue as a going concern for a reasonable period, not to exceed one year after the date of the financial statements. If the auditor believes there is such doubt, he or she should obtain information about management's plans to mitigate this risk and assess the likelihood that management can effectively implement these plans. If, after evaluating the evidence, the auditor continues to have substantial doubt about a company’s ability to continue as a going concern, the audit report must include a paragraph explaining why substantial doubt exists about the company’s ability to continue in business.

Highlights of Ideagen’s 2025 report include:

• The frequency of going concern opinions varies by company size. Non-accelerated filers had a going concern rate of 38.4 percent in FY2024, down four percent from FY2023. Large accelerated filers had a 0.3 percent rate, with only seven companies receiving going concern opinions. The rate for accelerated filers was 3.5 percent.

• Domestic companies have higher going concern rates than foreign private issuers (FPIs), although FPI rates are rising. Domestic filers' going concern rate was 20.7 percent in FY2024, down 3.3 percent. In contrast, FPIs hit a record high going concern rate of 18.8 percent. FPI going concern opinions constituted 16.7 percent of all such opinions in FY2024, the highest proportion in 20 years.

• Companies with previous going concern opinions account for a significant portion of going concern opinions in any given year.  In FY2024, 76 percent of companies that received going concern opinions also had such an opinion in FY2023. Over the past 20 years, repeat going concern filers have represented at least 57 percent of these opinions. 

• The frequency of going concern opinions varies widely by industry sector. Life Sciences had the highest going concern rate (37 percent) in FY2024, while Finance had the lowest rate (three percent). The Real Estate and Construction sector experienced a significant decline in going concern opinions, falling to 23.5 percent, down from a peak of 42.5 percent in FY2022.

• Special purpose acquisition companies (SPACs) significantly influenced the frequency of going concern opinions. In FY2024, 133 SPACs received going concern opinions, and constituted ten percent of total going concern opinions. The going concern rate for SPACs was 76 percent.

Understanding the frequency of going concern opinions and the types of companies most affected can help audit committees benchmark their own company’s risk profile, ask informed questions of management and the auditor, and increase the likelihood that potential going concern challenges are identified and addressed as early as possible.