Going concern is the concept audit training drills into you harder than almost anything else. Before you sign off a set of accounts, you ask one blunt question: will this business still be here in twelve months? Then you make the directors show their working. For most of my career that rigour effectively stopped at the audit threshold. The smallest companies I prepare accounts for never had to say a word about it.
That changes now. For accounting periods beginning on or after 1 January 2026, small companies and micro-entities have to disclose something about going concern for the first time (FRC, 2025). It sounds dry. It is one of the more interesting changes to land on my client base in a while, because it takes an instinct auditors are trained into and hands it, in proportionate form, to the smallest end of the market.
TL;DR: From periods beginning on or after 1 January 2026, small companies and micro-entities must say something about going concern in their accounts. For most healthy businesses this is a short, clean confirmation, not a warning sign. For the marginal ones, it is a disclosure that finally forces an honest conversation you were probably avoiding.
Why did small companies get to ignore going concern until now?
Because nothing explicitly required them to say anything. Under the small companies regime, there was no requirement in the Companies Act 2006 or in FRS 102 for a business preparing accounts under Section 1A, or a micro-entity under FRS 105, to report on the going concern basis or on any related uncertainty. So the smallest sets of accounts were often a balance sheet and a handful of notes, with the going concern judgement left silent and assumed.
That silence was never quite honest. Every set of accounts is prepared on a basis, and unless the business is being wound up, that basis is going concern: the assumption that it keeps trading for at least the next year rather than stopping or being forced to close. The judgement was always being made. It just was not being written down. What the FRC has done is close the gap between the judgement and the disclosure.
What actually changes from January 2026?
The Periodic Review 2024 of UK GAAP, completed in March 2024, adds explicit going concern disclosure into FRS 102 Section 1A (at paragraphs 3.8A and 3.9) and into FRS 105 (ICAEW, 2026). For an affected period, a small entity now has to do three things.
First, confirm it has adopted the going concern basis, having considered all available information about the future, covering at least twelve months from the date the accounts are authorised for issue. Second, disclose any material uncertainties that cast significant doubt on its ability to continue. Third, disclose the significant judgements made in reaching that conclusion. The FRC published supporting guidance, FRS Factsheet 13, in September 2025 to walk directors of small companies and micro-entities through it (FRC, 2025). This is an accounting standard you apply, not a deadline to diarise, so the job is building a proportionate assessment into how you prepare accounts.
Does a going concern disclosure mean my company is in trouble?
No, and this is the part I want to defuse before it builds. For most healthy small companies, the disclosure is a clean confirmation, not a distress signal. You state that the accounts are prepared on a going concern basis, that you considered the information available, and that is the end of it. A profitable business with cash in the bank and no facility about to expire writes a short, boring paragraph.
The reason this matters is that most owner-managers have never had to engage with the term, and "going concern" sounds ominous if you have only ever heard it in the context of a company collapsing. It is not a warning label. It is the same assumption that was always sitting underneath your accounts, now stated out loud. The overwhelming majority of the 5.4 million companies on the UK register file under the small companies or micro-entity regime (Companies House, 2025), and for most of them this is a non-event handled properly.
Where does this genuinely bite?
On the marginal business, and that is exactly where an accountant with audit instinct earns their fee. The cohort I am thinking about has a wafer-thin balance sheet, a large overdrawn director's loan account, post-year-end losses, or a bank facility coming up for renewal. For those companies a material uncertainty may now have to be disclosed, and the conversation with the director about what "all available information" really means becomes real work.
That conversation is uncomfortable and valuable in equal measure. If a business is leaning on a loan being renewed, I now have to ask whether the bank has actually confirmed it, or whether we are assuming. If the director's loan account is deep in the red, I want to know how it gets cleared, because that ties straight into the tax charge that can bite when a loan is written off. The disclosure rule drags these questions into the open on the smallest accounts, where before they could sit unspoken. That is the audit habit arriving, and for the businesses that need it, it is a good thing.
What does proportionate documentation look like for a one-person company?
A short, dated file note. Not a forty-page audit going concern memo. The requirement is to disclose the significant judgements you made, which means a file that shows the question was asked and a reasonable basis was reached is now part of preparing even the smallest accounts.
In practice, for a healthy micro-entity, that is a couple of sentences: cash position reviewed, no facility at risk, orders and pipeline look normal, no reason to doubt twelve months of trading. For the marginal client, it is longer and references the actual evidence, the renewal letter, the forecast, the plan to clear the loan account. This is the same discipline I keep coming back to on what audit taught me about running a cloud practice and on the judgement the new AML rules now demand of a sole practitioner. Write down why you reached the view. A conclusion with no working behind it is worth very little if anyone ever asks. This change sits alongside the wider Companies House filing reform coming in 2028, so the direction of travel for small-company reporting is clear: less silence, more shown reasoning.
Frequently Asked Questions
Do small companies and micro-entities have to report on going concern now?
Yes, for the first time. For accounting periods beginning on or after 1 January 2026, both small companies applying FRS 102 Section 1A and micro-entities applying FRS 105 must confirm the going concern basis, disclose any material uncertainties, and disclose the significant judgements made. Before this, there was no explicit requirement for them to say anything at all.
When do the new FRS 102 going concern rules start, and which accounts do they affect?
They apply to accounting periods beginning on or after 1 January 2026 (FRC, 2025). So the first affected accounts are those with year-ends from the end of 2026 onward, being prepared and filed through 2027. Early application is permitted, but only if all the Periodic Review 2024 amendments are applied together.
What do I actually have to write in the accounts?
For a healthy business, a short confirmation that the accounts are prepared on a going concern basis, that you considered information covering at least twelve months from when the accounts are authorised, and that you found no significant doubt. Where there is a genuine material uncertainty, you disclose it plainly. Where a finely balanced judgement was involved, you disclose that judgement.
What counts as a material uncertainty about going concern?
An event or condition that casts significant doubt on the company's ability to keep trading for at least the next twelve months. Common triggers for small companies are a bank facility due for renewal with no confirmation, sustained post-year-end losses, a heavily overdrawn director's loan account with no clear repayment route, or the loss of a customer the business depends on.
Does a micro-entity really have to do this too?
Yes. FRS 105 was amended alongside FRS 102, so micro-entities are in scope. The assessment should be proportionate to how simple the business is. For a straightforward micro-entity with cash in the bank and no red flags, the going concern assessment is quick and the disclosure is brief, but it still needs to be made and, sensibly, documented.
If your year-end is coming up and you are not sure whether your accounts need a plain confirmation or a proper going concern disclosure, get in touch. I am happy to run through where your business actually sits and what needs to go in the notes, especially if a facility renewal or a director's loan account is in the picture.