Are Short-Term 'Going Concern' Assessments Putting Companies at Risk?

NFRA Chairperson Nitin Gupta urges corporates to adopt a long-term viability assessment over a horizon of three to five years, considering global best practices. This follows issues with companies facing insolvency despite being labeled 'Going Concern' on a short-term basis. The call includes forming risk management committees.

Nitin Gupta, Chairperson of the National Financial Reporting Authority (NFRA), has called on businesses to consider conducting long-term viability assessments over the next three to five years.

This recommendation comes amidst rising instances of companies undergoing insolvency proceedings, despite the 'Going Concern' assessments conducted over a 12-month period.

The suggestion was made during a conference hosted by Assocham, where Gupta also stressed the importance of self-regulatory measures and recommended establishing a board-level risk management committee separate from audit committees to enhance corporate governance practices.

(With inputs from agencies.)