Funding risk and Going concern basis: Difference between pages

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1. ''Financial reporting - accounting concepts.''


''Bank funding.''
The going concern basis of accounting requires that the accounts are prepared using the assumption that the business will continue in operation for the foreseeable future (more than 12 months) and that there is neither the aim nor need to liquidate or limit significantly the nature of the operations.


In the bank liquidity and funding context, funding risk arises in the context of illiquid asset positions.


In this situation, funding risk means the risk of inability to obtain the necessary funding for the illiquid asset positions on the expected terms and when required.
2. ''Valuation.''


More generally, a basis of valuing a business on the assumption that it will continue in operation.


2.
Such a valuation may be made for accounting purposes or for other purposes.


''Pensions funding.''


In the pensions context, funding risk arises in the context of defined benefit pensions schemes, especially ones in deficit.
3. ''Pensions''.
The assumption that a pension scheme continues without being discontinued. 


In this context, funding risk means the obligation to make additional contributions to the pension fund, to make up shortfalls.
Going concern valuations are made on this basis.




== See also ==
* [[Accounting concepts]]
* [[Accruals concept]]
* [[Additional Tier 1]]
* [[Asset value]]
* [[Break-up value]]
* [[Consistency]]
* [[Disaggregation]]
* [[Discontinuance]]
* [[Discontinuance method]]
* [[Double entry]]
* [[Double entry bookkeeping]]
* [[Going concern]]
* [[Gone concern]]
* [[Headroom]]
* [[Liquidation value]]
* [[Total Loss Absorbing Capacity]]


== See also ==
[[Category:Accounting,_tax_and_regulation]]
* [[CFP]]
[[Category:The_business_context]]
* [[Concentration risk]]
[[Category:Identify_and_assess_risks]]
* [[Defined benefit pension scheme]]
[[Category:Manage_risks]]
* [[Deficit]]
[[Category:Risk_frameworks]]
* [[Flighty]]
[[Category:Risk_reporting]]
* [[Funding]]
* [[Funding liquidity risk]]
* [[Funding management]]
* [[Funding ratio]]
* [[Illiquid]]
* [[Liquidity risk]]
* [[MCT]]
* [[Net stable funding ratio]]
* [[Own funds]]
* [[Pensions risk]]
* [[Stability]]
* [[Sticky]]

Latest revision as of 05:37, 20 July 2022

1. Financial reporting - accounting concepts.

The going concern basis of accounting requires that the accounts are prepared using the assumption that the business will continue in operation for the foreseeable future (more than 12 months) and that there is neither the aim nor need to liquidate or limit significantly the nature of the operations.


2. Valuation.

More generally, a basis of valuing a business on the assumption that it will continue in operation.

Such a valuation may be made for accounting purposes or for other purposes.


3. Pensions.

The assumption that a pension scheme continues without being discontinued.

Going concern valuations are made on this basis.


See also