One public company in ten carries a going concern warning, and that share has barely moved in twenty five years

Congress put the going concern evaluation into federal law on 22 December 1995. It sits in section 10A of the Securities Exchange Act, added by the Private Securities Litigation Reform Act, and it says that every audit of a public company must include "an evaluation of whether there is substantial doubt about the ability of the issuer to continue as a going concern during the ensuing fiscal year."

That sentence is the reason the warning exists at all, and almost nothing written about going concern mentions it. The evaluation is not a courtesy the auditor extends. It is a statutory component of the audit, performed on every issuer, every year, whether the company is a shell in Nevada or a member of the Dow.

Money & World counted the results. Using the Securities and Exchange Commission's own full-text search of filed documents and the EDGAR quarterly indexes, we identified every annual report filed since 2001 whose text carries the phrase the auditing standard requires, and set it against the number of companies filing an annual report in the same year. The counts, the method and the underlying series are published below and in a downloadable file.

The result contradicts the way this subject is usually discussed. The number of going concern warnings has collapsed since the financial crisis. The share of companies receiving one has not.

What is a going concern opinion?

A going concern opinion is an audit report carrying an extra paragraph stating that conditions raise substantial doubt about the company's ability to continue operating. It is not a qualified or adverse opinion. The financial statements can still be signed off as fairly presented, with the doubt disclosed alongside the clean opinion in a separately titled paragraph.

The governing text for public company audits is AS 2415, the Public Company Accounting Oversight Board's standard on an entity's ability to continue as a going concern. Paragraph .12 tells the auditor that when substantial doubt remains after weighing management's plans, the report "should include an explanatory paragraph, including an appropriate title (immediately following the opinion paragraph), to reflect that conclusion."

The same paragraph does something unusual for an auditing standard. It dictates the words:

The auditor's conclusion about the entity's ability to continue as a going concern should be expressed through the use of the phrase "substantial doubt about its (the entity's) ability to continue as a going concern" [or similar wording that includes the terms substantial doubt and going concern].

That mandated wording is what makes this subject measurable. A rule requiring a specific sentence in a specific document turns a matter of professional judgment into something a search index can count.

How many public companies get a going concern warning?

In 2025, 670 registrants filed an annual report carrying the language, out of 6,558 registrants that filed an annual report at all. That is 10.2 percent, or roughly one company in ten. The peak was 2009, when 1,517 of 9,727 filers carried it, a share of 15.6 percent, or one in six.

Set the two ends of the series side by side and the usual reading falls apart.

The count fell 55.8 percent between 2009 and 2025. That looks like a story about corporate health improving dramatically. It is mostly a story about there being fewer public companies to audit. The population of annual report filers fell 32.6 percent over the same period, from 9,727 to 6,558.

Decompose the drop of 847 companies and it splits two ways. Holding the 2009 rate fixed, the shrinking population accounts for 494 of them. The falling rate accounts for the remaining 353. Well over half of the apparent improvement is arithmetic.

And the level the rate returned to is not a low. It is the level it started at. The share was 9.6 percent in 2001, 9.3 percent in 2005, and 10.2 percent in 2025. The crisis years were the anomaly, not the present.

Why do published counts of going concern opinions disagree so badly?

Because the form changed underneath the data. Until 2008 most small companies filed their annual report on Form 10-KSB rather than Form 10-K, and those are the companies that receive the great majority of going concern warnings. A count that looks only at Form 10-K therefore misses most of the pre-crisis population.

This is not a small effect. Searching only Form 10-K produces 163 flagged registrants in 2007 and 1,539 in 2009, which reads as an eightfold explosion. Add Form 10-KSB back, which the SEC's index labels with the root form 10KSB and not 10-KSB, and 2007 becomes 1,233. The explosion was a filing convention retiring.

The same trap catches the other end of the series. Form 10-K405, used until 2003, has to be included for the earliest years or 2001 and 2002 come out short. Any series that does not name the forms it counted should be treated as unverified.

How reliable is a phrase count as a measure of auditor behaviour?

Reasonably reliable, and reliable in a way that can be checked rather than asserted. The mandated wording appears in the auditor's own paragraph in the large majority of flagged filings, though a minority of hits reflect management's separate disclosure instead of the auditor's.

We tested this rather than assuming it. From the 675 filings in 2025 whose principal annual report document carried the phrase, we drew a random sample of 60 with a fixed seed and searched each for the opening of the model paragraph set out in AS 2415.13, which begins "The accompanying financial statements have been prepared assuming that the Company will continue as a going concern." That sentence is close to unique to the auditor's explanatory paragraph.

It was present in 52 of the 60. The eight remaining filings fall into two groups. Some auditors use the "similar wording" the standard expressly permits, so the marker undercounts them. Others carry the language only in the notes, where management performs its own separate evaluation.

Two conclusions follow. The series is a good proxy for auditor going concern reporting and a better one for going concern disclosure generally. It is not a certified count of explanatory paragraphs, and nobody publishing one from a keyword search has produced such a count either.

Who actually receives a going concern warning?

Overwhelmingly, companies that are pre-revenue by design rather than companies in decline. Life sciences alone accounted for 199 of the 670 registrants flagged in 2025, just under 30 percent, split across pharmaceutical preparations, biological products, and surgical and medical instruments as the SEC's own industry classification defines them.

The single largest classification is pharmaceutical preparations at 121 registrants. Biological products adds 49 and surgical and medical instruments 29. Blank check companies, the shells built to acquire an operating business, contribute 33. Prepackaged software adds 26 and metal mining 18.

That composition matters for interpretation. A drug developer with a promising compound, no product on the market and eleven months of cash is a textbook case for the standard: conditions plainly indicate it cannot meet obligations for a further year on present resources. The paragraph is doing its job. It is not reporting a business coming apart.

Geographically the flagged companies cluster where small growth companies cluster. California accounts for 128, Florida 69, New York 65, Texas 46, Massachusetts 38 and Nevada 33.

Does a going concern opinion mean a company is about to fail?

No. Of the 779 registrants flagged in an annual report filed during 2019, 311 were still filing annual reports in 2025 or 2026, a survival rate of 39.9 percent. Among the 5,998 companies that filed a 2019 annual report without the language, 65.0 percent were still filing. The warning roughly doubles the odds of disappearing. It does not settle them.

Run the same test on the 2020 cohort and the gap holds its shape: 48.6 percent of flagged companies were still filing five or six years later, against 69.5 percent of everybody else.

The measure needs stating carefully, because ceasing to file is not the same as failing. A company stops filing annual reports when it goes bankrupt, and also when it is acquired, taken private, or deregistered after falling below the reporting thresholds. Some of those outcomes made shareholders money. The comparison is still meaningful, because both groups are exposed to the same exits, and the gap between them is large and consistent across two cohorts.

What the data will not support is the reading the phrase invites. Two in five flagged companies were still standing six years later. Most of them raised money, and raising money is exactly what the standard anticipates: paragraph .07 requires the auditor to weigh management's plans to borrow, to restructure, to sell assets or to increase equity before concluding.

Persistence tells the same story. Of the 670 registrants flagged in 2025, 452 had been flagged in 2024 as well. Two thirds of any year's total is a company carrying the paragraph again, which is only possible because carrying it is survivable.

What does a clean audit report prove about solvency?

Nothing, and the standard is unusually direct about this. Paragraph .04 of AS 2415 states that "the absence of reference to substantial doubt in an auditor's report should not be viewed as providing assurance as to an entity's ability to continue as a going concern."

The same paragraph adds that a company failing within a year of receiving a clean report "does not, in itself, indicate inadequate performance by the auditor."

Read those two sentences together and the limits of the instrument are plain. The going concern paragraph is a positive signal when present and carries no information when absent. Screening a portfolio by its absence is not a screen.

Which one year period does the assessment actually cover?

Three different documents give three different answers, and the differences are not cosmetic.

The statute measures "the ensuing fiscal year." AS 2415.02 gives the auditor "a reasonable period of time, not to exceed one year beyond the date of the financial statements being audited." Management's accounting requirement, ASC 205-40, runs one year from a later starting point again.

That last one arrived in August 2014, when the Financial Accounting Standards Board issued Accounting Standards Update 2014-15 and gave management its own duty to evaluate and disclose. The PCAOB set out the mechanics in Staff Audit Practice Alert No. 13, which records that substantial doubt exists under the accounting standard when conditions "indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued", effective for annual periods ending after 15 December 2016.

The date the financial statements are issued falls weeks or months after the date of the financial statements themselves. So management looks further forward than the auditor does, from a later starting line, under a probability threshold the auditor does not use.

The alert draws the consequence plainly: "a determination that no disclosure is required under the ASC amendments or IAS 1, as applicable, is not conclusive as to whether an explanatory paragraph is required." The two assessments can disagree, and when they do, both are correct on their own terms.

Is the standard being updated?

Not at present. The PCAOB's going concern project page is still live and still reports that "the staff is analyzing relevant information and developing a proposal for the Board's consideration." It was last updated on 20 April 2022.

The project does not appear on the Board's current agenda, which lists two standard-setting projects, quality control and a set of amendments aligning interim standards with proposed SEC changes, plus one research project on data and technology. Going concern appears instead on the archived agenda, superseded on 5 May 2026, where its anticipated next Board action is recorded as a proposal in 2025. No proposal was issued.

AS 2415 is therefore still the operative standard, and paragraph .18 dates it: effective for audits of financial statements for periods beginning on or after 1 January 1989. The text auditors apply to a biotechnology company running an eleven month cash runway in 2026 was written before the company's investors were born.

The Board has opened a request for public comment on what its standard setting should cover. The comment period runs to 7 August 2026.

Method

The series counts distinct registrants and distinct filings whose annual report, filed in a given calendar year, contains the phrase "substantial doubt about its ability to continue as a going concern" in any document of the filing. Annual report forms are 10-K, 10-K405 and 10-KSB, which the EDGAR index labels 10-K, 10-K405 and 10KSB. Amendments are excluded from both the counts and the denominator.

The denominator is the count of distinct filer identifiers appearing on annual report rows in the SEC's quarterly full indexes for the same calendar year. Six of the 670 registrants flagged in 2025 filed only an amended annual report that year and so do not appear in the denominator, an inconsistency of 0.9 percent that we have left visible rather than smoothed away.

Three limits are worth stating. The phrase is one of several the standard permits, so the counts are a floor. Filings are attributed to the year they were filed rather than the fiscal year they report on. And the denominator includes every entity filing an annual report, including trusts and other non-operating registrants, which makes the rate a rate of filers rather than of operating businesses.

The full series is available as a CSV. The 2026 row runs to 31 July 2026 and is partial.

Frequently asked questions

Is a going concern opinion the same as a qualified opinion? No. The opinion on the financial statements remains unmodified. The doubt is expressed in a separate titled paragraph following the opinion paragraph. A qualified or adverse opinion arises under paragraph .14 only when the company's disclosure of the uncertainty is itself inadequate, which is a departure from generally accepted accounting principles.

How long does the warning last? As long as the conditions do. Paragraph .16 provides that where doubt existed in a prior period and has been removed, the earlier explanatory paragraph is not repeated in the comparative report. In practice most warnings recur: 452 of the 670 registrants flagged in 2025 had also been flagged in 2024.

Who decides, the auditor or the company? Both, separately. Management performs its own evaluation and disclosure under ASC 205-40, and the auditor reaches an independent conclusion under AS 2415. The PCAOB's practice alert states that a conclusion of no disclosure under the accounting standard is not conclusive for the auditor's report.

Does the auditor have to warn before a company goes bankrupt? No. Paragraph .04 provides that a company ceasing to exist within a year of a report that made no reference to substantial doubt does not in itself indicate that the auditor performed inadequately. The auditor is not responsible for predicting future conditions or events.