How to Update Your Going Concern Documentation for ISA 570 Revised

Key Takeaways

Your going concern working papers must separate gross identification from net evaluation – the biggest structural change in the revised standard.
You must evaluate management's going concern assessment on every audit, including engagements with no identified events or conditions. A one-line concurrence no longer complies.
The assessment period extends to twelve months from the approval date of the financial statements, not the balance sheet date. For many entities this adds three to five months.
Every auditor's report must include a Going concern section with two explicit conclusions, even when no material uncertainty exists.

What changes in your documentation

The FRC's 2022–23 Tier 2 and Tier 3 inspection found going concern findings in 38% of inspected audit files. The most common deficiency was insufficient challenge of management's cash flow forecasts. ISA 570 (Revised 2024) doesn't just change what you challenge. It changes when you challenge, how you document the challenge, what you report to users, and how your auditor's report is structured.

ISA 570 (Revised 2024) adds documentation requirements in four areas where the current standard is either silent or implicit.

First, the gross-basis identification of events and conditions. Under the current ISA 570 (Revised), most teams document a combined assessment: "we identified [event], management plans to [mitigate], therefore [conclusion]." The revised standard requires a documented separation. You identify events and conditions before considering management's plans. The identification step and the mitigation evaluation step must be distinct in your working paper.

Second, the evaluation of management's going concern assessment. Under the current standard, this detailed evaluation is triggered by identified events or conditions. Under ISA 570 (Revised 2024), the auditor evaluates management's assessment on every engagement. Even your cleanest files need a documented evaluation of how management assessed going concern, what assumptions underlie that assessment, what data supports those assumptions, and whether the assessment covers the required period.

Third, the assessment period. ISA 570 (Revised 2024) paragraph 21 requires management's assessment to cover at least twelve months from the date of approval of the financial statements (as defined in ISA 560), not twelve months from the balance sheet date. Your working paper needs to record both dates and confirm that management's assessment covers the required period.

Fourth, the auditor's report. Every engagement now requires either a "Going concern" section or a "Material uncertainty related to going concern" section, with explicit conclusions on management's use of the going concern basis and on whether a material uncertainty exists. Your report template needs these sections drafted and ready.

Separating gross identification from net evaluation

This is the most significant structural change to your going concern working paper. Under the current standard, the typical going concern template has a single section: identify events and conditions, consider management's response, and conclude. ISA 570 (Revised 2024) splits this into two distinct steps.

Step 1: Gross identification. Design and perform risk assessment procedures to determine whether events or conditions have been identified that may cast significant doubt on the entity's ability to continue as a going concern. Do this before considering any mitigating factors in management's plans.

In practice, this means your planning working paper should have a section that lists all identified events and conditions (financial indicators such as net current liability position, operating losses, or declining margins; operating indicators such as loss of key customers, labour shortages, or supply chain disruptions; and other indicators such as debt covenant breaches, pending litigation, or regulatory changes). This list stands on its own. No mitigation, no management plans, no "but the entity intends to refinance."

Step 2: Net evaluation. After identifying events and conditions on a gross basis, evaluate management's plans for future actions and whether those plans are feasible and sufficient.

Template restructure

If you use a single-page going concern assessment in your current template, split it into two pages (or two clearly labelled sections within a single working paper). The first section records gross identification. The second section records the evaluation of management's mitigating plans and the auditor's conclusion. Reviewers under the revised standard will look for this separation.

Documenting the mandatory management assessment evaluation

Under the current standard, for entities with no identified going concern indicators, most files contain a brief paragraph: "No events or conditions identified. Management confirms the entity is a going concern. We concur." That paragraph won't survive ISA 570 (Revised 2024).

The revised standard requires the auditor to evaluate management's going concern assessment on every audit. This evaluation covers the method management used and the significant assumptions underlying the assessment, the data supporting those assumptions, and whether the assessment period meets the revised standard's minimum.

A compliant minimum for a low-risk entity would document:

What management's assessment consists of (a board discussion, a formal paper, a cash flow forecast, or an informal assessment by the owner-manager)
What period the assessment covers (at least twelve months from the expected approval date)
What significant assumptions management relied on (continued trading at current levels, no loss of key customers, availability of existing credit facilities)
Whether those assumptions are consistent with the auditor's understanding of the entity
Whether the data management used (for example, the 2028 budget or the bank facility agreement) is consistent with audit evidence obtained elsewhere in the file

For entities with identified events or conditions, the evaluation must go deeper. You need to evaluate management's specific plans for future actions, assess whether management has the intent and ability to carry out those plans (ISA 570 (Revised 2024) makes this explicit), and obtain sufficient appropriate audit evidence about the feasibility of management's plans. If management's plan depends on third-party support (a parent company guarantee, a shareholder loan, a bank refinancing), the revised standard requires evidence of that party's intent and ability to provide support.

The extended assessment period

The shift from "twelve months from the date of the financial statements" to "twelve months from the date of approval of the financial statements" affects every engagement. The practical impact depends on how long after year-end the entity approves its financial statements.

For a 31 December 2027 year-end with financial statements approved on 30 April 2028, the current standard requires an assessment period to at least 31 December 2028. The revised standard requires an assessment period to at least 30 April 2029. That's four additional months.

Your going concern working paper needs to record the expected approval date at planning and confirm the assessment period covers the required minimum. If management's assessment only covers twelve months from the balance sheet date (the old requirement), you need to request an extension. Document that request and management's response.

Watch for gap items

For entities with seasonal cash patterns or debt maturities falling in the gap between the old and new assessment period endpoints, the extended period could change the going concern conclusion. A revolving credit facility maturing in February 2029 falls outside the old assessment window for a December 2027 year-end but inside the new one. Flag any such items in your planning working paper.

New auditor's report content

Every auditor's report under ISA 570 (Revised 2024) must include one of two sections.

When no material uncertainty exists: The report includes a new "Going concern" section. This section contains two explicit conclusions. The auditor states that management's use of the going concern basis of accounting in preparing the financial statements is appropriate. The auditor also states whether, based on the audit evidence obtained, a material uncertainty exists related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern.

For listed entities where management has made significant judgements in concluding that no material uncertainty exists (the "close call"), the Going concern section includes additional description of those judgements and the auditor's evaluation. The current standard has no equivalent requirement.

When a material uncertainty exists: The report includes a "Material uncertainty related to going concern" section, similar to the current standard but with the two explicit conclusions added. When the financial statements adequately disclose the material uncertainty, the auditor includes the explicit conclusions and a reference to the relevant disclosures. When they don't, ISA 705 (Revised) applies and the opinion is modified.

Update your report template now. Draft the Going concern section language for the "no material uncertainty" scenario, because that wording will apply to the majority of your engagements. The IAASB has published illustrative wording in ISA 570 (Revised 2024) for both unlisted and listed entity scenarios.

Worked example: updating the going concern file for Mulder Bouw B.V.

Mulder Bouw B.V. is a Dutch construction company with €28M revenue. The entity has a €4M bank loan with Rabobank maturing in November 2028. Net profit for 2027 was €410K. The owner-manager runs the company. Financial statements for the year ended 31 December 2027 will be approved in May 2028. The entity has no formal going concern assessment document.

Before (current ISA 570 file)

The going concern working paper contains a single section: "The engagement team performed inquiry and analytical procedures at planning. The entity's bank loan (€4M) matures in November 2028, which is within the assessment period. Management confirmed that refinancing discussions with Rabobank are underway. The entity's cash position is stable. No material uncertainty identified. Going concern basis appropriate."

Events and mitigation are assessed together. No evaluation of management's method or assumptions. The assessment period runs to December 2028.

After (ISA 570 (Revised 2024) file)

Section 1: Gross identification of events and conditions

The engagement team identified the following events and conditions that may cast significant doubt on Mulder Bouw B.V.'s ability to continue as a going concern, assessed on a gross basis (before considering management's plans for future actions):

The entity's €4M bank loan with Rabobank matures in November 2028. Without refinancing, the entity would not be able to repay the principal from operating cash flows (2027 operating cash flow was €1.2M).
The construction sector in the Netherlands is experiencing margin pressure from rising material costs (the CBS construction cost index rose 4.8% year-on-year to Q3 2027).
Two fixed-price contracts signed in early 2027 (combined value €6.4M) carry embedded cost risk if material prices continue to rise.

Section 2: Evaluation of management's going concern assessment

Management's assessment: Mulder Bouw has no formal going concern assessment document. The owner-manager, H. Mulder, confirmed in discussion on 18 October 2027 that the entity intends to continue trading and expects to refinance the Rabobank facility. The auditor requested that management prepare a written assessment covering the period to at least May 2029 (twelve months from the expected approval date of the financial statements).

Management provided a cash flow forecast covering the period to June 2029. The forecast assumes revenue of €30M for 2028 (7% growth over 2027), a gross margin of 14% (consistent with 2027 actual), refinancing of the Rabobank facility by August 2028, and no further increase in material costs beyond the forecast rate.

The auditor evaluated these assumptions. Revenue growth of 7% is consistent with Mulder Bouw's pipeline (€32M of signed contracts for 2028). Gross margin of 14% is consistent with 2027 actuals but assumes stable material costs, which contradicts the rising trend. The auditor performed sensitivity analysis: a margin decline to 12% reduces forecast cash flow by €560K but does not create a cash shortfall within the assessment period. Refinancing: the auditor obtained a letter from Rabobank dated 12 February 2028 confirming that a refinancing proposal is under discussion and that the bank has no current intention to withdraw the facility.

Section 3: Conclusion

Based on the audit evidence obtained, management's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. No material uncertainty exists related to events or conditions that, individually or collectively, may cast significant doubt on Mulder Bouw B.V.'s ability to continue as a going concern.

Section 4: Auditor's report content

The auditor's report will include a "Going concern" section with the following conclusions: management's use of the going concern basis is appropriate, and no material uncertainty exists related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern.

Your update checklist

Split your going concern template into two distinct sections: gross identification (events and conditions, no mitigation) and net evaluation (management's plans, feasibility, conclusion). This structural change is the single most important update.
Add a management assessment evaluation section that applies to every engagement, including those with no identified events or conditions. For low-risk entities, this section should record the nature of management's assessment, the period covered, the key assumptions, and the auditor's evaluation of consistency with other audit evidence.
Record the expected approval date of the financial statements in your planning working paper. Confirm that management's going concern assessment covers at least twelve months from that date. If management's assessment falls short, document your request for extension and management's response.
Update your auditor's report template to include a "Going concern" section for engagements with no material uncertainty. Draft the two explicit conclusions using the illustrative wording in ISA 570 (Revised 2024). For listed entity engagements, add the incremental "close call" description requirements.
For entities where management's plans rely on third-party support (refinancing, parent guarantees, shareholder loans), create a documentation prompt for evidence of that party's intent and ability to provide support. ISA 570 (Revised 2024) makes this explicit.
Review your engagement letter templates. The going concern assessment period change may need to be communicated to management early, particularly for entities that have historically provided a going concern assessment covering only twelve months from the balance sheet date.

Common mistakes to watch for

The FRC's 2022–23 Tier 2 and Tier 3 inspection identified going concern deficiencies in 38% of files inspected. The most frequent finding was insufficient procedures to test cash flow forecasts and assess the impact of sensitivities in the going concern model. Under ISA 570 (Revised 2024), where the mandatory evaluation applies to every engagement, this deficiency will be more visible because even files with no identified indicators will now contain a documented evaluation of management's forecast.

The FRC also identified inadequate procedures to evaluate the impact of covenant breaches on continued availability of financing. The revised standard's gross-basis requirement means you document the breach as an event before considering management's remediation plan. Teams that jump straight to "management obtained a waiver" without first recording the breach on a gross basis will have a structural deficiency in their file.

Frequently asked questions

What is the biggest structural change to the going concern working paper under ISA 570 (Revised 2024)?

The working paper must separate gross-basis identification of events and conditions (before considering management's mitigating plans) from the evaluation of management's plans. Under the current standard, most templates combine these into a single assessment. The revised standard requires two distinct sections: identification first, then evaluation.

Do I need to evaluate management's going concern assessment even when there are no indicators?

Yes. ISA 570 (Revised 2024) requires the auditor to evaluate management's assessment on every audit, regardless of whether events or conditions have been identified. For low-risk entities, this means documenting the nature of management's assessment, the period covered, the key assumptions, and the auditor's evaluation of consistency with other audit evidence.

How does the assessment period change under ISA 570 (Revised 2024)?

The assessment period extends from twelve months from the balance sheet date (under the current standard) to twelve months from the date of approval of the financial statements. For a December 2027 year-end with financial statements approved in April 2028, this means the assessment period extends to at least April 2029 rather than December 2028.

What new content is required in the auditor's report under ISA 570 (Revised 2024)?

Every auditor's report must now include a Going concern section with two explicit conclusions: whether management's use of the going concern basis is appropriate, and whether a material uncertainty exists. Under the current standard, going concern language appeared only when a material uncertainty existed or the going concern basis was inappropriate.

What should I document when management has no formal going concern assessment?

You still need to evaluate management's implicit method, assumptions, and data. Document what management's assessment consists of (a board discussion, a brief memo, or an informal assessment), what period it covers, what significant assumptions management relied on, and whether those assumptions are consistent with audit evidence obtained elsewhere in the file. The depth scales with the entity's complexity, but the documentation must exist.