ISA 570 (Revised) — Going Concern: Complete Guide

Key Takeaways

ISA 570 (Revised) addresses one of the most publicly scrutinised areas of auditing: whether an entity can continue as a going concern. Corporate failures shortly after clean audit opinions have repeatedly damaged public trust in auditing.
The auditor's responsibilities include: evaluating management's assessment, remaining alert throughout the audit for going concern indicators, performing additional procedures when events or conditions are identified, evaluating the adequacy of disclosures, and reporting appropriately.
Management must assess the entity's ability to continue as a going concern for at least twelve months from the reporting date (under IAS 1). The auditor evaluates this assessment regardless of whether indicators of doubt have been identified.
When events or conditions are identified that may cast significant doubt, the auditor must perform additional procedures — evaluating management's plans, assessing their feasibility, and obtaining written representations.
The reporting consequences depend on the conclusion: no material uncertainty → unmodified opinion (with possible "close call" disclosure); material uncertainty exists but adequately disclosed → unmodified opinion with a "Material Uncertainty Related to Going Concern" section; material uncertainty inadequately disclosed → qualified or adverse opinion; going concern basis inappropriate → adverse opinion.
ISA 570 (Revised 2024) has been approved by the IAASB and is effective for periods beginning on or after 15 December 2026. It significantly expands the auditor's responsibilities, including mandatory evaluation of management's method, assumptions, and data; a dedicated "Going Concern" section in all auditor's reports; and enhanced transparency for "close call" situations.

What is ISA 570?

ISA 570 (Revised), titled "Going Concern," addresses the fundamental assumption underpinning virtually all financial statements: that the entity will continue in business for the foreseeable future. If this assumption is wrong, the financial statements may need to be prepared on a different basis (break-up or liquidation), and the values assigned to assets and liabilities could change dramatically.

The standard exists because users of financial statements — investors, lenders, suppliers, employees — rely on the auditor to flag situations where continuity is in doubt. The expectation gap in this area is significant: the public often assumes the auditor guarantees the entity's survival, while the standard requires the auditor to evaluate and report on management's assessment.

Going Concern Indicators

ISA 570 provides examples of events or conditions that, individually or collectively, may cast significant doubt on going concern:

Financial indicators

Net liability or net current liability position. Fixed-term borrowings approaching maturity without realistic prospects of renewal or repayment. Excessive reliance on short-term borrowings to finance long-term assets. Adverse key financial ratios. Substantial operating losses or significant deterioration in the value of assets used to generate cash flows. Arrears or discontinuance of dividends. Inability to pay creditors on due dates. Inability to comply with loan covenants. Change from credit to cash-on-delivery transactions with suppliers.

Operating indicators

Management intentions to liquidate or cease operations. Loss of key management without replacement. Loss of a major market, key customer, franchise, licence, or principal supplier. Labour difficulties. Shortages of important supplies. Emergence of a highly successful competitor.

Other indicators

Non-compliance with capital or other statutory or regulatory requirements. Pending legal or regulatory proceedings against the entity that may result in claims the entity cannot satisfy. Changes in law or regulation or government policy expected to adversely affect the entity. Uninsured or underinsured catastrophes.

The Auditor's Process

Step 1: Risk assessment procedures

The auditor must consider whether events or conditions exist that may cast significant doubt on going concern. This is not a one-time check — the auditor must remain alert throughout the audit.

Step 2: Evaluating management's assessment

Regardless of whether indicators are identified, the auditor must evaluate management's assessment of the entity's ability to continue as a going concern. This includes considering whether management's assessment covers at least twelve months from the reporting date and evaluating the process and underlying assumptions.

Step 3: Additional procedures when doubt is identified

When events or conditions are identified, the auditor must:

Request management to make or extend its assessment if it has not already done so.
Evaluate management's plans for future actions — such as plans to liquidate assets, borrow money, restructure debt, reduce expenditures, or increase equity.
Evaluate the feasibility of these plans and whether their outcome will improve the situation.
Obtain written representations regarding management's plans and the feasibility of those plans.
Consider whether any additional facts or information have become available since management's assessment.

Step 4: Conclude on going concern

Based on the evidence obtained, the auditor concludes whether a material uncertainty exists:

Conclusion	Disclosure	Audit Report
No events/conditions identified	Normal disclosures	Unmodified opinion
Events/conditions identified, but no material uncertainty after evaluation	Adequate disclosure may be needed	Unmodified opinion (may be a "close call" requiring KAM disclosure for listed entities)
Material uncertainty exists, adequately disclosed	Going concern note with required disclosures	Unmodified opinion + "Material Uncertainty Related to Going Concern" section
Material uncertainty exists, inadequately disclosed	Disclosure deficiency	Qualified or adverse opinion (depending on pervasiveness)
Going concern basis inappropriate	Financial statements should be on break-up basis	Adverse opinion
Management unwilling to assess	Scope limitation	Qualified opinion or disclaimer

The "close call" situation

One of the most challenging scenarios is the "close call" — where events or conditions are identified that may cast significant doubt, but after evaluating management's plans, the auditor concludes that no material uncertainty exists. This is not a clean bill of health: it means the entity faced genuine going concern risks that were resolved by management's mitigating actions.

For listed entity audits, this situation should typically be communicated as a Key Audit Matter (ISA 701). Under the upcoming ISA 570 (Revised 2024), close call transparency will be further enhanced with explicit requirements for the auditor to describe the evaluation in the report.

ISA 570 (Revised 2024): What's Coming

The IAASB approved ISA 570 (Revised 2024) in April 2025, effective for periods beginning on or after 15 December 2026. Key changes include:

Mandatory evaluation of management's assessment. The auditor must evaluate the method, significant assumptions, and data underlying management's assessment in all cases — not only when indicators of doubt are identified.

Management bias. The auditor must consider potential management bias in the going concern assessment, including overly optimistic assumptions.

Extended evaluation period. The evaluation now extends at least twelve months from the date of approval of the financial statements (not the reporting date), which may extend the look-forward period.

New auditor's report section. All auditor's reports will include a dedicated "Going Concern" section with explicit conclusions about whether management's use of the going concern basis is appropriate and whether a material uncertainty has been identified.

Enhanced "close call" transparency. For listed entities, when events or conditions are identified but no material uncertainty exists, the auditor must describe how the evaluation was conducted.

Reporting to external authorities. New requirement to consider reporting to regulators when a material uncertainty section or modified opinion is included.

ISA 570 in Your Jurisdiction

Netherlands. COS 570 follows ISA 570 (Revised). Going concern has been a major focus of AFM inspections, particularly in the wake of corporate failures. The AFM has criticised auditors for insufficient challenge to management's assumptions, over-reliance on management's representations without independent corroboration, and inadequate documentation of the going concern evaluation. Dutch company law requires the management board to include a continuity paragraph in the annual report.

Germany. IDW PS 570 adapts ISA 570 (Revised). German practice has specific going concern considerations under the HGB, including the obligation to report in the Prüfungsbericht on going concern risks. The Fortführungsprognose (going concern prognosis) is a formal element of the auditor's evaluation. German insolvency law (InsO) creates additional urgency: directors have a legal obligation to file for insolvency within specific timeframes, and the auditor must consider whether these obligations are being met.

United Kingdom. ISA (UK) 570 (Revised) goes further than the international standard. The UK requires the auditor to conclude and report explicitly on whether management's use of the going concern basis is appropriate. The UK Corporate Governance Code requires directors to state whether the company is a going concern and to make a separate "viability statement" covering a longer period (typically three to five years). The FRC has identified going concern as a persistent audit quality concern.

France. NEP 570 implements ISA 570 (Revised). French company law requires the commissaire aux comptes to report going concern doubts through a specific mechanism — the procédure d'alerte (alert procedure). This is a graduated process: the auditor first questions the president/gérant in writing, and if the response is unsatisfactory, escalates to the board, shareholders, or the commercial court. This goes significantly beyond the international standard and gives the French auditor a quasi-regulatory role in going concern situations.

Frequently Asked Questions

Does the auditor guarantee that the entity will survive?

No. The auditor evaluates management's assessment of going concern and concludes on whether a material uncertainty exists. The audit opinion does not provide assurance about the entity's future viability — it provides assurance about whether the financial statements are prepared appropriately given the going concern assessment.

What if management's assessment covers less than twelve months?

The auditor must request management to extend the assessment to at least twelve months from the reporting date. If management refuses, the auditor considers the implications — this may constitute a scope limitation leading to a qualified opinion or disclaimer.

Does a "Material Uncertainty" paragraph mean the entity is going to fail?

No. It means the auditor has identified a material uncertainty — the entity's ability to continue as a going concern is in significant doubt, but the outcome is uncertain. Many entities that receive this paragraph in the audit report continue to operate successfully.

What is the difference between ISA 570 and ISA 560?

ISA 570 deals with the going concern assumption. ISA 560 deals with subsequent events more broadly. There is overlap: going concern indicators may be discovered during the subsequent events review (ISA 560), and ISA 570 specifically requires the auditor to consider events up to the date of the auditor's report.