Key Points
- The revised standard takes effect for periods beginning on or after 15 December 2026, giving firms roughly one year to update templates.
- Every audit report must now include a going concern section, not only those with material uncertainty.
- Auditors must evaluate events and conditions on a "gross" basis before factoring in management's plans.
- "Close call" situations move from the KAM section to the dedicated going concern section of the report.
Side-by-side comparison
| Dimension | Current ISA 570 (Revised) | ISA 570 (Revised 2024) |
|---|---|---|
| Going concern section in audit report | Required only when material uncertainty exists | Required on every audit, regardless of findings |
| Evaluation of events and conditions | Assessed together with management's mitigating plans | Evaluated "gross" first (paras 11–12), then mitigating plans assessed separately |
| Assessment period | 12 months from the balance sheet date | 12 months from the date of approval of the financial statements |
| "Close call" reporting | Typically reported as a KAM under ISA 701 | Must appear in the going concern section, with a KAM cross-reference |
| Explicit auditor conclusions | Implicit in opinion wording | Two explicit conclusions required: on management's use of the going concern basis and on whether material uncertainty exists |
| Management plan verification | Evaluate reasonableness of plans | Evaluate both intent and ability to execute plans, with written third-party support evidence where relevant |
What is ISA 570 Revised 2024 vs Current ISA 570?
The biggest operational change hits every engagement, not just troubled clients. Under the current standard, if no going concern indicators exist, the auditor documents that assessment and moves on. The report says nothing about going concern unless there is a problem. Under ISA 570 (Revised 2024) paragraph 22, every audit report must include a going concern section with explicit conclusions. That means firms need a going concern reporting template for clean engagements, not just distressed ones.
For engagements where indicators exist but the auditor concludes no material uncertainty remains after evaluating management's plans (the "close call"), the revised standard requires disclosure of those events and conditions in the going concern section. Under the current standard, that information often sits in the KAM section or is omitted entirely. The shift forces transparency about near-misses that regulators have repeatedly flagged as under-reported.
Worked example: Schröder Haustechnik GmbH
Client: German building services company, FY2027 (first year under revised standard), revenue €28M, HGB reporter. The financial statements are approved on 15 April 2028.
Step 1 — Identify events and conditions (gross)
The engagement team identifies two indicators. First, the client lost its largest contract (18% of revenue) in November 2027. Second, a €3.2M bank facility expires in June 2028 with no renewal commitment. The team documents both on a gross basis, before considering any management response.
Step 2 — Evaluate management's assessment
Management provides a cash flow forecast showing the company can meet obligations through April 2029 (twelve months from approval date). The forecast assumes two new contracts worth €5M and renewal of the bank facility at similar terms. The team requests the signed engagement letters for the new contracts and a bank letter confirming the renewal is under active negotiation.
Step 3 — Determine reporting outcome
One new contract is signed (€2.8M). The second remains unsigned. The bank provides a letter of intent but not a binding commitment. The engagement partner concludes that events and conditions exist that may cast significant doubt, but after evaluating management's plans (including the signed contract and bank letter of intent), no material uncertainty remains. This is a "close call."
Step 4 — Draft the audit report
The team prepares a going concern section stating both indicators, the evidence obtained, and the basis for concluding no material uncertainty exists. If the team had applied the current ISA 570, the report would contain no going concern section at all, and a reader would not know the client lost its largest contract.
Conclusion: the revised standard surfaces information the current standard allows to remain invisible. Confusing the two reporting models risks either omitting required going concern disclosure (if applying the current standard's logic to a post-2026 engagement) or over-reporting material uncertainty when the revised standard only requires description of the events and conditions.
Why it matters in practice
The AFM's October 2025 exploratory study on going concern found that auditors generally take going concern seriously, but failures occurred where auditors lacked a broad understanding of the client's environment, causing clear indicators to be missed. Insufficient independence from the audit client was cited as a contributing factor.
The FRC's 2025 Annual Review of Audit Quality flagged recurring deficiencies in going concern procedures at Tier 2 and Tier 3 firms: insufficient testing of cash flow forecasts, inadequate sensitivity analysis, and failure to evaluate the impact of covenant breaches on available liquidity.