Going Concern Checklist for Energy
Tailored going concern assessment for energy entities. Covers industry-specific indicators including commodity price exposure, reserve adequacy, decommissioning obligations, and energy transition risks.
Engagement context
Set the entity details for your working paper. The assessment period is calculated per ISA 570.3.
Indicators
Check all indicators that apply to the entity. 21 indicators from ISA 570.A2/A7 including ISA 570 (Revised 2024) additions. Expand any indicator to see working paper guidance and the likely review challenge.
ISA 570 Going Concern Reference Card: free PDF
One page for your planning folder: the indicator severity matrix, ISA 570.3 assessment period checklist, draft MURGC paragraph, ISA 570.16–.19 evidence requirements, and a summary of the key ISA 570 (Revised 2024) changes effective December 2026. Plus one practical audit insight per week.
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How the score works
Each indicator is weighted by severity: High = 3 points, Medium = 2 points, Low = 1 point.
Assessment levels are determined by two criteria (whichever is met first):
- Substantial doubt: ≥2 high-severity indicators OR weighted score ≥8
- Significant concern: ≥1 high-severity indicator OR weighted score ≥4
- Limited concern: Weighted score ≥1
- No indicators: Score = 0
The 21 indicators are sourced from ISA 570.A2 (current) and ISA 570 (Revised 2024) A7, covering financial, operating, and other categories.
This scoring is a starting point for professional judgment. The auditor must consider entity-specific circumstances, industry context, and the collective effect of indicators when forming a conclusion.
ISA 570.9: The auditor shall evaluate management's assessment of the entity's ability to continue as a going concern.
ISA 570.A2/A7: Events or conditions that may cast significant doubt include financial, operating, and other indicators.
ISA 570.16: If events or conditions have been identified, the auditor shall obtain sufficient appropriate audit evidence about whether a material uncertainty exists.
Going concern assessment: Energy
Energy companies face going concern risks driven by commodity price volatility, capital-intensive operations, and the structural shift toward renewable energy. Upstream oil and gas entities are exposed to price cycles that can render reserves uneconomic, while utilities face regulatory and transition risks as energy markets decarbonise. The long-term nature of decommissioning obligations adds a unique dimension — these liabilities can exceed the entity's equity if asset values decline.
Key risk factors: Energy
Key energy sector going concern indicators include: commodity prices sustained below the entity's breakeven production cost, proved reserve depletion without adequate replacement through exploration or acquisition, decommissioning obligation funding shortfalls, regulatory changes that strand assets or reduce allowable returns, loss of key licences or concessions, and inability to fund the capital expenditure required for energy transition.
Commodity price sensitivity — model the entity's cash flows at current commodity prices, not at management's optimistic forecasts. Assess the breakeven oil/gas price and how long the entity can sustain operations below breakeven.
Reserve replacement ratio — if the entity is producing reserves faster than replacing them, this signals a finite operational life. Assess the remaining reserve life at current production rates.
Decommissioning obligations — these are often large and long-dated. Assess whether the entity has adequate financial provision or security (bonds, guarantees) to meet these obligations, particularly if asset values are declining.
Regulatory and licence risk — energy entities depend on government-granted licences and concessions. Changes in regulatory regime, environmental requirements, or carbon pricing can fundamentally alter the economics.
Energy transition exposure — assess the entity's strategy for the energy transition. Fossil fuel assets may face accelerated depreciation or impairment if they become stranded assets.
Hedging programme — energy companies often hedge future production. Assess the extent and tenor of the hedging programme — a well-hedged entity has protected near-term cash flows even if spot prices decline.