Going Concern Checklist for Real Estate
Tailored going concern assessment for real estate entities. Covers industry-specific indicators including vacancy rates, loan-to-value covenants, refinancing risk, and tenant creditworthiness.
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: Real Estate
Real estate entities face going concern risks that are amplified by leverage. Property companies typically carry significant debt secured against their portfolio, with covenants tied to property valuations and rental income coverage ratios. A decline in property values, an increase in vacancy rates, or the insolvency of a major tenant can trigger covenant breaches that cascade into going concern doubts.
Key risk factors: Real Estate
Key real estate going concern indicators include: vacancy rates rising above the level required to service debt, approaching loan maturity dates without committed refinancing, LTV covenant breaches triggered by declining property valuations, insolvency or lease default by major tenants, rising interest rates increasing debt service costs beyond rental income coverage, and inability to fund committed development projects or contractual obligations.
LTV covenant compliance — recalculate LTV ratios using current valuations (not book values) to assess proximity to covenant thresholds. A 5–10% decline in values could trigger breaches.
Debt maturity schedule — assess whether loans maturing within 12 months have committed refinancing. In tight credit markets, refinancing is not guaranteed, especially for secondary assets.
Vacancy rate trajectory — are vacancies increasing? Calculate the void period before new tenants are secured and whether rental income covers debt service during voids.
Tenant creditworthiness — assess the financial health of the top 5–10 tenants by rental income. The insolvency of a single major tenant can collapse income coverage ratios.
Interest rate exposure — for variable-rate debt, model the impact of rate increases on debt service coverage. If interest rate hedges are expiring, the entity faces increased exposure.
Development commitments — entities with projects under construction have contractual obligations to complete them. Assess whether funding is in place and whether the completed project will generate sufficient returns.