Going Concern Checklist for Retail
Tailored going concern assessment for retail entities. Covers industry-specific indicators including same-store sales decline, lease burden, consumer behaviour shifts, and seasonal cash flow dependencies.
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.
No spam. We're auditors, not marketers.
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: Retail
Retail entities are particularly vulnerable to going concern risk because of their high fixed-cost structure (primarily store leases and staff), thin margins, and sensitivity to consumer spending patterns. A decline in foot traffic, a shift to online competitors, or a failed seasonal trading period can rapidly consume cash reserves. The interaction between lease obligations under IFRS 16 and declining revenue is a common trigger for going concern concerns.
Key risk factors: Retail
Key retail going concern indicators include: negative same-store sales trends over consecutive periods, inability to renew or exit onerous store leases, increasing reliance on supplier credit or overdraft facilities, seasonal cash flow dependency where a poor Christmas or peak trading period cannot be recovered, and loss of key concessions or franchise agreements. For fashion and seasonal retailers, the risk of inventory obsolescence adds a valuation dimension to the going concern assessment.
Same-store sales trends (excluding new openings) are the most reliable indicator of underlying performance — two or more consecutive quarters of decline warrant close scrutiny of cash flow projections.
Lease obligations under IFRS 16 create significant fixed commitments — assess whether the entity can meet lease payments from operations, and whether landlords have agreed or are likely to agree to rent concessions.
Supplier payment terms and trade credit availability — if suppliers are tightening terms or demanding payment on delivery, working capital will be squeezed precisely when the entity can least afford it.
Seasonal cash flow dependency — retailers that generate a disproportionate share of annual cash flow in a single period (e.g. Christmas, back-to-school) face binary risk if that period underperforms.
Online competition and channel shift — assess whether the entity's omnichannel strategy is viable or whether physical store economics are permanently impaired.
Inventory liquidation — if the entity is heavily discounting to clear stock, this signals both demand weakness and margin erosion that directly impacts cash flow forecasts.