Key takeaways

• ISA 570 (Revised 2024) applies to audits of financial statements for periods beginning on or after 15 December 2026.
• Even when no material uncertainty exists, the auditor’s report must include a separate section headed ‘Going Concern’.
• For publicly traded entities, ‘close call’ situations and cases of material uncertainty require a bespoke description of how the auditor evaluated management’s assessment.
• If a material uncertainty is not adequately disclosed, the auditor must express a qualified or adverse opinion.
• Communicating Key Audit Matters does not replace ISA 570 reporting, but the KAM section must cross-refer to the going concern section.

The International Standard on Auditing (ISA) 570 (Revised 2024), Going concern requires auditors to clearly describe the outcome of the auditor’s evaluation of management’s going concern assessment in the auditor’s report. With the revised standard becoming effective for audits of financial statements for periods beginning on or after 15 December 2026, auditors must prepare for their increased reporting responsibilities.

Use of the going concern assumption is appropriate and no material uncertainty exists

If the auditor concludes that the going concern basis of accounting is appropriate and no material uncertainty exists, the auditor still needs to include a separate section in the auditor’s report with the heading ‘Going Concern’. This section must include a clear statement on going concern, including the following:

1. The auditor concluded that management’s use of the going concern basis of accounting is appropriate.
2. Based on the audit evidence obtained, the auditor did not identify a material uncertainty related to going concern.
3. The auditor’s conclusions are based on audit evidence obtained up to the date of the auditor’s report and are not a guarantee.

For an audit of a publicly traded entity, when significant judgments are made by management in concluding that there is no material uncertainty, a so-called ‘close call’ situation, the ‘Going Concern’ section must also include:

1. A reference to the related disclosure in the financial statements, if any
2. A description of how the auditor evaluated management’s assessment of the entity’s ability to continue as a going concern.

Use of the going concern assumption is appropriate and a material uncertainty exists

If the auditor concludes that the going concern basis of accounting is appropriate, but a material uncertainty exists, the reporting depends on whether adequate disclosure is made in the financial statements.

If adequate disclosure of the material uncertainty is made in the financial statements, the auditor expresses an unmodified opinion and includes a separate section in the auditor's report with the heading, ‘Material Uncertainty Related to Going Concern’. This section must include the following:

1. A reference to the related disclosure in the financial statements
2. A statement that a material uncertainty exists
3. A statement that the auditor’s opinion is not modified in relation to the matter
4. A statement that the auditor concluded that management’s use of the going concern basis of accounting is appropriate
5. A statement that the auditor’s conclusions are based on audit evidence obtained up to the date of the auditor’s report and are not a guarantee.

For an audit of a publicly traded entity, the ‘Material Uncertainty Related to Going Concern’ section must also include a description of how the auditor evaluated management’s assessment of the entity’s ability to continue as a going concern.

If adequate disclosure is not made in the financial statements, the auditor must express a qualified or adverse opinion. In the ‘Basis for Qualified or Adverse Opinion’ section of the auditor’s report, the auditor must state that a material uncertainty exists and that the financial statements do not adequately disclose this matter. Additionally, in a separate section of the auditor’s report with the heading, ‘Material Uncertainty Related to Going Concern’, the auditor must:

1. Draw attention to the ‘Basis for Qualified or Adverse Opinion’ section of the auditor’s report
2. State that the auditor concluded that management’s use of the going concern basis of accounting is appropriate
3. State that the auditor’s conclusions are based on audit evidence obtained up to the date of the auditor’s report and are not a guarantee.

Use of the going concern basis of accounting is inappropriate or a disclaimer of opinion

If the auditor disclaims an opinion on the financial statements, the auditor must not include separate sections on ‘Going Concern’ or ‘Material Uncertainty Related to Going Concern’ in the auditor's report.

Similarly, if the financial statements have been prepared using the going concern basis of accounting, but the use of the going concern basis of accounting is inappropriate, the auditor must express an adverse opinion and must not include separate sections on ‘Going Concern’ or ‘Material Uncertainty Related to Going Concern’ in the auditor's report.

Additional reporting requirements for audits of publicly traded entities

There are two cases (‘close call’ situations and instances where a material uncertainty is identified) where the auditor is required to provide a description in the audit report of how the auditor evaluated management’s assessment of the entity’s ability to continue as a going concern. This description must be bespoke and should reflect the facts and circumstances of each particular audit engagement. These reporting requirements are aimed at promoting greater transparency and user understanding of going concern risks.

The following elements may be considered when providing this description:

• A brief overview of procedures performed
• An indication of the outcome of the procedures
• Aspects of the auditor’s approach that were most relevant
• Key observations about the events and conditions that may cast significant doubt on the entity’s ability to continue as a going concern

Refer to the Frequently Asked Questions on ISA 570 (Revised 2024), developed by the IAASB staff.

These FAQs discuss the reporting requirements of the standard in more detail and provide an illustrative example.

It should be noted that communicating Key Audit Matters (KAM) does not substitute reporting in accordance with ISA 570 (Revised). Where a material uncertainty or a ‘close call’ situation exists, these are by their nature KAM. However, the auditor must reference from the KAM section to the ‘Going Concern’ or ‘Material Uncertainty Related to Going Concern’ section. Illustrations 2, 4 and 5 in the appendix to ISA 570 (Revised 2024) provides illustrative examples of such referencing.

Conclusion

It is important to update methodologies and reporting templates in time for the effective date of the revised standard, and staff must be trained on the changes. It will also take some time to get used to it during implementation. LEAF can assist practitioners with navigating these changes to prevent unnecessary disruption.

References

1. ISA 570 (Revised 2024), Going concern
2. IAASB Staff Update May 2025: Frequently Asked Questions, Reporting going concern matters in the auditor’s report

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