IAASB issues revised going concern standard for auditors

The International Auditing and Assurance Standards Board (IAASB) has released its revised International Standard on Auditing 570 (Revised 2024), Going Concern. The revised standard responds to corporate failures that raised questions regarding auditors’ responsibilities by significantly enhancing the auditor’s work in evaluating management’s assessment of an entity’s ability to continue as a going concern. The revise standard is effective for audits of financial statements for periods beginning on or after 15 December, 2026.

ISA 570 (Revised 2024) introduces several key changes:

• Robust risk assessment. Auditors must conduct, in a more timely manner, thorough risk assessments to determine whether events or conditions are identified that may cast significant doubt on the entity’s ability to continue as a going concern.
• Evaluating Management’s Assessment. Auditors must evaluate management’s assessment of going concern irrespective of whether events or conditions are identified. In doing so, auditors must consider the potential for management bias and evaluate the underlying method, significant assumptions, and data used when management formed its assessment. Additionally, auditors must evaluate whether management’s judgements and decisions indicate potential bias.
• Extended date of evaluation period. The auditor’s evaluation period for going concern now extends at least twelve months from the date of approval of the financial statements, contributing to an assessment of more relevant, decision-useful information.
• Enhanced transparency. The standard requires clearer communication in the auditor’s report about the auditor’s responsibilities and work related to going concern and strengthened communications with those charged with governance and external parties.

The IAASB also developed a fact sheet and Basis for Conclusions, which are available on the IAASB’s website. The IAASB will also issue a frequently asked questions document and technical overview video to support the revised standard’s implementation.