Financial Reporting: Revised ISA 570

Strengthening the Auditor’s Role in Going Concern

The approval of ISA 570 (Revised 2024), Going Concern is one of the most important recent developments in auditing. Effective for audits of financial statements for periods beginning on or after 15 December 2026, the revised standard responds to increased stakeholder expectations for stronger auditor procedures and greater transparency in reporting. These expectations have been shaped by high-profile corporate failures, economic uncertainty, and the lessons learned from the COVID period.

The revised standard is intended to promote more consistent auditor behaviour, strengthen the evaluation of management’s going concern assessment, and improve communication with users of financial statements. In practice, it raises the bar for both auditors and management.

What’s changed?

One of the most significant changes is the introduction of a new Going Concern section in the auditor’s report. Under the revised standard, the auditor will now provide two explicit conclusions: whether management’s use of the going concern basis of accounting is appropriate, and whether the auditor has identified a material uncertainty related to going concern. This is a notable shift from previous reporting, where these conclusions were often implicit rather than clearly stated. The change is aimed at providing users with more direct and transparent information.

Listed entities

For listed entities, the reporting requirements are even more extensive. Where a material uncertainty exists, or where there is a “close call” requiring significant judgement to conclude that no material uncertainty exists, the auditor must explain how management’s assessment was evaluated. This additional disclosure is designed to improve transparency and provide investors with more entity-specific insight into the auditor’s work.

Forward-looking period extended

Another important change is the required period of management’s assessment. Management must now assess going concern for at least twelve months from the date of approval of the financial statements, rather than twelve months from the reporting date. This extends the forward-looking period and ensures the assessment is more current and useful for decision-making. If management’s assessment covers a shorter period, the auditor must request that it be extended and consider the implications if management refuses.

Other features of the Standard

The revised standard also significantly enhances the auditor’s work effort in evaluating management’s assessment. Auditors are now required to evaluate the method, significant assumptions, and underlying data used by management, regardless of whether any events or conditions indicating financial stress have been identified. This is an important shift, as the auditor’s work is no longer limited to situations where there are clear signs of distress. Instead, it requires a more disciplined and structured review of how management reached its conclusion.

The standard also clarifies that events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern should first be identified on a gross basis, before considering mitigating factors in management’s plans. Only after these risks are identified should the auditor assess whether management’s proposed actions are capable of addressing them. This helps separate the identification of risk indicators from the evaluation of management’s response.

Where management’s plans include measures such as restructuring debt, raising capital, reducing costs, or obtaining financial support from third parties or related parties, the auditor must evaluate not only the feasibility of those plans but also management’s intent and ability to implement them. If support from owners, group entities, or other parties is critical, the auditor must obtain evidence about those parties’ willingness and ability to provide such support.

The revised ISA 570 also strengthens communication requirements with those charged with governance, emphasising timely two-way dialogue on matters such as identified events or conditions, the adequacy of disclosures, and management’s plans. In some circumstances, the auditor may also need to consider whether there is a responsibility to communicate externally to an appropriate authority.

Overall, ISA 570 (Revised 2024) represents a substantial strengthening of the auditor’s responsibilities in relation to going concern. It reinforces the need for professional scepticism, stronger audit evidence, clearer reporting, and more robust management assessments. For audit firms, finance teams, and those charged with governance, the message is clear: preparation should begin well before the effective date. Better processes, better documentation, and earlier engagement on going concern matters will be essential to meet the expectations of the revised standard.

You can read more about the ISA 570 (Revised 2024) Going Concern on the IAASB website.

Contact your Bentleys Advisor to discuss how you need to incorporate ISA 570 (Revised 2024), Going Concern into your audit on or after 15 December 2026.