By Vineet Rathi

The International Standard on Auditing (ISA) 570, Going Concern provides guidance on an auditor’s responsibilities regarding the going concern assumption of financial statements. This principle – that an entity will continue operating for the foreseeable future – is fundamental to financial reporting. ISA 570 was significantly revised in 2016 and again in 2024, in response to high-profile corporate failures and evolving stakeholder expectations. This article compares the 2016 and 2024 versions, highlighting major changes in language, structure, and requirements, and explains how the 2024 revision improves clarity, expands auditor responsibilities, and enhances transparency. We also discuss practical implications for auditors (and CFOs), including changes to audit procedures, risk assessment, documentation, and communication requirements, with examples illustrating the new standard in action. Finally, we conclude with the expected impact on audit quality and the challenges and benefits that may arise.

Background: Evolution of ISA 570 (2016 vs. 2024)

ISA 570 (2016 Revision): The 2016 revision of ISA 570 (introduced as part of the IAASB’s 2015 auditor reporting reforms) aimed to increase transparency after the global financial crisis. A key change in the 2016 version was more explicit wording in the auditor’s report about going concern responsibilities (ASB issues new going concern auditing standard – Journal of Accountancy). For instance, auditors began including a separate “Material Uncertainty Related to Going Concern” paragraph in their reports when applicable, rather than burying going concern issues in a generic emphasis-of-matter. The 2016 standard clarified that auditors must conclude and report if substantial doubt (termed “material uncertainty” internationally) exists about the entity’s ability to continue as a going concern. However, under the 2016 standard the auditor’s reporting on going concern was largely “exception-based,” meaning it only provided detailed commentary when problems were identified (). In other words, if no significant going concern issues were found, the auditor’s report did not elaborate on the going concern conclusion (aside from standard boilerplate language on responsibilities).

ISA 570 (2024 Revision): By 2024, new pressures — including a series of corporate collapses (e.g. major retailers and contractors in the late 2010s) and global shocks like the COVID-19 pandemic — had intensified scrutiny on going concern. Investors, regulators, and the public raised concerns that auditors were not doing enough to flag companies in financial distress (ASB issues new going concern auditing standard – Journal of Accountancy) (ASB issues new going concern auditing standard – Journal of Accountancy). In response, the International Auditing and Assurance Standards Board (IAASB) undertook an overhaul of ISA 570 to further strengthen the standard. The 2024 revision (effective for audits of periods beginning on or after December 15, 2026) “significantly enhanc[es] the auditor’s work in evaluating management’s assessment” of going concern (ISA 570 (Revised 2024), Going Concern | IAASB). It introduces major changes in terminology, requirements, and the auditor’s report to promote consistency, rigor, and transparency in audits of going concern (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). In short, ISA 570 (Revised 2024) “raises the bar” for auditors in terms of responsibility, depth of assessment, and communication, compared to the 2016 version.

Key Changes in the 2024 Revision of ISA 570

The 2024 revision makes several notable enhancements over the 2016 standard. Below is an overview of the major changes:

  • Clearer Definitions and Terminology: The new standard introduces a refined definition of “Material Uncertainty Related to Going Concern (MURGC)” to clarify the meaning of “may cast significant doubt” on going concern (). This added clarity helps ensure consistent interpretation across jurisdictions and aligns understanding between auditors and preparers. In short, the threshold for a material uncertainty is now more clearly defined, improving language precision in the standard.
  • Robust Risk Assessment Procedures: Auditors are now required to perform more robust and timely risk assessment specifically targeting going concern issues (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). The revised ISA 570 emphasizes designing procedures to identify, at an early stage, any events or conditions that might cast significant doubt on the entity’s ability to continue as a going concern (). Importantly, auditors must consider such events on a “gross basis,” without prematurely factoring in management’s potential mitigating plans (). This ensures potential risks are flagged before assuming management will resolve them.
  • Evaluation of Management’s Assessment (Always Required): Under the 2024 standard, auditors must evaluate management’s going concern assessment on every audit, regardless of whether any indicators of going concern problems exist (). This is a substantial expansion from the 2016 version, which effectively required this evaluation primarily when problems were identified. Now, for all audits, the auditor needs to obtain management’s going concern analysis and critically assess the method, data, and significant assumptions management used (). The auditor should also remain alert to management bias – evaluating whether management’s judgments and decisions are overly optimistic or indicate bias in how going concern was assessed (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). In essence, the auditor’s responsibility no longer stops at looking for red flags; it proactively includes validating management’s process even when no obvious red flags appear.
  • Extended Time Horizon for Going Concern Assessment: One of the most impactful changes is the extension of the required evaluation period. Auditors must now ensure management’s assessment covers at least 12 months from the date of approval of the financial statements (i.e. the date the statements are authorized for issue), not just 12 months from the balance sheet date (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). If management used a shorter horizon (for example, only 12 months from period-end), the auditor is required to request management to extend its assessment to meet the new threshold (). If management is unwilling to extend the evaluation appropriately, the auditor must take further actions – including discussing the implications with those charged with governance (e.g. the audit committee) and understanding management’s reasoning (). This change ensures a more forward-looking assessment that captures events in the post-balance-sheet period, yielding more relevant and decision-useful information for users (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). By extending the timeline, the standard addresses scenarios where a company might appear fine at year-end but encounters trouble soon after.
  • Deeper Scrutiny of Management’s Plans and Supporting Evidence: If management’s going concern assessment relies on certain future actions or mitigating plans (for instance, cost-cutting, asset sales, refinancing, or support from a parent company/shareholder), the auditor’s responsibilities have expanded here as well. ISA 570 (2024) explicitly requires the auditor to evaluate both the intent and ability of management to carry out its plans for future actions (). For example, if management plans to obtain financial support from a third party or an owner-manager, the auditor must obtain sufficient appropriate audit evidence about that party’s intent and ability to provide support (ASB issues new going concern auditing standard – Journal of Accountancy). This could involve obtaining written confirmations or support letters, or directly confirming with the funding source (ASB issues new going concern auditing standard – Journal of Accountancy). The 2016 standard discussed considering management’s plans, but the 2024 revision makes this a clear requirement with explicit evidence-gathering – meaning auditors will now routinely seek documentation (or third-party confirmations) for critical elements of management’s going concern mitigation plans.
  • Emphasis on Professional Skepticism: The new standard weaves in stronger language about applying professional skepticism throughout the going concern evaluation. Auditors are reminded (through new requirements and guidance) to design and perform procedures in a neutral, unbiased manner – not just looking for evidence that corroborates management’s optimistic view, but also actively seeking or considering contradictory evidence (). The 2024 ISA 570 explicitly warns against confirmation bias, instructing auditors to avoid procedures that are skewed toward confirming the entity’s ability to continue, and instead to fairly evaluate all evidence. Additionally, auditors must assess whether management’s judgments show any indicators of bias (e.g. assumptions that are overly aggressive or unsupported) (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). This heightened skepticism requirement will likely lead to auditors challenging management more rigorously. In practice, teams might perform more sensitivity analyses on forecasts, critically question management’s assumptions (e.g. growth rates, funding plans), and ensure that pessimistic scenarios have been considered.
  • Enhanced Focus on Disclosures: The 2024 revision places greater stress on the auditor evaluating the adequacy of financial statement disclosures related to going concern. If there are significant judgments made by management in concluding going concern is appropriate (especially when it was a close call), or if there is a material uncertainty, the auditor must assess whether those are properly disclosed in the financial statements (). The standard includes enhanced requirements to reinforce the auditor’s evaluation of whether the financial statements adequately disclose the underlying going concern issues and management’s judgments (). In the 2016 version, auditors certainly had to consider disclosure sufficiency (and modify the opinion if disclosures of a material uncertainty were inadequate), but the new standard bolsters this by explicitly tying it to the auditor’s conclusion process. In other words, auditors must “stand back” and ask: Do the financial statement notes clearly communicate any significant going concern matters? Ensuring transparency in management’s disclosures is now an articulated part of the auditor’s responsibilities.
  • Modernized Guidance (Use of External Information): Recognizing changes in the business environment and auditing techniques, ISA 570 (2024) includes new guidance encouraging auditors to leverage technology and information from external sources when assessing going concern (). For example, auditors might use external economic forecasts, industry trends, credit ratings, or news about major customers/suppliers to inform their risk assessment of the client’s going concern status. The prior standard did not explicitly highlight this, so this addition encourages a more holistic view – auditors looking beyond management’s internal data.
  • Documentation and Written Representations: The revised standard strengthens documentation requirements related to going concern. Auditors will need to document the key elements of their going concern evaluation and conclusions – including the rationale for judgments made. There is also a strengthened requirement to obtain written representations from management regarding going concern. For instance, management may be asked to explicitly state in the representation letter that they have disclosed all relevant events/conditions and their plans, and that they believe the going concern basis is appropriate. The 2024 revision introduced new documentation requirements for significant professional judgments and new written representation content to support the auditor’s work (). These changes ensure an audit file contains clear evidence of how going concern was addressed and that management has formally acknowledged its responsibility and views on the matter (important if disagreements or issues later arise).
  • Scalability for Different Sizes of Entities: While the new ISA 570 is more rigorous, it was designed to be scalable. The standard explicitly recognizes that the nature and extent of audit procedures (to evaluate management’s methods, assumptions, data, etc.) should be tailored to the circumstances – taking into account the risk factors identified and the size/complexity of the entity (). Additional guidance and examples were added to illustrate how auditors can scale down the work for smaller, less complex entities while still complying with the standard (). The aim is to avoid a one-size-fits-all approach; a small private company’s going concern work can be proportionate (focusing on the most relevant areas) whereas a large listed company with more complex risks will naturally require more extensive procedures. The 2016 standard also applied to all audits, but these additions in 2024 acknowledge scalability more directly, which is helpful for auditors in practice.
  • Public Sector Considerations: The 2024 revision adds guidance for public sector auditors, acknowledging that going concern in a public sector context (e.g. government entities or not-for-profits) can involve different considerations (such as funding guarantees by governments, or legal dissolution frameworks). New material helps auditors apply ISA 570 to public sector audits appropriately (). This was not a focus in the 2016 version, and its inclusion reflects a broader applicability of the standard.

The above changes collectively upgrade ISA 570 in 2024 to be much more comprehensive and proactive. Next, we delve further into two critical areas: (1) the expanded auditor responsibilities/work effort and (2) the enhanced communication and reporting requirements, and how these compare to the 2016 standard.

Expanded Auditor Responsibilities and Work Effort (2024 vs 2016)

One of the clearest distinctions between the 2024 and 2016 versions is the scope and depth of work the auditor is expected to perform regarding going concern. The new standard not only adds requirements but also provides an enhanced framework for performing the going concern evaluation (). Here we highlight key aspects of auditor responsibilities that have been expanded or clarified:

Risk Assessment Now Starts Earlier and Runs Deeper

Under ISA 570 (Revised 2024), auditors must incorporate going concern considerations robustly into the audit’s risk assessment phase. The standard calls for designing and performing “robust risk assessment procedures” specifically to identify events or conditions that may cast significant doubt on going concern, and to do so “on a timely basis” (). In practical terms, auditors will likely raise going concern as a discussion point at the planning stage with management, inquire about any known issues or future uncertainties, and perhaps perform preliminary analytical reviews (such as trends in cash flows or debt maturity analyses) early in the audit. The 2016 standard certainly required auditors to consider going concern, but the 2024 revision explicitly elevates this to a more structured and urgent assessment. By emphasizing timely risk identification (i.e. not waiting until the audit is almost complete), the revised standard ensures that potential going concern issues are on the auditor’s radar from the beginning, allowing more time for appropriate audit responses. This change improves the likelihood that auditors will uncover and address problems well before the audit opinion is drafted (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB).

Moreover, ISA 570 (2024) clarifies that when performing risk assessment related to going concern, auditors should assume no mitigating factors initially – identify risks on a gross basis (). For example, if a company has a large loan maturing in 9 months, the auditor flags that as a risk factor without yet considering management’s plan to refinance; only after identification will mitigating plans be evaluated. The 2016 version did not spell out this “gross basis” concept, which sometimes led auditors to too quickly conclude “management has a plan, so it’s fine” without fully analyzing the inherent risk first. The new approach forces a two-step thought process: identify the risk, then evaluate management’s response, thereby reinforcing professional skepticism and thoroughness.

Mandatory Evaluation of Management’s Process and Assumptions

Perhaps the most significant expansion of auditor duty in the 2024 revision is the requirement to always evaluate management’s going concern assessment. The previous standard (2016) expected auditors to look at management’s assessment if there were indications of possible issues, and if management hadn’t made an assessment the auditor would request one. In practice, for companies in sound financial health, auditors might perform only cursory procedures for going concern (since no issues were evident). Now, the 2024 standard leaves no room for a “light touch” – regardless of circumstances, the auditor must obtain and examine management’s going concern assessment ().

This involves:

  • Checking how management made its assessment (Did they create cash flow forecasts? Over what period? What method/model was used?).
  • Evaluating the key assumptions and whether they are reasonable and supportable (e.g. growth rates, profit margins, ability to renew financing, etc.).
  • Evaluating the underlying data used by management (ensuring the data is accurate and complete, for instance the opening cash position, or order backlog figures feeding into a forecast) ().
  • Considering management’s track record in past estimates (if management historically has been overly optimistic, that might indicate a need for more skepticism now).
  • Assessing if management has appropriately factored in relevant events and conditions identified in the risk assessment.

In essence, the auditor performs a mini “audit” of management’s going concern analysis itself. The 2024 revision also explicitly requires the auditor to consider potential bias in management’s judgments when making their going concern assessment (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). For example, if management’s plan to remain viable depends on aggressive cost reductions, is there objective evidence those cuts are feasible, or is management being overly hopeful? If management assumes revenue will rebound quickly from a downturn, is that assumption biased by optimism? The auditor must probe such questions.

Under the 2016 standard, if no big going concern risks were apparent, this kind of deep dive into management’s assumptions might not have been thoroughly done in all cases. Now it is an expectation. This change improves clarity (auditors know they have to do it every time) and quality (stakeholders can be more confident that the auditor has vetted management’s assertion of going concern soundness even when all seems well).

Another new nuance is that auditors should evaluate significant judgments that management made in concluding there is no material uncertainty (). If it took significant judgment to reach a positive going concern conclusion (for instance, assuming a successful outcome to a pending lawsuit or a major debt refinance), the auditor needs to recognize that situation as sensitive. The standard effectively says: whenever management’s conclusion of “no going concern problem” required significant judgment, that scenario is, by nature, a Key Audit Matter (KAM) – though it will be reported under the going concern section of the auditor’s report rather than the general KAM section (). This clarification ties the auditor’s evaluation of management’s process directly into how it will be communicated (discussed more in the next section on reporting).

Auditing the Time Horizon and Forcing Extensions if Needed

ISA 570 (2024) tackles a previous ambiguity about how far into the future management (and auditors) need to look. It now unambiguously requires 12 months from the date of financial statement approval as the minimum look-forward period (). In cases where management’s own assessment didn’t cover that full period, the auditor is obliged to ask management to extend the assessment to meet this benchmark ().

For example, consider a company with a year-end of December 31, 2024, and the financial statements are approved by the board on March 31, 2025. Under the new standard, management’s going concern assessment should extend at least to March 31, 2026. If management only evaluated through December 31, 2025 (12 months from year-end), the auditor would request an extension to March 2026 to include the full year beyond approval date. If management refuses or cannot extend, the auditor must then perform additional procedures to evaluate the situation and discuss it with those charged with governance (). This might also raise questions about whether a material uncertainty exists (if management is unwilling to look further while significant events loom after the 12-month mark).

By contrast, the old 2016 ISA 570 required a look-forward period of “at least 12 months from the date of the financial statements” (which many interpreted as 12 months from the balance sheet date, unless law or regulation required otherwise). In practice, most auditors did consider events through roughly a year after issuance, but the explicit requirement was less direct. The change to “12 months from approval” aligns ISA 570 with certain accounting standards (like US GAAP’s one-year-from-issue requirement) and reflects practical reality: as auditors, we often have knowledge of events in the gap between year-end and report date, so it makes sense to include those in the going concern evaluation. This extension enhances the thoroughness and relevance of the assessment – for instance, significant debt repayments or loss of major contracts that occur 14-15 months after year-end will now be within the formal consideration window, whereas under the old interpretation they might have fallen just outside it. Ultimately this leads to better-informed auditor conclusions and likely earlier warning signals if trouble is on the horizon.

Plans for Future Actions – Verify Feasibility and Support

Management’s plans to deal with adverse situations are a crucial part of the going concern evaluation. The revised standard compels auditors to drill down into these plans. It is no longer sufficient to simply obtain management’s representations about their plans; auditors must evaluate the credibility of those plans and gather evidence. Two important scenarios are explicitly addressed:

  • Planned Mitigating Actions by Management: Auditors should evaluate whether management’s plans (to mitigate going concern threats) are realistic and whether management has both the intent and the ability to execute them (). For example, if a company intends to raise capital or sell a division to generate cash, has the company started taking action? Is there evidence (like discussions with investors or a broker’s valuation of the division) that supports this plan’s viability? Under the 2016 standard, auditors did consider management’s plans, but the 2024 version ups the ante by requiring explicit evaluation of intent/ability.
  • Financial Support by Third Parties/Owners: When management’s plan involves financial support from a parent, shareholder, or other third party (a common scenario for struggling entities), the auditor must obtain evidence of that party’s intent and ability to provide support (ASB issues new going concern auditing standard – Journal of Accountancy). As noted earlier, the audit procedures might include getting a signed support letter or direct confirmation from the supporting party (ASB issues new going concern auditing standard – Journal of Accountancy). For instance, if a subsidiary is relying on a letter of guarantee from its parent company to stay afloat, the auditor will seek confirmation from the parent (or at least a written commitment) that the parent indeed has the funds and will inject them if needed. This reduces the risk of management making optimistic claims about support that may not materialize. The 2016 ISA 570 addressed this scenario mostly in application guidance, whereas the 2024 standard makes it an outright requirement to gather evidence.

These steps ensure that an auditor’s conclusion on going concern is grounded in verified information, not just management’s assertions. It expands the auditor’s responsibility to actively corroborate management’s mitigation plans. Auditors will likely devote more time to challenging management: e.g. “Show me your agreed term sheet with the bank for that refinancing” or “We need a written letter of intent from your owner to inject capital if needed,” rather than simply noting in a memo that “management will seek refinancing” as might have happened under a less rigorous approach.

Professional Skepticism and “Stand-Back” Documentation

With greater responsibility comes the need for greater skepticism. ISA 570 (2024) explicitly reminds auditors to apply professional skepticism throughout, and it provides specific angles to do so. We’ve touched on management bias and avoiding confirmation bias. The standard also has what the UK regulators called a “stand-back” requirement (even if not labelled as such): after doing all the procedures, the auditor should consider all evidence obtained – both positive and negative – before concluding on going concern, and this conclusion process needs to be well documented (Revised Auditing Standard – ISA570: Going Concern) (Revised Auditing Standard – ISA570: Going Concern).

The new documentation requirement means the audit file should clearly show how the auditor moved from the identified risks and management’s inputs to the final conclusion that either no material uncertainty exists or that one does (and how it was addressed). Auditors may need to document, for instance, the various scenarios management considered, the results of stress-testing those scenarios, and why the auditor is comfortable (or not) that the company can meet its obligations for the foreseeable future. In the 2016 standard, documentation was of course required (as with any audit conclusion) but the 2024 revision likely leads firms to create more structured workpapers specifically focused on going concern assessment, given the new explicit steps and evidence to gather.

In summary, the 2024 revision greatly expands the auditor’s work effort on going concern. The auditor is now an active investigator into management’s going concern evaluation, rather than a passive checker. This results in a much higher level of assurance (for both auditors and users of financial statements) that if a company were on shaky ground, the issue would be identified, thoroughly probed, and transparently communicated, rather than slipping through unnoticed.

Enhanced Communication and Transparency Requirements

Hand-in-hand with the expanded work effort, ISA 570 (2024) significantly boosts communication and reporting around going concern matters. This addresses the “transparency gap” that many felt existed under the older standard, where stakeholders often had little insight into the auditor’s going concern evaluation unless a serious problem was present. The new standard enhances transparency in two arenas:

1. Communications between the auditor and those charged with governance (and potentially regulators), and

2. The content of the auditor’s report.

Two-Way Communication with Those Charged with Governance (TCWG)

The revised standard reinforces the importance of frequent and frank dialogue with the entity’s board or audit committee regarding going concern. Auditors are expected to communicate throughout the audit with TCWG on matters related to going concern (). This includes discussing the identified risk factors, how management is addressing them, the auditor’s plans for audit procedures in this area, and preliminary findings. While good auditors would have done this under the 2016 standard as well, the 2024 revision explicitly stresses “timely, two-way communications” about going concern matters (). Practically, an auditor might, for example, brief the audit committee early on: “We have identified going concern as a significant focus area this year due to the upcoming debt covenant test; we’ll keep you posted on our assessment.” Later, as the audit concludes, the auditor would communicate the results of their evaluation (e.g., “Management’s plans appear adequate and we concur no material uncertainty exists, so no emphasis in the report will be necessary” or conversely “We believe there is a material uncertainty and have discussed ensuring full disclosure in the financial statements”). Emphasizing this communication ensures no surprises – those charged with governance should be well aware of any going concern issues by the time the audit report is issued.

Obligation to Communicate with External Authorities (When Applicable)

In a notable addition, ISA 570 (2024) highlights the auditor’s obligation to communicate with appropriate external authorities if law, regulation, or ethical requirements mandate such reporting (). This aligns with provisions in many jurisdictions where auditors have a duty to report to regulators (for example, bank auditors may need to alert the banking regulator if a bank is in serious financial trouble, or auditors may have duties under anti-fraud/NOCLAR laws to report certain matters). The 2016 standard did not mention this aspect, as it was usually covered in ethics codes or local law. By including it, the standard reminds auditors that if an entity is facing severe going concern issues, the auditor might need to alert regulators or other authorities outside the normal shareholder-auditor communication channel. For CFOs and management, this is also a reminder: if their company’s situation triggers any legal reporting duties, the auditor cannot keep it confidential – their professional standards would require them to take it to the proper authorities. This change enhances transparency and accountability to the public interest, ensuring that serious going concern issues don’t remain hidden if the law expects disclosure beyond the audit report.

Overhaul of the Auditor’s Report – New Going Concern Sections

One of the most visible changes in the 2024 revision is how the auditor’s reporting model for going concern has been transformed from the prior “exception-based” approach to a more affirmative and detailed approach. Under the 2016 version, if the auditor concluded there was no going concern issue, the audit report contained only the standard language about responsibilities (and maybe Key Audit Matters discussion if it was a listed entity and going concern was deemed a KAM). Only when there was a material uncertainty did the auditor add a specific paragraph (titled Material Uncertainty Related to Going Concern) to highlight that.

Under ISA 570 (Revised 2024), the auditor’s report will always include a dedicated section addressing going concern – either a “Going Concern” section or a “Material Uncertainty Related to Going Concern” (MURGC) section, depending on the circumstances () (). This is a significant structural change. Here’s how it works:

  • When No Material Uncertainty Exists: The auditor’s report will have a “Going Concern” section (applicable to all audits). In that section, the auditor will explicitly state:
    • That they have concluded management’s use of the going concern basis of accounting is appropriate for the entity ().
    • That they have not identified a material uncertainty related to going concern ().
    • For listed entities, if management had to make significant judgments to support the going concern assumption (yet concluded no uncertainty), the auditor will include a brief description of how they evaluated management’s assessment (). Essentially, this adds transparency about close calls – investors will read what the auditor did to satisfy themselves on going concern when significant judgment was involved.

This new Going Concern section is a major departure from the past. It provides positive assurance to the reader that the going concern assumption was specifically checked and found to be appropriate. It addresses a long-standing expectation gap: previously, users might not realize that auditors evaluate going concern for every audit (because if everything was fine, no mention was made). Now it will be clear in the report that the auditor did evaluate it and reached a conclusion.

  • When a Material Uncertainty Does Exist (and is adequately disclosed in the financials): The auditor’s report will include a “Material Uncertainty Related to Going Concern” section (just like in the 2016 standard, but with enhanced content). In this MURGC section, the auditor will state:
    • That they have concluded management’s use of going concern basis is appropriate (important to say, because even with an uncertainty, the statements are prepared on going concern basis as long as that basis is still appropriate under the framework) ().
    • That a material uncertainty exists that may cast significant doubt on the entity’s ability to continue ().
    • That the auditor’s opinion is not modified in respect of the matter (assuming disclosures are adequate) ().
    • A brief description of how the auditor evaluated management’s assessment of going concern in light of this uncertainty (). This last point is new – previously, the auditor’s paragraph would typically just refer to the note in the financial statements that describes the uncertainty. Now, the auditor will also give some insight into their own procedures (for listed entities, this is required; for others it may be encouraged or at auditor’s discretion).

Additionally, the auditor still needs to include a reference to the note disclosure in the financial statements that details the uncertainty (that part remains similar to the 2016 practice) ().

  • When the Financial Statements Lack Adequate Disclosure or the Going Concern Basis is Inappropriate: In such cases, the outcome is still a modified audit opinion (qualified or adverse for inadequate disclosure, or adverse if statements were wrongly prepared on a going concern basis when liquidation basis should be used). The 2024 standard doesn’t change the fundamental treatment in these extreme scenarios; the auditor would explain the issue in the Basis for Opinion or an Emphasis paragraph as appropriate. The focus of the new reporting model is on unmodified opinions, ensuring they too carry information on going concern.

The enhanced reporting model thus ensures consistency and transparency. All audit reports, starting 2026, will explicitly comment on going concern. The IAASB believes this will “enhance transparency that the auditor has fulfilled their responsibilities” regarding going concern (). Stakeholders reading the audit report will no longer have to guess whether the auditor considered going concern – it will be plainly documented. Furthermore, for listed companies, there’s an extra layer of detail in cases where judgment calls were significant or where an uncertainty exists, which provides investors a window into what audit work was done in this critical area.

From a structural standpoint, auditors and firms will need to update their audit report templates to include these new sections and wording. Audit software and report generation tools will incorporate logic to produce a Going Concern section for all audits (with standardized wording confirming appropriateness of the assumption and no uncertainties) or a MURGC section if applicable. This is a change from current practice, where a large proportion of audit reports have no such section because no issue was identified.

Interaction with Key Audit Matters (KAMs)

Another reason the auditor’s report needed tweaking was to clarify the overlap with ISA 701 (Key Audit Matters) for listed entities. Under the 2016 standards, a close call on going concern could end up being discussed as a KAM in the auditor’s report (since it was a significant risk/judgment area), or if it became a material uncertainty, it would go in the MURGC section. There was potential confusion or duplication. The 2024 revision clarifies that significant judgments related to going concern (no material uncertainty) or a material uncertainty itself are by definition Key Audit Matters, but they should be reported within the dedicated going concern section(s) per ISA 570 rather than in the general KAM section (). Essentially, going concern matters take precedence in their own section. The auditor does not need to repeat them as KAMs, avoiding redundancy. The standard explicitly states that the scenarios mentioned (significant management judgments to conclude no uncertainty, or the existence of a material uncertainty) are KAMs, however they are reported in accordance with ISA 570 (meaning in the GC or MURGC section) (). This provides clarity to auditors on placement, and clarity to readers that all going concern related communications will be centralized in the report’s going concern section. The KAM section of the report would then typically exclude those matters (perhaps even contain a cross-reference if necessary).

This change in report structure might seem like a technical detail, but it improves the readability and focus of the audit report. Users get a coherent story in one place about going concern, and auditors have clear guidance on how to present it.

Overall, the communications and reporting enhancements in ISA 570 (2024) are about making the auditor’s work more visible and ensuring relevant parties are informed. Compared to 2016, where one might only see boilerplate text if everything was fine, the 2024 standard means even when all is well, the audit report will explicitly note the auditor’s going concern conclusion (providing comfort that the matter was looked at), and when things are not well, the report will be more informative about what was done and what the outcomes mean.

For auditors and audit firms, these changes will require training and updates to methodologies. Audit teams will need to communicate more with clients’ governance (which can also serve as evidence of compliance with the standard), and they must adapt to drafting longer audit reports. For companies and CFOs, these changes mean they should expect auditors to ask more incisive questions about going concern, to request more documentation, and to possibly include slightly more text about the company’s situation in the audit report. Good management teams and boards will likely welcome the rigor, as it ultimately provides greater credibility to the financial statements and the audit.

Practical Implications for Auditors (and CFOs)

The revised ISA 570 (2024) will impact how audits are conducted and documented. Here are some practical implications and considerations for auditors (and, by extension, finance teams preparing for audit):

  • Earlier Engagement on Going Concern: Auditors will bring up going concern in early planning meetings. Expect more in-depth discussions with management and audit committees at the start of the audit about the company’s outlook, key risks, and management’s process to assess going concern. This early focus allows any potential issues to be identified when there is still time to address them. Implication for CFOs: Be prepared to discuss your going concern assessment process in detail, even if the company is performing well. Have your preliminary forecasts or assessments ready for the auditors early.
  • Enhanced Audit Procedures: Audit teams will design specific procedures to probe going concern. This may include:
    • Analyzing future cash flow forecasts, testing their arithmetic accuracy, and evaluating the reasonableness of assumptions (e.g. by comparing to external economic data or industry benchmarks).
    • Performing sensitivity analysis or stress testing on management’s models (e.g. “What if revenue is 10% lower than forecast? Does cash run out?”).
    • Reviewing subsequent events up to the audit report date for any indicators of financial stress (e.g. if after year-end the company lost a major customer or failed to renew a key credit facility).
    • Obtaining confirmations or other evidence for key elements (as discussed, letters of support from parents, or bank term sheets for planned financing).
    • In group audits, communicating with component auditors to ensure they flag any subsidiary-level going concern issues that could affect the group.
  • Greater Documentation and Analysis in Workpapers: Auditors will need to document their work and conclusions on going concern more extensively. This could mean dedicated sections in the audit file that:
    • Outline the identified events/conditions (risks) and mitigating factors.
    • Summarize management’s going concern assessment (with key assumptions listed).
    • Document the audit procedures performed (e.g. “evaluated forecast assumptions X, Y, Z; obtained evidence A, B, C; results of stress test,” etc.).
    • Conclude whether a material uncertainty exists and the basis for that conclusion (or that it doesn’t exist, and why the auditor is satisfied).
    • Show that contradictory evidence (if any) was considered.
      This thorough documentation provides an audit trail of professional judgment and will be reviewed in internal quality control and inspections to ensure compliance with the new standard.
  • Increased Interaction with Management’s Process: Auditors might ask management to perform additional analysis. For example, if management’s own assessment is not well-documented or seems simplistic, the auditor may request that management produce more formal forecasts or analysis to support the going concern assumption. The standard gives auditors leverage to insist on this (especially with the requirement to evaluate management’s assessment and possibly have them extend the period of assessment). This can sometimes be sensitive – essentially the auditor might be telling a CFO, “we need you to do a bit more work to assess your viability because what you’ve given us isn’t sufficient.” Implication for management: Companies should strengthen their internal going concern assessment processes. Many companies now develop a going concern memorandum or analysis for their boards, considering various scenarios, to meet both accounting and audit expectations.
  • Skepticism in Practice: Audit partners and managers will reinforce to their teams the need to maintain skepticism. Concretely, firms might update their guidance to caution against over-reliance on management’s optimistic scenarios. Engagement teams might hold internal brainstorming sessions about “What could go wrong for this business in the next year?” to ensure they’ve identified all plausible risks. There may be more frequent consultation within audit firms for tricky cases (e.g. using technical panels when deciding if something constitutes a material uncertainty). Auditors will also need to be ready to push back on management if they believe that management is downplaying risks.
  • Communication with Those Charged with Governance: Auditors will formally communicate going concern matters to audit committees. In audit committee presentations or reports, there may be a dedicated section on going concern, covering:
    • Management’s view and whether the auditor agrees.
    • Any deficiencies in management’s process (e.g. if the auditor had to ask management to improve their assessment, that might be reported).
    • The outcome (no uncertainty, or existence of uncertainty) and how it will be reflected in the audit report. This transparency with the board ensures that governance is aware and can fulfill their oversight role. It also helps if tough decisions (like making additional disclosures or even not continuing as a going concern) need to be addressed – everyone is on the same page.
  • Possible Extended Audit Timelines: With more work and communication required, auditors will factor in additional time for the going concern evaluation. Especially for companies under stress, the audit might take longer as the team performs extra procedures, waits for evidence (like confirmation of financing), or drafts new wording for audit report sections and clears that with management. Audit firms will need to plan for this so that audit reports are not delayed.
  • Audit Report Drafting and Review: The new required audit report language means audit reports will be slightly longer and will contain entity-specific content for going concern when applicable. Auditors will likely create templates for the common scenario (no uncertainty) – e.g. a standard paragraph stating appropriation of the going concern basis and no uncertainties found, as required (). For listed clients, auditors must also be ready to write a custom description of how they evaluated management’s assessment if significant judgment was involved or a material uncertainty was present () (). This requires writing skills and careful alignment with what management discloses. Expect an iterative process: the auditor might share a draft of the going concern section with management and the audit committee to ensure it does not inadvertently conflict with or reveal something not in the financial statements. While the auditor’s wording is independent, coordination is key to avoid confusion. Implication for companies: Don’t be surprised to see new paragraphs in your audit report – auditors should explain to management and boards why they are there, so everyone understands the message being conveyed publicly.
  • Training and Mindset: Audit firms will train their staff on the new requirements. The mindset shift is towards “leave no stone unturned” for going concern. Engagement teams will approach going concern with the same rigor as, say, revenue recognition or other high-risk areas. Firms may use internal checklists to ensure all new requirements (like the extended period, external info usage, written rep from management about going concern, etc.) are complied with on each engagement.

In summary, the 2024 revision makes the going concern evaluation a more central, visible part of the audit. Auditors will likely spend more time and effort here, but in doing so, will provide greater value in terms of assurance on a company’s viability. For finance professionals, working with auditors under this new standard means more collaboration and transparency on forward-looking matters, rather than treating going concern as a cursory year-end checklist item.

Example Scenarios: Old vs. New Standard Application

To illustrate the practical difference between the 2016 and 2024 versions of ISA 570, let’s consider two simplified scenarios and how an auditor’s approach (and reporting) would differ under the old standard vs. the new standard:

Scenario 1: Healthy Company with No Apparent Going Concern Issues

Situation: Imagine a mid-size manufacturing company, StableCo, with steady profits and no debt. At year-end 2024, there are no obvious indicators of financial stress. Management’s going concern assessment is informal (they’ve never had issues, so they might just assert “we foresee no problems for next year”).

  • Audit under ISA 570 (2016 version): The auditor would certainly consider if any going concern issues exist, but finding none, they might not perform extensive procedures. They might document something like “No events or conditions identified that cast significant doubt, management expects continued profitability.” They would obtain a standard representation letter where management confirms it knows of no conditions that jeopardize going concern. There would be no specific mention of going concern in the auditor’s report (aside from the generic responsibility paragraph). The audit report would be completely standard with an unmodified opinion and no emphasis or KAM on going concern, since everything appeared fine.
  • Audit under ISA 570 (2024 version): Even though StableCo appears healthy, the auditor must still obtain and evaluate management’s assessment. So, the auditor asks management, “Please provide your assessment of the company’s ability to continue as a going concern for at least 12 months from the financial statement approval date.” Perhaps management now prepares a short memo or analysis (maybe a 2-year budget or forecast) to satisfy this request. The auditor reviews the forecast assumptions (e.g. checking that key customers’ orders are in line with past trends, etc.) and concludes it’s reasonable. They also perform a risk assessment and indeed find no issues. They document all this evaluation in their workpapers. When drafting the audit report, they include a “Going Concern” section saying that the auditor concluded the going concern basis is appropriate and that no material uncertainties were identified (). This section might be just a couple of sentences, but it explicitly confirms to readers that the auditor considered going concern and didn’t find problems. For StableCo (not listed, assume), no further description is needed in the report. The rest of the audit report is standard. The result is an added measure of transparency – any reader of StableCo’s audit report will see a statement about going concern, whereas under the 2016 standard they would not have.

In this scenario, the new standard doesn’t change the outcome (there’s no going concern issue either way), but it changes the process (more thorough documentation and requiring management to provide an assessment) and the reporting (an explicit section confirming all is well). This helps narrow the expectation gap – stakeholders won’t wrongly assume the auditor ignored going concern just because the company was healthy; the report makes clear it was evaluated.

Scenario 2: Company Facing Uncertainty (Borderline Going Concern)

Situation: Consider TechStartup Inc., which has incurred losses and is low on cash at year-end. It needs to raise new capital to continue operations in the next 6 months. Management is in talks with investors and is optimistic but nothing is finalized by audit time. They believe they’ll get funding and thus did not disclose a going concern uncertainty in the financial statements (but they did mention in notes that they plan to raise funds).

  • Audit under ISA 570 (2016 version): The auditor identifies the conditions (recurring losses, low cash, need for funding) as events that may cast significant doubt on going concern. They obtain management’s plans (e.g. management provides a cash flow forecast showing they run out of money in 4 months but assume a capital injection in 3 months will save the day). The auditor evaluates this: they might inquire about the status of investor negotiations, perhaps get a representation from management that discussions are in advanced stages. If the auditor is convinced the plan is probable and mitigating, they might conclude that while there were events that could cause doubt, management’s plans are likely sufficient, so no material uncertainty exists as of the report date. However, given the significance of the judgments involved, if this is a listed company, the auditor would likely include a Key Audit Matter about going concern, describing that it was a close call and how they evaluated management’s projections. If it’s not listed, the auditor might not include any specific mention in the audit report (because they concluded no material uncertainty, and KAM section isn’t applicable). So, the audit report could still end up with no reference to going concern issues, aside from maybe a mention in the KAM section if applicable. Many stakeholders might remain unaware of how close TechStartup was to running out of cash, except perhaps if they read between the lines of the financial statement notes or the auditor’s KAM description (if there was one).

Alternatively, if the auditor was not fully convinced the funding will come through (i.e. they believe a material uncertainty does exist), under 2016 standards they would insist management add a disclosure in the notes about this uncertainty. The auditor’s report would then include a Material Uncertainty Related to Going Concern paragraph highlighting that there is such an uncertainty and pointing to the note. It would not, however, detail what the auditor did; it would just state the uncertainty and that the opinion is not modified for it. If management refused to adequately disclose, the auditor would have to qualify or adverse the opinion for inadequate disclosure.

  • Audit under ISA 570 (2024 version): The auditor similarly identifies the going concern risk and gets management’s plan. Now, the auditor is required to rigorously evaluate the plan and seek evidence. They ask management for any documentation of investor talks – e.g. term sheets, letters of intent – and perhaps reach out (with permission) to confirm an investor’s intention. Suppose the evidence is still not solid (no signed agreements yet). The auditor probably determines that a material uncertainty exists (because the outcome of the fundraising is uncertain and without it the company may not survive). They make sure management discloses this uncertainty in the notes.

Now, in drafting the audit report, per ISA 570 (2024) the auditor will include a MURGC section. In that section, they will explicitly state that there is a material uncertainty relating to TechStartup’s ability to continue as a going concern, that management’s use of going concern basis is appropriate but this uncertainty exists, and that the auditor’s opinion is not modified in respect of this (assuming disclosures are okay) (). Crucially, if TechStartup is listed (or even if not, the standard encourages transparency), the auditor will describe how they evaluated management’s assessment (). For example, the audit report might say: “As part of our audit, we evaluated management’s plan for raising additional capital. We examined correspondence with prospective investors and assessed the reasonableness of management’s cash flow forecasts for the year 2025. We considered the company’s successful fundraising in prior years and the current status of negotiations. However, the funding is not finalized at the date of this report and thus a material uncertainty exists…” etc. This narrative, which would appear in the audit report’s going concern section, gives readers a clearer picture of what the auditors did and the fact that the future funding is not guaranteed. This goes beyond the 2016-style report which might have simply said “a material uncertainty exists” without context.

If TechStartup were not listed and management’s plans seemed likely enough that the auditor decided no material uncertainty (a very borderline call), the 2024 standard would still require a Going Concern section in the report. Because significant judgment was needed by management to conclude no uncertainty, and because it’s inherently a close call, for a listed entity the auditor would include a description of how they evaluated management’s assessment () (similar to a KAM discussion, but in the GC section). Even for a non-listed entity, the auditor might choose to include some explanation for transparency, or at least will have heavily communicated with governance about it. The new standard also explicitly would categorize that scenario as a KAM by nature, so the auditor would ensure it gets attention either in the GC section (preferred) or KAM section if applicable.

In summary of this scenario: The new standard leads to more audit work (seeking evidence of funding intent, etc.), a more forthright audit report (with detailed going concern section), and ensures that even a “close call” where things turn out okay is communicated appropriately. Under the old standard, there was a risk that if the auditor gave the benefit of the doubt, the audit report might remain silent on a situation that was actually touch-and-go. The 2024 revision mitigates that by requiring transparency either way – uncertainty present or significant judgment needed – especially for listed companies. This helps users of financial statements get a better sense of the company’s condition and the audit effort around going concern.

Conclusion: Impact on Audit Quality, Challenges, and Benefits

The 2024 revision of ISA 570 represents a major step forward in auditing standards, one that is expected to improve audit quality and confidence in financial reporting. By compelling auditors to dig deeper and communicate more clearly, it addresses many of the criticisms that arose after unexpected corporate collapses. Key benefits and final thoughts include:

  • Narrowing the Expectation Gap: Users of financial statements often wonder, “Did the auditors even consider that this company might fail?” Now the audit report will explicitly answer that question for every audit. The additional transparency – through explicit statements in the auditor’s report and more robust disclosures – means stakeholders are less likely to be caught off guard. The IAASB noted that these changes “provide decision-useful, entity-specific information in the auditor’s report regarding the auditor’s work and responsibilities for going concern,” thereby helping to align user expectations with what auditors actually do (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). In the long run, this can enhance the credibility of audit opinions.
  • Enhanced Auditor Diligence and Audit Quality: Auditors, knowing that their procedures and conclusions will be scrutinized (and potentially spelled out in the audit report), have a strong incentive to perform high-quality work in this area. The standard “raises the bar” for auditor responsibility (#transparency #goingconcern #audit #auditorsreport | International Auditing and Assurance Standards Board (IAASB)), which should lead to more consistent and thorough practices globally. A more standardized robust approach (rather than varying levels of effort) means audit quality is uplifted, especially in areas that might have previously been treated perfunctorily when no issues were evident. The focus on professional skepticism and avoiding bias will improve the objectivity of auditors’ judgments.
  • Greater Management Accountability: Indirectly, the changes also shine a light on management and boards. Management can no longer take going concern evaluation lightly; they will be aware that auditors will be reviewing their work carefully and even reporting publicly on it. This likely will prompt better internal governance – e.g. boards demanding a solid going concern analysis from the CFO, audit committees engaging in discussions about worst-case scenarios, etc. Over time, this could lead to companies identifying and managing their risks earlier, not just as an audit compliance exercise. In troubled situations, the requirement for auditors to perhaps inform regulators adds pressure on management to be transparent and proactive (rather than hoping an auditor might overlook an issue).
  • Consistency and Comparability: With ISA 570 (2024) being applied internationally, investors and other users can expect a more consistent approach from auditors worldwide on going concern. Previously, some audit reports included lengthy KAMs about going concern while others said nothing, which could be confusing. Now, the presence of a Going Concern section in all audit reports will be the norm, and its content will be driven by the standard’s requirements. This consistency helps users read audit reports from different companies and interpret them more readily. It also helps multinational audit firms streamline their methodologies.
  • Challenges for Auditors: Admittedly, the new standard is more demanding. Auditors will face higher workloads in performing and documenting the necessary procedures. There may be a learning curve and the need for training, especially in how to write clear and succinct audit report disclosures about going concern. Determining how much detail to include in the new report sections will require judgment – too little detail, and you lose transparency; too much, and you might inadvertently create confusion or reveal confidential info. Auditors must also be careful that their new statements (for example, “we found no material uncertainty”) are not misinterpreted as a guarantee of stability – the standard will include caveats, and indeed the fact sheet notes that context will be provided to clarify that this is not a guarantee of the entity’s continued viability (). Communication skills and careful wording are thus at a premium.
  • Challenges for Smaller Entities: For audits of smaller or less complex entities, complying with the new standard might seem burdensome if they historically never had going concern issues. However, the IAASB has built in scalability, and auditors can tailor procedures to fit the size and complexity of the client (). It will be important for auditors of small clients to not gold-plate the requirements but to do what’s necessary and document it, without overkill. Similarly, those entities’ management might need guidance to prepare an adequate assessment (even if it’s brief) to satisfy the audit needs.
  • Implementation and Coordination: The effective date (periods beginning Dec 15, 2026) gives a long lead time. This is because regulators and firms want to align this change with other upcoming auditing standards changes (notably in fraud and entities of public interest) to avoid piecemeal updates () (). Auditors should use this time to update methodologies, and perhaps even early-adopt if allowed and beneficial. Some firms may choose to roll out aspects early (like the enhanced procedures) as best practices before it’s officially required.

In conclusion, the differences between the 2016 and 2024 revisions of ISA 570 Going Concern are substantial. The 2024 revision provides clearer guidance, broader responsibilities for auditors, and improved transparency in audit reporting. These changes directly respond to calls from the public and regulators to not be caught flat-footed by corporate failures, and to ensure auditors play their part in highlighting going concern risks (ISA 570 (Revised 2024), Going Concern | IAASB). While the new standard will require more effort from auditors and careful implementation, it ultimately advances audit quality and enhances the usefulness of audits by focusing on what truly matters – whether a company can continue operating and whether anyone (management, auditors, or those charged with governance) sees storm clouds on the horizon. Auditors and finance professionals should prepare for this shift, as it will strengthen trust in financial reporting and hopefully contribute to broader financial stability (IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard | IAASB). The auditing community’s embrace of these changes will be crucial in realizing their intended benefits: more informative audits, fewer surprises, and greater confidence in the going concern assessment of companies worldwide.