IAASB revises going concern international audit standard

The International Auditing and Assurance Standards Board released a revised global standard on how auditors should evaluate a business’ prospects as a going concern.

International Standard on Auditing 570 (Revised 2024), “Going Concern“ comes in response to corporate failures that have raised questions about auditors’ responsibilities, significantly enhancing the auditor’s work in evaluating management’s assessment of an entity’s ability to continue as a going concern. 

The standard will take effect for audits of financial statements for periods starting on or after Dec. 15, 2026. It aims to increase consistency in auditing practices and bolster transparency through communications and auditor reporting on matters related to going concern in a consistent manner.

Some of the main changes in ISA 570 (Revised 2024) include requirements for a more robust risk assessment. Auditors need to conduct, in a more timely manner, thorough risk assessments to determine whether events or conditions are identified that can cast significant doubt on the entity’s ability to continue as a going concern.

Auditors will need to evaluate management’s assessment of going concern regardless of whether events or conditions are identified. As part of that, auditors have to weigh the potential for management bias and evaluate the underlying method, significant assumptions, and data used when management formed its assessment. In addition, auditors will need to evaluate whether management’s judgements and decisions indicate potential bias.

The standard includes a more extended evaluation period — at least 12 months from the date of approval of the financial statements, allowing auditors to assess more relevant, useful information.

The revised standard also mandates clearer communication in the auditor’s report about their responsibilities and work related to going concern and strengthened communications with those charged with governance and external parties.

“This milestone addresses calls from investors, regulators, and other stakeholders for more robust audit procedures related to going concern. It provides decision-useful, entity-specific information in the auditor’s report regarding the auditor’s work and responsibilities for going concern,” said the chair of the IAASB, Tom Seidenstein, in a statement Wednesday. “The changes in the standard further advance high-quality audits and help narrow the expectation gap, thereby supporting users’ interests and broader financial stability.”

To help auditors implement the revised standard, the IAASB has written a fact sheet and a “Basis for Conclusions,” both posted on the IAASB’s website. The board also plans to offer a frequently asked questions document and technical overview video to support the revised standard’s implementation.