ISA 570 (Revised 2024): Going Concern: Audit Transparency as Investor Confidence
ISA 570 (Revised 2024): Going Concern: Audit Transparency as Investor Confidence
From compliance to confidence
Traditionally, going concern was a quiet checkpoint — investors saw little more than silence, which they interpreted as stability. But silence is not always reassuring. ISA 570 (Revised 2024) changes the narrative by requiring auditors to provide explicit, visible, and comparable going concern conclusions in every audit report.
The revision is not about adding more paperwork. It's about ensuring that investors receive the insights they need to make informed decisions about the companies they back.
Key changes at a glance
The revised standard introduces several significant new requirements for auditors:
- Explicit conclusions on whether management's use of the going concern basis of accounting is appropriate, and whether any material uncertainty was identified
- Material uncertainty disclosures when significant doubt about survival exists
- Close-call explanations for borderline situations — even when no material uncertainty is found — now reported in a dedicated Going Concern section rather than as a Key Audit Matter
- Bias evaluation to test whether management's assumptions lean too heavily on optimism
- Extended horizon of at least 12 months from the date of approval of the financial statements
- Verification of third-party and related-party support — auditors must assess both intent and ability of external parties to deliver promised financial support
What this means for investors
- Clearer survival signals
Two new required conclusions appear in a dedicated Going Concern section of the auditor's report — replacing vague silence with direct, comparable statements on financial resilience.
- Earlier warning of distress
Material uncertainty disclosures flag significant doubt early and visibly, rather than being buried or omitted entirely from audit reports.
- Insight into borderline cases
Close-call situations — where management judged no material uncertainty exists despite real concerns — must now be disclosed, giving investors visibility into near-miss scenarios.
- Longer forward view
The extended 12-month horizon from financial statement approval (rather than the reporting date) provides investors with a longer window of audited foresight into risk.
Challenges for auditors
The revised standard sets a higher bar across the audit process:
- Evaluating management's assessment— auditors must rigorously test methods, assumptions, and data even when no obvious risks are present, requiring deeper technical expertise and professional skepticism
- Expanded risk procedures— risks must be identified on a gross basis before mitigating factors are applied, demanding stronger understanding of the entity's environment
- Assessing management's intent and ability— beyond feasibility, auditors must judge whether management can and will execute on their plans
- Verifying external support— evidence of both willingness and capacity from related parties must be obtained and documented
- Close-call disclosures— determining and consistently reporting borderline situations requires nuanced professional judgment
Our observations
ISA 570 (Revised 2024) transforms the going concern assessment from a compliance exercise into a genuine strategic safeguard. For investors, this means sharper early warning signals, standardised disclosures across listed entities, and greater confidence in the financial resilience assessments underlying audit reports.
For auditors and the companies they audit, early preparation will be essential — particularly in documenting management's judgment processes, establishing evidence of third-party support, and developing consistent close-call assessment frameworks ahead of the December 2026 effective date.
Questions about ISA 570 (Revised 2024)?
Contact BDO in Thailand's IFRS team at ifrsthailand@bdo.th or speak to your usual BDO contact.