Objective
To obtain sufficient appropriate audit evidence regarding management's use of the going-concern basis, and to conclude on whether a material uncertainty exists.
Key requirements
- Evaluation of management's assessment of going concern (period of at least 12 months from FS date)
- Identification of events / conditions that may cast significant doubt
- Evaluation of management's plans for future actions
- Determination of material uncertainty disclosure or modification of the report
- Communication with TCWG
Typical procedures
- Review of 12-month cash-flow forecast with sensitivity analysis
- Review of debt-service schedule and covenant compliance
- Discussion with management of mitigating actions
- Independent evaluation of forecast assumptions
Common pitfalls
- Going-concern conclusion based on management's assertion without independent forecast review
- No sensitivity analysis on the key forecast assumption
- Material uncertainty disclosure missing where indicators clearly exist
On CORAA
16 going-concern indicators tracked, 8 auto-prefilled from balance sheet / P&L / cash flow signals. Sensitivity stress tested before the SA 570 conclusion lands in the file.
Open the matching module →SA 570 in practice
SA 570 sits in the Concluding phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.
For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.
