Going Concern Assessment Checklist — SA 570
GOING CONCERN ASSESSMENT — SA 570 (REVISED) CHECKLIST
Entity: {{client_name}} · Year ended: {{period_end}} · Prepared by: __________ · Reviewed by: __________
Purpose: document the auditor’s evaluation of management’s use of the going-concern basis of accounting, covering a period of at least twelve months from the date of the financial statements.
Part A — Indicators (SA 570 App.): does any event or condition exist?
| Financial indicators | Yes / No / N.A. | WP ref |
|---|
| Net liability or net current liability position | | |
| Borrowings approaching maturity without realistic prospects of renewal or repayment | | |
| Excessive reliance on short-term borrowings to finance long-term assets | | |
| Withdrawal of financial support by creditors / lenders | | |
| Negative operating cash flows (historical or prospective) | | |
| Adverse key financial ratios (current ratio, interest cover, debt-equity) | | |
| Substantial operating losses or significant deterioration in asset values | | |
| Arrears or discontinuance of dividends | | |
| Inability to pay creditors on due dates / comply with loan covenants | | |
| Change from credit to cash-on-delivery terms by suppliers | | |
| Inability to obtain financing for essential new product development or investment | | |
| Operating indicators | Yes / No / N.A. | WP ref |
|---|
| Management intention to liquidate or cease operations | | |
| Loss of key management without replacement | | |
| Loss of a major market, key customer, franchise, licence or principal supplier | | |
| Labour difficulties or shortage of important supplies | | |
| Emergence of a highly successful competitor | | |
| Other indicators | Yes / No / N.A. | WP ref |
|---|
| Non-compliance with capital or statutory / regulatory requirements | | |
| Pending legal or regulatory proceedings that could result in unpayable claims | | |
| Changes in law, regulation or government policy adversely affecting the entity | | |
| Uninsured or under-insured catastrophes | | |
Part B — Evaluating management’s assessment (paras 12–15)
- Obtain management’s written going-concern assessment covering at least 12 months from the financial-statements date; if the period is shorter, request extension
- Evaluate whether the assessment includes all relevant information the auditor is aware of
- Where events / conditions were identified: review cash-flow forecasts — evaluate reliability of underlying data and support for assumptions
- Consider subsequent events (SA 560) beyond the assessment period that bear on going concern
- Evaluate feasibility and expected outcome of management’s plans (asset disposals, borrowings / restructuring, expenditure deferral, capital raising, promoter / group support)
- Where group / promoter support is relied on: obtain the letter of support and evaluate the supporter’s ability to provide it
- Obtain written representations (SA 580) on plans and their feasibility
Part C — Conclusion and reporting (paras 17–24)
| Scenario | Opinion | Report treatment |
|---|
| Going-concern basis appropriate; no material uncertainty | Unmodified | No going-concern reference required |
| Material uncertainty exists; adequately disclosed in the financial statements | Unmodified | Separate section: "Material Uncertainty Related to Going Concern" referring to the note |
| Material uncertainty exists; disclosure inadequate | Qualified or Adverse (SA 705) | Basis paragraph states that a material uncertainty exists and the financial statements do not adequately disclose it |
| Going-concern basis inappropriate but used | Adverse | Financial statements should have been prepared on an alternative (e.g. liquidation) basis |
| Management unwilling to make or extend its assessment | Consider Qualified / Disclaimer | Scope limitation — inability to obtain sufficient appropriate evidence |
Conclusion
Events / conditions identified: YES / NO. Material uncertainty: YES / NO. Disclosure adequate: YES / NO / N.A. Report treatment selected: __________________________________________.
Conclusion and basis: ____________________________________________________________________________
Prepared by: __________ Date: ______ · Engagement partner review: __________ Date: ______
