The two standards ask the same question: is there substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time? They answer it on different clocks and in different report formats. Under PCAOB AS 2415 the period is not to exceed one year beyond the date of the financial statements. Under AU-C 570 the period is the one the financial reporting framework requires, or if none is required, one year after the date the financial statements are issued (or available to be issued). For a client whose report goes out March 15, that is a gap of 75 days.
This post sets the two side by side. For the full nonissuer procedure, see our guide to going concern assessment under AU-C 570 and the AU-C 570 standards page.
Which standard applies to my engagement?
AS 2415 applies to audits performed under PCAOB standards. AU-C 570 applies to audits under US GAAS, which is what a nonissuer audit uses.
How do the evaluation periods compare?
AS 2415.02 says the auditor evaluates whether there is substantial doubt "for a reasonable period of time, not to exceed one year beyond the date of the financial statements being audited." The evaluation rests on the auditor's knowledge of conditions and events that exist at or have occurred prior to the date of the auditor's report.
AU-C 570.11 defines a reasonable period of time as the period required by the applicable framework or, absent a requirement, within one year after the date the financial statements are issued (or available to be issued, when applicable). Paragraph .05 gives the FASB ASC rule as one year after issuance, and GASB Statement No. 56 as 12 months beyond the date of the financial statements. Paragraph .14b requires the auditor's evaluation to cover the same period management used.
Worked example
A calendar-year client has a December 31, 2026 balance sheet and issues its statements on March 15, 2027.
| Standard | Window ends | Days past year end |
|---|---|---|
| AS 2415 (up to one year beyond the balance sheet date) | December 31, 2027 | 365 |
| AU-C 570 with FASB ASC (one year after issuance) | March 15, 2028 | 440 |
The ASC window is 75 days longer. A debt maturity on February 1, 2028 sits outside the AS 2415 window and inside the AU-C 570 window. That is why a covenant schedule built for one audience cannot be reused as is for the other.
Who evaluates first?
AU-C 570 starts with management. Paragraph .12 requires the auditor, during risk assessment, to determine whether management has performed a preliminary evaluation. If so, the auditor discusses it with management. If not, the auditor discusses the basis for using the going concern basis and inquires about conditions or events. Paragraph .14 then requires the auditor's evaluation to address management's evaluation, and paragraph .16 requires the auditor to ask management to make an evaluation if it has not yet done so.
AS 2415 is written from the auditor's side. Paragraph .03 has the auditor consider whether the results of planning, evidence gathering and completion procedures, in the aggregate, indicate there could be substantial doubt. The standard does not make management's evaluation the starting point.
Do both standards require going concern procedures?
AS 2415.05 says it is not necessary to design procedures solely for going concern: results of procedures designed for other objectives should be sufficient. It lists analytical procedures, subsequent events review, debt covenant compliance, minutes, legal counsel inquiry and confirmation of financial support arrangements. AU-C 570.13 requires the auditor to remain alert throughout the audit for evidence of conditions or events.
Both list the same families of indicators: negative trends, financial difficulties such as loan default, internal matters such as labor difficulties, and external matters such as loss of a key customer or license (AS 2415.06).
How do the tests for management's plans differ?
- AS 2415.07: the auditor considers whether it is likely that the adverse effects will be mitigated for a reasonable period of time and that the plans can be effectively implemented.
- AU-C 570.16b: the auditor evaluates whether it is probable that the plans can be effectively implemented and that they would mitigate the relevant conditions or events.
The words differ and the audit file should use the words of the standard under which the opinion is issued. Both standards give the plan categories the auditor examines: asset disposals, borrowing or debt restructuring, reduced or delayed expenditures, and increased equity.
AS 2415.09 and AU-C 570.16c both address forecasts. AU-C 570 requires the auditor to evaluate the reliability of the underlying data and whether there is adequate support for the assumptions, including contradictory evidence. AS 2415.09 directs attention to assumptions that are material, especially sensitive, or inconsistent with historical trends.
Support from owners and third parties
AU-C 570.17 is specific. If management's plans include financial support from third parties or the owner-manager and the support is necessary, the auditor obtains evidence of intent, including written evidence, and of ability. Failure to obtain the written evidence means management's plans are insufficient to alleviate substantial doubt. AS 2415.05 lists confirmation of financial support arrangements with related and third parties as a procedure, without a written-evidence rule of that kind.
How do the reports differ?
| Situation | AS 2415 | AU-C 570 |
|---|---|---|
| Substantial doubt remains, disclosure adequate | Explanatory paragraph with an appropriate title, immediately following the opinion paragraph (.12) | Separate section headed "Substantial Doubt About the Entity's Ability to Continue as a Going Concern" stating the opinion is not modified (.24) |
| Doubt alleviated | Consider the need to disclose the principal conditions and events (.11) | Evaluate disclosure (.22); an emphasis-of-matter paragraph is allowed under AU-C 706 (.A54) |
| Disclosure inadequate | Departure from GAAP; qualified or adverse opinion (.14) | Qualified or adverse opinion under AU-C 705, with the basis section stating the matter (.26) |
| Going concern basis inappropriate | Not addressed in this section | Adverse opinion (.23) |
Both standards bar conditional language. AS 2415 (footnote to .12) and AU-C 570.A57 give the same two examples of wording not to use, for instance "there may be substantial doubt" tied to an "if" clause. For the AU-C section wording and the 705 and 706 interplay, see our wording guide.
What changes in communications and documentation?
AS 2415.17 lists what the auditor documents once substantial doubt is believed to exist: the conditions or events, the significant elements of management's plans, the procedures and evidence, and the conclusion on report wording. AU-C 570.32 sets a parallel list. On communication, AS 2415.17A points to AS 1301.17, which requires telling the audit committee about the conditions identified, the basis for any alleviation conclusion, and further matters when substantial doubt remains. AU-C 570.28 requires communication with those charged with governance unless all of them are involved in managing the entity.
Frequently asked questions
Is the AS 2415 period shorter than the AU-C 570 period?
Yes, under FASB ASC, when measured from the same year end. AS 2415 caps the period at one year beyond the balance sheet date. AU-C 570 with FASB ASC runs one year from the issuance date, which falls after the balance sheet date.
Does either standard make the auditor responsible for predicting the future?
No. AS 2415.04 and AU-C 570.08 both say the absence of a reference to substantial doubt in the report is not an assurance of the entity's ability to continue.
Does the report change if doubt is alleviated?
Under AS 2415 there is no required report paragraph for alleviated doubt; the auditor considers disclosure. Under AU-C 570 an emphasis-of-matter paragraph is optional and cannot be used if the opinion is modified or the matter is a key audit matter (.A55).
Sources
- PCAOB, AS 2415, Consideration of an Entity's Ability to Continue as a Going Concern (paragraphs .02 to .17A), and AS 1301, Communications with Audit Committees (paragraph .17): https://pcaobus.org/oversight/standards/auditing-standards/details/AS2415
- AICPA, AU-C Section 570, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (paragraphs .05, .11 to .32 and .A54 to .A57): https://www.aicpa-cima.com/resources/landing/aicpa-professional-standards
CORAA prepares ready-to-review audit files for US CPA firms from client books; you review and sign. See /us.
Part of CORAA University · Evidence and audit procedures: related guides, calculators and templates.
AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error