What it is
ASC 205-40 requires management to evaluate whether it is probable that the entity will be unable to meet its obligations within one year after the date the statements are issued. Plans that mitigate the conditions count only to the extent it is probable they will be effectively implemented and probable they will mitigate. The disclosures differ depending on whether substantial doubt is alleviated.
This checklist covers the evaluation, plans, both disclosure outcomes and the audit side under AU-C 570.
When to use it
- When conditions such as losses, covenant violations or liquidity gaps exist.
- When drafting the going concern note.
- To align the note with the auditor’s report.
What’s inside
- Management’s evaluation and look-forward period
- Management’s plans and the probability tests
- Substantial doubt alleviated: required disclosures
- Substantial doubt not alleviated: required disclosures
- Related items and audit linkage
Standard cited
This template follows ASC 205-40 / AU-C 570. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use. See AU-C 570 explained.
Questions
What is the look-forward period?
One year after the date the financial statements are issued or available to be issued, not one year from the balance sheet date.
What if substantial doubt is not raised?
ASC 205-40 does not require disclosure if substantial doubt is not raised, though other disclosures such as risks and uncertainties may apply.
Is this checklist complete?
No. It is a prompt list paraphrased from the standard, not a substitute for the Codification or a full commercial disclosure checklist. Check each item against the current ASC text and any ASUs issued since the date you last checked, and add industry-specific requirements.
Related templates
- Going Concern Evaluation Memo (AU-C 570 / ASC 205-40)
- GAAP Disclosure Checklist (Private Company, Short Form)
- Disclosure Checklist: Debt (ASC 470)
Last updated 11/05/2026. All free templates.