What it is
Management evaluates, each reporting period, whether conditions and events raise substantial doubt about the entity’s ability to meet its obligations within one year after the financial statements are issued. This workbook puts the evidence for that evaluation in one place: a twelve-month cash forecast, a covenant test, a log of conditions and events and a screen for management’s plans.
The conclusion tab reads the forecast and the plans, and takes your judgment before plans as an input. It returns one of three outcomes: no substantial doubt, substantial doubt alleviated by plans, or substantial doubt remains. A flag appears when your judgment disagrees with the indicators, so the rationale gets written.
When to use it
- At each year-end close, to support management’s going concern evaluation and the related disclosure.
- When a covenant breach, debt maturity or loss of a major customer puts liquidity in question.
- During an audit, to evaluate management’s evaluation and plans.
What’s inside
- Setup: issuance date, opening cash, minimum operating cash and covenant name
- Forecast: 12 month-end columns with inflows, outflows, ending cash and headroom
- Covenant test with breach flags by month
- Conditions log and a plans screen: approved, probable to implement, probable to mitigate
- Conclusion tab with a consistency check and a disclosure implication
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 period does the evaluation cover?
One year after the date the financial statements are issued, or available to be issued for entities that do not file with the SEC. The Forecast tab builds twelve months from the date you enter on Setup.
When can management’s plans be counted?
A plan counts when it is probable that it will be effectively implemented and probable that it will mitigate the relevant conditions within the period. The Plans tab also asks whether management approved it before issuance, and counts a plan only when all three answers are Yes.
Does the sheet decide whether substantial doubt exists?
No. You record the judgment, and the sheet flags a judgment that disagrees with the forecast or the log. The conclusion then follows from your judgment and the counted plans.
What happens if substantial doubt remains?
The notes disclose that substantial doubt exists, the conditions and events, management’s evaluation and management’s plans. The auditor’s report then carries a going concern emphasis paragraph under AU-C 570.
Related templates
- Going Concern Evaluation Memo (AU-C 570 / ASC 205-40)
- Disclosure Checklist: Going Concern (ASC 205-40)
- 13-Week Cash Flow Forecast Template
- Debt Covenant Compliance Workbook
Last updated 11/05/2026. All free templates.