Key points
- The revised standard takes effect for periods beginning on or after 15 December 2026, giving firms roughly one year to update templates.
- Every audit report must now include a going concern section, not only those with material uncertainty.
- Auditors must evaluate events and conditions on a "gross" basis before factoring in management's plans.
- "Close call" situations move from the KAM section to the dedicated going concern section of the report.
Side-by-side comparison
At most mid-tier firms, going concern procedures on a healthy client are still a tick-box exercise: confirm indicators are absent, document that management has made no contrary assessment, move on. The revised standard breaks that pattern by requiring a going concern section in every audit report, even the clean ones. The table below shows exactly what changes and what stays the same.
| Dimension | Current ISA 570 (Revised) | ISA 570 (Revised 2024) |
|---|---|---|
| Going concern section in audit report | Required only when material uncertainty exists | Required on every audit, regardless of findings |
| Evaluation of events and conditions | Assessed together with management's mitigating plans | Evaluated "gross" first (paras 11–12), then mitigating plans assessed separately |
| Assessment period | 12 months from the balance sheet date | 12 months from the date of approval of the financial statements |
| "Close call" reporting | Typically reported as a KAM under ISA 701 | Must appear in the going concern section, with a KAM cross-reference |
| Explicit auditor conclusions | Implicit in opinion wording | Two explicit conclusions required: on management's use of the going concern basis and on whether material uncertainty exists |
| Management plan verification | Evaluate reasonableness of plans | Evaluate both intent and ability to execute plans, with written third-party support evidence where relevant |
What is ISA 570 Revised 2024 vs Current ISA 570?
The biggest operational change hits every engagement, not just troubled clients. Under the current standard, if no going concern indicators exist, the auditor documents that assessment and moves on. The report says nothing about going concern unless there is a problem. Under ISA 570 (Revised 2024) paragraph 22, every audit report must include a going concern section with explicit conclusions. That means firms need a going concern reporting template for clean engagements, not just distressed ones.
Where judgment starts: deciding whether identified events and conditions, evaluated on a gross basis (before management's plans), are enough to trigger the "close call" disclosure. Two auditors looking at the same covenant headroom can reach different conclusions about whether an event or condition exists at all.
For engagements where indicators exist but the auditor concludes no material uncertainty remains after evaluating management's plans (the "close call"), the revised standard requires disclosure of those events and conditions in the going concern section. Under the current standard, that information often sits in the KAM section or is omitted entirely. The shift forces transparency about near-misses that regulators have flagged as under-reported.
Where experienced auditors disagree
Consider a client with a bank facility expiring seven months after the financial statements (FS) are approved, and verbal assurance from the bank that renewal is expected. One partner treats the verbal assurance as sufficient evidence that no event or condition exists on a gross basis. The going concern section says nothing beyond the standard boilerplate. Another partner argues that an unsigned renewal within the assessment period is an event or condition by definition, regardless of how likely renewal is. Under the revised standard, that partner would document the gross indicator, evaluate management's plan (the renewal negotiation), and disclose the close call in the report. Both positions are defensible. The first is more practical. The second is more conservative and closer to what the IAASB intended with the gross evaluation requirement. The file should tell a story about which position was taken and why.
The structural pressure behind the default
Disclosing a close call in the audit report creates a conversation the engagement partner has to have with the client. Management boards do not want "going concern" language appearing in a report on a company they consider healthy. Fee pressure makes that conversation harder: the client asks why last year's report said nothing about going concern and this year's does, and the answer ("the standard changed") feels insufficient when the underlying business has not deteriorated. The result is predictable. Teams are tempted to set the gross evaluation threshold just high enough that no event or condition is identified, keeping the going concern section clean. This is genuinely difficult to get right. The standard asks for a judgment call in an area where the commercial incentive runs directly against transparency.
Worked example: Schröder Haustechnik GmbH
Client: German building services company, FY2027 (first year under revised standard), revenue €28M, HGB reporter. The financial statements (FS) are approved on 15 April 2028.
Step 1 — Identify events and conditions (gross)
The engagement team identifies two indicators. First, the client lost its largest contract (18% of revenue) in November 2027. Second, a €3.2M bank facility expires in June 2028 with no renewal commitment. The team documents both on a gross basis, before considering any management response.
Step 2 — Evaluate management's assessment
Management provides a cash flow forecast showing the company can meet obligations through April 2029 (twelve months from the FS approval date). The forecast assumes two new contracts worth €5M and renewal of the bank facility at similar terms. The team requests the signed engagement letters for the new contracts and a bank letter confirming the renewal is under active negotiation.
Step 3 — Determine reporting outcome
One new contract is signed (€2.8M). The second remains unsigned. The bank provides a letter of intent but not a binding commitment. The engagement partner concludes that events and conditions exist that may cast significant doubt, but after evaluating management's plans (including the signed contract and bank letter of intent), no material uncertainty remains. This is a "close call."
Step 4 — Draft the audit report
The team prepares a going concern section stating both indicators, the evidence obtained, and the basis for concluding no material uncertainty exists. If the team had applied the current ISA 570 , the report would contain no going concern section at all. A reader would not know the client lost its largest contract.
The revised standard surfaces information the current standard allows to remain invisible. Confusing the two reporting models risks either omitting required going concern disclosure (if applying the current standard's logic to a post-2026 engagement) or over-reporting material uncertainty when the revised standard only requires description of the events and conditions.
Why it matters in practice
The AFM's October 2025 exploratory study on going concern found that, in the cases reviewed, auditors took going concern seriously as a concept but failures occurred where auditors lacked a broad understanding of the client's environment, causing clear indicators to be missed. Insufficient independence from the audit client was cited as a contributing factor.
The FRC's 2025 Annual Review of Audit Quality flagged recurring deficiencies in going concern procedures at Tier 2 and Tier 3 firms: insufficient testing of cash flow forecasts, inadequate sensitivity analysis, weak evaluation of covenant breach impacts on available liquidity, and limited challenge of management's mitigating plans. In our experience, the last point is where the tick-box exercise problem is most visible. The team documents that management has a plan but does not test whether management has the ability to execute it.