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Commonwealth legislation
**What this standard does (mechanically)
Sets the auditor’s duties when assessing whether an audited entity can continue as a "going concern" (i.e. keep operating) and prescribes how the auditor must reflect that assessment in the auditor’s report. (See: Scope and Objectives.)
Adds Australia‑specific requirements to the international ISA 570 standard, including references to the Corporations Act 2001 and a defined "relevant period" for the auditor’s assessment. (See: Aus 3.1, Aus 13.1–Aus 13.2.)
**Who it affects
**How it works — the practical steps
Early risk assessment: the auditor considers, as part of normal audit risk procedures, whether events or conditions might cast significant doubt on going concern (examples listed: net current liability, breaching loan terms, severe cash flow problems, loss of major customers, regulatory actions). If management has already done a going‑concern assessment, the auditor discusses it; if not, the auditor asks management to explain the basis for using the going‑concern basis of accounting. (Paras. 10–11; A3–A7.)
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Direct links to the current provisions in ASA 570 - Going Concern - December 2015.
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 20, 500 Collins StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
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© 2023 Commonwealth of Australia. The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source as being the Australian Auditing and Assurance Standards Board (AUASB).
Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
This Auditing Standard reproduces substantial parts of the corresponding International Standard on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC), in the manner described in the statement on Conformity with International Standards on Auditing. The AUASB acknowledges that IFAC is the owner of copyright in the International Standard on Auditing incorporated in this Auditing Standard throughout the world.
All existing rights in this material are reserved outside Australia. Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use only.
Further information and requests for authorisation to reproduce this Auditing Standard for commercial purposes outside Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Any decision to approve a request may also require the agreement of IFAC.
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard..................................................1
Going Concern Basis of Accounting...............................................2
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern..........3-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions are Identified.....................16
Auditor Conclusions.......................................................17-20
Implications for the Auditor’s Report...........................................21-24
Communication with Those Charged with Governance.................................25
Significant Delay in the Approval of Financial Report..................................26
Application and Other Explanatory Material
Scope of this Auditing Standard.................................................A1
Going Concern Basis of Accounting..............................................A2
Risk Assessment Procedures and Related Activities................................A3-A7
Evaluating Management’s Assessment........................................A8-A13
Period beyond Management’s Assessment................................A14-Aus A15.1
Additional Audit Procedures When Events or Conditions are Identified................A16-A20
Auditor Conclusions.....................................................A21-A25
Implications for the Auditor’s Report....................................A26-Aus A35.1
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
Appendix 2: Illustrations of Auditor’s Reports Relating to Going Concern
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 20, 500 Collins StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
|---|
© 2023 Commonwealth of Australia. The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source as being the Australian Auditing and Assurance Standards Board (AUASB).
Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
This Auditing Standard reproduces substantial parts of the corresponding International Standard on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC), in the manner described in the statement on Conformity with International Standards on Auditing. The AUASB acknowledges that IFAC is the owner of copyright in the International Standard on Auditing incorporated in this Auditing Standard throughout the world.
All existing rights in this material are reserved outside Australia. Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use only.
Further information and requests for authorisation to reproduce this Auditing Standard for commercial purposes outside Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Any decision to approve a request may also require the agreement of IFAC.
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard..................................................1
Going Concern Basis of Accounting...............................................2
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern..........3-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions are Identified.....................16
Auditor Conclusions.......................................................17-20
Implications for the Auditor’s Report...........................................21-24
Communication with Those Charged with Governance.................................25
Significant Delay in the Approval of Financial Report..................................26
Application and Other Explanatory Material
Scope of this Auditing Standard.................................................A1
Going Concern Basis of Accounting..............................................A2
Risk Assessment Procedures and Related Activities................................A3-A7
Evaluating Management’s Assessment........................................A8-A13
Period beyond Management’s Assessment................................A14-Aus A15.1
Additional Audit Procedures When Events or Conditions are Identified................A16-A20
Auditor Conclusions.....................................................A21-A25
Implications for the Auditor’s Report....................................A26-Aus A35.1
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
Appendix 2: Illustrations of Auditor’s Reports Relating to Going Concern
This compilation takes into account amendments made up to and including 15 March 2023 and was prepared on 22 March 2023 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (December 2015) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 1 December 2015 | Financial reporting periods ending on or after 15 December 2016 |
| ASA 2020-2 [B] | 30 June 2020 | Financial reporting periods ending on or after 15 July 2020 |
| ASA 2020-1 [C] | 3 March 2020 | Financial reporting periods commencing on or after 15 December 2021[*] |
| ASA 2021-5 [D] | 5 November 2021 | Financial reporting periods commencing on or after 15 December 2021 |
| ASA 2023-1 [E] | 15 March 2023 | Financial reporting periods commencing on or after 1 January 2023 |
[A] Federal Register of Legislation – registration number F2015L02015, 15 December 2015
[B] Federal Register of Legislation – registration number F2020L00885, 7 July 2020
[C] Federal Register of Legislation – registration number F2020L00252, 13 March 2020
[D] Federal Register of Legislation – registration number F2021L01525, 8 November 2021
[E] Federal Register of Legislation – registration number F2023L00295, 21 March 2023
| Paragraph affected | How affected | By … [paragraph] |
|---|---|---|
| Appendix 2 | Amended | ASA 2020-2 [41] to [44] |
| 10Footnote 3 | Amended | ASA 2020-1 [190] |
| A7Footnote 10 | Amended | ASA 2020-1 [191] |
| Appendix 2[Aus] Illustration 4A | Amended | ASA 2021-5 [25] |
| Appendix 2 | Amended | ASA 2023-1 [20] to [23] |
Auditing Standard ASA 570 Going Concern (as amended to 15 March 2023) is set out in paragraphs Aus 0.1 to Aus A35.1 and Appendices 1 and 2.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to AUASB Standards, which sets out how AUASB Standards are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
This Auditing Standard conforms with International Standard on Auditing ISA 570 Going Concern issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following requirements are additional to ISA 570:
Paragraph Aus 3.1 refers to requirements under the Corporations Act 2001.
Paragraph Aus 13.1 requires the auditor to assess the appropriateness of management’s going concern assumption for the relevant period.
Paragraph Aus 13.2 defines the relevant period to be approximately twelve months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period.
ISA 570 requires the auditor to consider the appropriateness of management’s going concern for a period of at least twelve months from the date of the financial statements.
The following application and other explanatory material are additional to ISA 570:
Paragraph Aus A15.1 contains application material around the auditor’s responsibility in the period beyond management’s assessment.
Aus A21.1/[Aus] Appendix 1 contains an explanatory diagram mapping going concern considerations and types of audit opinions.
Appendix 2 contains [Aus] Illustration 1A, [Aus] Illustration 2A, [Aus] Illustration 3A and [Aus] Illustration 4A example auditors’ reports that conform with the requirements of the Corporations Act 2001.
This Auditing Standard incorporates terminology and definitions used in Australia.
Compliance with this Auditing Standard enables compliance with ISA 570.
This compilation takes into account amendments made up to and including 15 March 2023 and was prepared on 22 March 2023 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (December 2015) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 1 December 2015 | Financial reporting periods ending on or after 15 December 2016 |
| ASA 2020-2 [B] | 30 June 2020 | Financial reporting periods ending on or after 15 July 2020 |
| ASA 2020-1 [C] | 3 March 2020 | Financial reporting periods commencing on or after 15 December 2021[*] |
| ASA 2021-5 [D] | 5 November 2021 | Financial reporting periods commencing on or after 15 December 2021 |
| ASA 2023-1 [E] | 15 March 2023 | Financial reporting periods commencing on or after 1 January 2023 |
[A] Federal Register of Legislation – registration number F2015L02015, 15 December 2015
[B] Federal Register of Legislation – registration number F2020L00885, 7 July 2020
[C] Federal Register of Legislation – registration number F2020L00252, 13 March 2020
[D] Federal Register of Legislation – registration number F2021L01525, 8 November 2021
[E] Federal Register of Legislation – registration number F2023L00295, 21 March 2023
| Paragraph affected | How affected | By … [paragraph] |
|---|---|---|
| Appendix 2 | Amended | ASA 2020-2 [41] to [44] |
| 10Footnote 3 | Amended | ASA 2020-1 [190] |
| A7Footnote 10 | Amended | ASA 2020-1 [191] |
| Appendix 2[Aus] Illustration 4A | Amended | ASA 2021-5 [25] |
| Appendix 2 | Amended | ASA 2023-1 [20] to [23] |
Auditing Standard ASA 570 Going Concern (as amended to 15 March 2023) is set out in paragraphs Aus 0.1 to Aus A35.1 and Appendices 1 and 2.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to AUASB Standards, which sets out how AUASB Standards are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
This Auditing Standard conforms with International Standard on Auditing ISA 570 Going Concern issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following requirements are additional to ISA 570:
Paragraph Aus 3.1 refers to requirements under the Corporations Act 2001.
Paragraph Aus 13.1 requires the auditor to assess the appropriateness of management’s going concern assumption for the relevant period.
Paragraph Aus 13.2 defines the relevant period to be approximately twelve months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period.
ISA 570 requires the auditor to consider the appropriateness of management’s going concern for a period of at least twelve months from the date of the financial statements.
The following application and other explanatory material are additional to ISA 570:
Paragraph Aus A15.1 contains application material around the auditor’s responsibility in the period beyond management’s assessment.
Aus A21.1/[Aus] Appendix 1 contains an explanatory diagram mapping going concern considerations and types of audit opinions.
Appendix 2 contains [Aus] Illustration 1A, [Aus] Illustration 2A, [Aus] Illustration 3A and [Aus] Illustration 4A example auditors’ reports that conform with the requirements of the Corporations Act 2001.
This Auditing Standard incorporates terminology and definitions used in Australia.
Compliance with this Auditing Standard enables compliance with ISA 570.
Auditing Standard ASA 570 Going Concern (as amended to 15 March 2023) is set out in paragraphs Aus 0.1 to Aus A35.1 and Appendices 1 and 2.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to AUASB Standards, which sets out how AUASB Standards are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
This Auditing Standard conforms with International Standard on Auditing ISA 570 Going Concern issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following requirements are additional to ISA 570:
Paragraph Aus 3.1 refers to requirements under the Corporations Act 2001.
Paragraph Aus 13.1 requires the auditor to assess the appropriateness of management’s going concern assumption for the relevant period.
Paragraph Aus 13.2 defines the relevant period to be approximately twelve months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period.
ISA 570 requires the auditor to consider the appropriateness of management’s going concern for a period of at least twelve months from the date of the financial statements.
The following application and other explanatory material are additional to ISA 570:
Paragraph Aus A15.1 contains application material around the auditor’s responsibility in the period beyond management’s assessment.
Aus A21.1/[Aus] Appendix 1 contains an explanatory diagram mapping going concern considerations and types of audit opinions.
Appendix 2 contains [Aus] Illustration 1A, [Aus] Illustration 2A, [Aus] Illustration 3A and [Aus] Illustration 4A example auditors’ reports that conform with the requirements of the Corporations Act 2001.
This Auditing Standard incorporates terminology and definitions used in Australia.
Compliance with this Auditing Standard enables compliance with ISA 570.
Auditing Standard ASA 570
The Auditing and Assurance Standards Board (AUASB) made Auditing Standard ASA 570 Going Concern pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001, on 1 December 2015.
This compiled version of ASA 570 incorporates subsequent amendments contained in other Auditing Standards made by the AUASB up to and including 15 March 2023 (see Compilation Details).
Aus 0.1 This Auditing Standard applies to:
(a) an audit of a financial report for a financial year, or an audit of a financial report for a half‑year, in accordance with the Corporations Act 2001; and
(b) an audit of a financial report, or a complete set of financial statements, for any other purpose.
Aus 0.2 This Auditing Standard also applies, as appropriate, to an audit of other historical financial information.
Aus 0.3 This Auditing Standard is operative for financial reporting periods ending on or after 15 December 2016. [Note: For operative dates of paragraphs changed or added by an Amending Standard, see Compilation Details.]
Aus 3.1 Australian Accounting Standards[*] require management to make an assessment of an entity’s ability to continue as a going concern. In addition, certain legislation, such as the Corporations Act 2001[#], requires a formal statement as to the solvency of the entity to be made by those charged with governance and included as part of the financial report upon which the auditor’s opinion is expressed.
The degree of uncertainty associated with the outcome of an event or condition increases significantly the further into the future an event or condition or the outcome occurs. For that reason, most financial reporting frameworks that require an explicit management assessment specify the period for which management is required to take into account all available information.
The size and complexity of the entity, the nature and condition of its business and the degree to which it is affected by external factors affect the judgement regarding the outcome of events or conditions.
Any judgement about the future is based on information available at the time at which the judgement is made. Subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made.
Responsibilities of the Auditor
Aus 13.1 In evaluating management’s assessment of the entity’s ability to continue as a going concern, the auditor shall consider the relevant period as defined in paragraph Aus 13.2 of this Auditing Standard, which may be the same or may differ from that used by management to make its assessment as required by the applicable financial reporting framework. If management’s assessment of the entity’s ability to continue as a going concern covers less than the relevant period, the auditor shall request management to extend its assessment period to correspond to the relevant period used by the auditor. (Ref: Para. A11–A13)
Aus 13.2 Relevant period means the period of approximately twelve months from the date of the auditor’s current report to the expected date of the auditor’s report for:
(a) the next annual reporting date in the case of an annual financial report; or
(b) the corresponding reporting period for the following year in the case of an interim financial reporting period.
Adequacy of Disclosures When Events or Conditions Have Been Identified and a Material Uncertainty Exists
Adequacy of Disclosures When Events or Conditions Have Been Identified but No Material Uncertainty Exists
Use of Going Concern Basis of Accounting Is Inappropriate
Use of Going Concern Basis of Accounting Is Appropriate but a Material Uncertainty Exists
Adequate Disclosure of a Material Uncertainty Is Made in the Financial Report
Adequate Disclosure of a Material Uncertainty Is Not Made in the Financial Report
Management Unwilling to Make or Extend Its Assessment
* * *
Considerations Specific to Public Sector Entities
Events or Conditions That May Cast Significant Doubt on the Entity’s Ability to Continue as a Going Concern (Ref: Para. 10)
Financial
Net liability or net current liability position.
Fixed‑term borrowings approaching maturity without realistic prospects of renewal or repayment; or excessive reliance on short‑term borrowings to finance long‑term assets.
Indications of withdrawal of financial support by creditors.
Negative operating cash flows indicated by historical or prospective financial report.
Adverse key financial ratios.
Substantial operating losses or significant deterioration in the value of assets used to generate cash flows.
Arrears or discontinuance of dividends.
Inability to pay creditors on due dates.
Inability to comply with the terms of loan agreements.
Change from credit to cash‑on‑delivery transactions with suppliers.
Inability to obtain financing for essential new product development or other essential investments.
Operating
Management intentions to liquidate the entity or to cease operations.
Loss of key management without replacement.
Loss of a major market, key customer(s), franchise, licence, or principal supplier(s).
Labour difficulties.
Shortages of important supplies.
Emergence of a highly successful competitor.
Other
Non‑compliance with capital or other statutory or regulatory requirements, such as solvency or liquidity requirements for financial institutions.
Pending legal or regulatory proceedings against the entity that may, if successful, result in claims that the entity is unlikely to be able to satisfy.
Changes in law or regulation or government policy expected to adversely affect the entity.
Uninsured or underinsured catastrophes when they occur.
The significance of such events or conditions often can be mitigated by other factors. For example, the effect of an entity being unable to make its normal debt repayments may be counter‑balanced by management’s plans to maintain adequate cash flows by alternative means, such as by disposing of assets, rescheduling loan repayments, or obtaining additional capital. Similarly, the loss of a principal supplier may be mitigated by the availability of a suitable alternative source of supply.
Considerations Specific to Smaller Entities (Ref: Para. 10)
Remaining Alert throughout the Audit for Audit Evidence about Events or Conditions (Ref: Para. 11)
Management’s Assessment and Supporting Analysis and the Auditor’s Evaluation (Ref: Para. 12)
The Period of Management’s Assessment (Ref: Para. Aus 13.1–Aus A13.2)
Considerations Specific to Smaller Entities (Ref: Para. 12–Aus 13.2)
Aus A15.1 Other than enquiry of management, the auditor does not have a responsibility to perform any other audit procedures to identify events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern beyond the period assessed by management, which, as discussed in paragraph Aus 13.2, is approximately twelve months from the date of the auditors’ report on the current financial report.
Analysing and discussing cash flow, profit and other relevant forecasts with management.
Analysing and discussing the entity’s latest available interim financial report.
Reading the terms of debentures and loan agreements and determining whether any have been breached.
Reading minutes of the meetings of shareholders, those charged with governance and relevant committees for reference to financing difficulties.
Enquiring of the entity’s legal counsel regarding the existence of litigation and claims and the reasonableness of management’s assessments of their outcome and the estimate of their financial implications.
Confirming the existence, legality and enforceability of arrangements to provide or maintain financial support with related and third parties and assessing the financial ability of such parties to provide additional funds.
Evaluating the entity’s plans to deal with unfilled customer orders.
Performing audit procedures regarding subsequent events to identify those that either mitigate or otherwise affect the entity’s ability to continue as a going concern.
Confirming the existence, terms and adequacy of borrowing facilities.
Obtaining and reviewing reports of regulatory actions.
Determining the adequacy of support for any planned disposals of assets.
Evaluating Management’s Plans for Future Actions (Ref: Para. 16(b))
The Period of Management’s Assessment (Ref: Para. 16(c))
The prospective financial information for recent prior periods with historical results; and
The prospective financial information for the current period with results achieved to date.
Written Representations (Ref: Para. 16(e))
Material Uncertainty Related to Events or Conditions that May Cast Significant Doubt on the Entity’s Ability to Continue as a Going Concern (Ref: Para. 18‒19)
Aus A21.1 Refer to [Aus] Appendix 1 for a diagrammatic illustration of the links between going concern considerations and the types of audit opinions.
Adequacy of Disclosure when Events or Conditions Have Been Identified and a Material Uncertainty Exists (Ref: Para. 18‒19)
Management’s evaluation of the significance of the events or conditions relating to the entity’s ability to meet its obligations; or
Significant judgements made by management as part of its assessment of the entity’s ability to continue as a going concern.
Some financial reporting frameworks may provide additional guidance regarding management’s consideration of disclosures about the magnitude of the potential impact of the principal events or conditions, and the likelihood and timing of their occurrence.
Adequacy of Disclosures When Events or Conditions Have Been Identified but No Material Uncertainty Exists (Ref: Para. 20)
Principal events or conditions;
Management’s evaluation of the significance of those events or conditions in relation to the entity’s ability to meet its obligations;
Management’s plans that mitigate the effect of these events or conditions; or
Significant judgements made by management as part of its assessment of the entity’s ability to continue as a going concern.
Implications for the Auditor’s Report
Use of Going Concern Basis of Accounting is Inappropriate (Ref: Para. 21)
Use of the Going Concern Basis of Accounting Is Appropriate but a Material Uncertainty Exists (Ref: Para. 22‒23)
That the existence of a material uncertainty is fundamental to users’ understanding of the financial report;[15] or
How the matter was addressed in the audit. (Ref: Para. A1)
Adequate Disclosure of a Material Uncertainty Is Made in the Financial Report (Ref: Para. 22)
Adequate Disclosure of a Material Uncertainty Is Not Made in the Financial Report (Ref: Para. 23)
Aus A33.1 [Aus] Illustration 4A of Appendix 2 is an example of an auditor’s report containing a disclaimer of opinion, when the auditor has not obtained sufficient appropriate audit evidence regarding the appropriateness of the management’s use of the going concern basis of accounting.
Communication with Regulators (Ref: Para. 2223)
Management Unwilling to Make or Extend Its Assessment (Ref: Para. 24)
Other Considerations (Ref. Para. 24)
Aus A35.1 An auditor is required under the Corporations Act 2001[*] (the Act) to notify the Australian Securities and Investments Commission (ASIC) if the auditor, when conducting an audit, becomes aware of certain circumstances specified in the Act. ASIC[#] provides guidance to help auditors comply with their obligations under the, such as reporting suspected insolvent trading.
[Aus] Appendix 1
(Ref: Para. Aus A21.1)
LINKING GOING CONCERN CONSIDERATIONS AND TYPES OF AUDIT OPINIONS
directional arrow directional arrow directional arrowdirectional arrowno boxdirectional arrowAus Appendix 1directional arrow text box text boxtext boxdirectional arrow
Appendix 2
(Ref: Para. A29, A31‑A32, Aus A33.1)
Illustrations of Auditor’s Reports Relating to Going Concern
Illustration 1: [Deleted by the AUASB. Refer [Aus] Illustration 1A].
[Aus] Illustration 1A: An auditor’s report on a financial report of a single listed company prepared in accordance with the Corporations Act 2001 containing an unmodified opinion when the auditor has concluded that a material uncertainty exists and disclosure in the financial report is adequate.
Illustration 2: [Deleted by the AUASB. Refer [Aus] Illustration 2A].
[Aus] Illustration 2A: An auditor’s report on a financial report of a single listed company prepared in accordance with the Corporations Act 2001 containing a qualified opinion when the auditor has concluded that a material uncertainty exists and that the financial report is materially misstated due to inadequate disclosure.
Illustration 3: [Deleted by the AUASB. Refer [Aus] Illustration 3A].
[Aus] Illustration 3A: An auditor’s report on a financial report of a single listed company prepared in accordance with the Corporations Act 2001 containing an adverse opinion when the auditor has concluded that a material uncertainty exists and the financial report omits the required disclosures relating to a material uncertainty.
[Aus] Illustration 4A: An auditor’s report on a financial report of a single listed company prepared in accordance with the Corporations Act 2001 containing a disclaimer of opinion (limitation of scope) when the auditor has been unable to obtain sufficient appropriate audit evidence about the company’s ability to continue as a going concern.
Example Auditor’s Report
Unmodified Opinion, Material Uncertainty Exists, Adequate Disclosure
Single Company‑Corporations Act 2001
(Fair Presentation Framework)
[Aus] Illustration 1A:
For purposes of this illustrative auditor’s report, the following circumstances are assumed:
Audit of the financial report of a single listed company. The audit is not a group audit (i.e. ASA 600[*] does not apply).
The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001.
The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[#]
The auditor has concluded an unmodified (i.e., “clean”) opinion is appropriate based on the audit evidence obtained.
The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards).
Based on the audit evidence obtained, the auditor has concluded that a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. The disclosure of the material uncertainty in the financial report is adequate.
Key audit matters have been communicated in accordance with ASA 701.
The auditor has obtained all of the other information prior to the date of the auditor’s report and has not identified a material misstatement of the other information.
In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(3C) of the Corporations Act 2001.
INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Report on the Audit of the Financial Report[§]
Opinion
We have audited the financial report of ABC Company Ltd. (the Company), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
In our opinion, the accompanying financial report of ABC Company Ltd., is in accordance with the Corporations Act 2001, including:
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company would be on the same terms if given to the directors as at the time of this auditor’s report.[*]
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 6 in the financial report, which indicates that the Company incurred a net loss of ZZZ during the year ended 30 June 20X1 and, as of that date, the Company’s current liabilities exceeded its total assets by YYY. As stated in Note 6, these events or conditions, along with other matters as set forth in Note 6, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.
[Description of each key audit matter in accordance with ASA 701.]
Other Information [or another title if appropriate such as “Information Other than the Financial Report and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ASA 720 – see [Aus] Illustration 1A in Appendix 3 of ASA 720.]
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.[*]]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Report on the Remuneration Report[#]
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
[Auditor’s name and signature][†]
[Name of Firm]
[Date of the auditor’s report]
[Auditor’s Address]
Example Auditor’s Report
Qualified Opinion, Material Uncertainty Exists, Inadequate Disclosure
Single Listed Company‑Corporations Act 2001
(Fair Presentation Framework)
| [Aus] Illustration 2A:For purposes of this illustrative auditor’s report, the following circumstances are assumed: Audit of the financial report of a single listed company. The audit is not a group audit (i.e. ASA 600[*] does not apply). The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001. The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[#] The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards). Based on the audit evidence obtained, the auditor has concluded that a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. Note yy to the financial report discusses the magnitude of financing arrangements, the expiration and the total financing arrangements; however the financial report does not include discussion on the impact or the availability of refinancing or characterise this situation as a material uncertainty. The financial report is materially misstated due to the inadequate disclosure of the material uncertainty. A qualified opinion is being expressed because the auditor concluded that the effects on the financial report of this inadequate disclosure are material but not pervasive to the financial report. Key audit matters have been communicated in accordance with ASA 701. The auditor has obtained all of the other information prior to the date of the auditor’s report and the matter giving rise to the qualified opinion on the financial report also affects the other information. In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(3C) of the Corporations Act 2001. |
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INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Report on the Audit of the Financial Report[*]
Qualified Opinion
We have audited the financial report of ABC Company Ltd., (the Company), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
In our opinion, except for the incomplete disclosure of the information referred to in the Basis for Qualified Opinion section of our report, the accompanying financial report of ABC Company Ltd., is in accordance with the Corporations Act 2001, including:
Basis for Qualified Opinion
As discussed in Note yy, the Company’s financing arrangements expire and amounts outstanding are payable on 19 August 20X2. The Company has been unable to conclude re‑negotiations or obtain replacement financing. This situation indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. The financial report does not adequately disclose this matter.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of ABC Company Ltd., would be on the same terms if given to the directors as at the time of this auditor’s report.[#]
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report.
[Descriptions of each key audit matter in accordance with ASA 701.]
Other Information [or another title if appropriate such as “Information Other than the Financial Report and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ASA 720 – see [Aus] Illustration 6A in Appendix 3 of ASA 720. The last paragraph of the other information section in [Aus] Illustration 6A would be customised to describe the specific matter giving rise to the qualified opinion that also affects the other information.[*]]
Responsibilities of the Directors for the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.[#]]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Report on the Remuneration Report[†]
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
[Auditor’s name and signature][§]
[Name of Firm]
[Date of the auditor’s report]
[Auditor’s Address]
Example Auditor’s Report
Adverse Opinion, Material Uncertainty Exists, Inadequate Disclosure
Single listed Company‑Corporations Act 2001
(Fair Presentation Framework)
| [Aus] Illustration 3A:For purposes of the illustrative auditor’s report, the following circumstances are assumed: Audit of the financial report of a single listed company. The audit is not a group audit (i.e. ASA 600[*] does not apply). The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001. The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[#] The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards). Based on the audit evidence obtained, the auditor has concluded that a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern, and the company is considering bankruptcy. The financial report omits the required disclosures relating to the material uncertainty. An adverse opinion is being expressed because the effects on the financial report of such omission are material and pervasive. ASA 701 applies; however, the auditor has determined that there are no key audit matters other than the matter described in the Basis for Adverse Opinion section. The auditor has obtained all of the other information prior to the date of the auditor’s report and the matter giving rise to the adverse opinion on the financial report also affects the other information. In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(3C) of the Corporations Act 2001. |
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INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Report on the Audit of the Financial Report[§]
Adverse Opinion
We have audited the financial report of ABC Company Ltd., (the Company), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
In our opinion, because of the omission of the information mentioned in the Basis for Adverse Opinion section of our report, the financial of ABC Company Ltd., is not in accordance with the Corporations Act 2001 including:
Basis for Adverse Opinion
The Company’s financing arrangements expired and the amount outstanding was payable on 30 June 20X1. The Company has been unable to conclude re‑negotiations or obtain replacement financing and is considering filing for bankruptcy. This situation indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. The financial report does not adequately disclose this fact.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of ABC Company Ltd., would be on the same terms if given to the directors as at the time of this auditor’s report.[*]
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.
Key Audit Matters
Except for the matter described in the Basis for Adverse Opinion section, we have determined that there are no other key audit matters to communicate in our report.
Other Information [or another title if appropriate such as “Information Other than the Financial Report and Auditor’s Report Thereon”]
[Reporting in accordance with the reporting requirements in ASA 720 – see [Aus] Illustration 7A in Appendix 3 of ASA 720. The last paragraph of the other information section in [Aus] Illustration 7A would be customised to describe the specific matter giving rise to the adverse opinion that also affects the other information.[#]]
Responsibilities of the Directors for the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Report on the Remuneration Report[†]
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
[Auditor’s name and signature][*]
[Name of Firm]
[Date of the auditor’s report]
[Auditor’s Address]
Example Auditor’s Report
Disclaimer of Opinion (Limitation of Scope)
Single listed Company‑Corporations Act 2001
(Fair Presentation Framework)
| [Aus] Illustration 4A:For purposes of the illustrative auditor’s report, the following circumstances are assumed: Audit of the financial report of a single listed company. The audit is not a group audit (i.e. ASA 600[*] does not apply). The financial report is prepared by the directors of the company in accordance with Australian Accounting Standards (a general purpose framework) and under the Corporations Act 2001. The terms of the audit engagement reflect the description of the directors’ responsibility for the financial report in ASA 210.[#] The relevant ethical requirements that apply to the audit are the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards). The auditor is unable to obtain sufficient appropriate audit evidence about the company’s ability to continue as a going concern as the directors have refused to extend their going concern assessment up to the relevant period (limitation of scope). The auditor is not permitted to communicate key audit matters in accordance with ASA 705.[†] The auditor does not include an other information section in accordance with ASA 720.[§] In addition to the audit of the financial report, the auditor has other reporting responsibilities required under section 308(3C) of the Corporations Act 2001. |
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INDEPENDENT AUDITOR’S REPORT
[Appropriate Addressee]
Report on the Audit of the Financial Report[‡]
Disclaimer of Opinion
We were engaged to audit the financial report of ABC Company Ltd., (the Company), which comprises the statement of financial position as at 30 June 20X1, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information, and the directors’ declaration.
We do not express an opinion on the accompanying financial report of the Company. Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on this financial report.
Basis for Disclaimer of Opinion
The Company’s financing arrangements expired and the amount outstanding was payable on 30 June 20X1. The Company has been unable to conclude re‑negotiations to obtain replacement financing. The directors have refused to extend their assessment of the Company’s ability to continue as a going concern beyond 30 September 20X1 given the uncertainty of obtaining suitable replacement financing. We have been unable to obtain alternative evidence which would provide sufficient appropriate audit evidence as to whether the Company may be able to obtain such financing, and hence remove significant doubt of its ability to continue as a going concern within twelve months of the date of this auditor’s report.
Responsibilities of the Directors for the Financial Report
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
Auditor’s Responsibilities for the Audit of the Financial Report
[Reporting in accordance with ASA 705 – see [Aus] Illustration 5 in ASA 705.]
Report on the Remuneration Report[#]
[Reporting in accordance with ASA 700 – see [Aus] Illustration 1A in ASA 700.]
[Auditor’s name and signature] [#]
[Name of Firm]
[Date of the auditor’s report]
[Auditor’s Address]
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 20, 500 Collins StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
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© 2023 Commonwealth of Australia. The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source as being the Australian Auditing and Assurance Standards Board (AUASB).
Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
This Auditing Standard reproduces substantial parts of the corresponding International Standard on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC), in the manner described in the statement on Conformity with International Standards on Auditing. The AUASB acknowledges that IFAC is the owner of copyright in the International Standard on Auditing incorporated in this Auditing Standard throughout the world.
All existing rights in this material are reserved outside Australia. Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use only.
Further information and requests for authorisation to reproduce this Auditing Standard for commercial purposes outside Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to . Any decision to approve a request may also require the agreement of IFAC.
Evaluate management’s assessment: the auditor evaluates management’s analysis, assumptions and plans and whether management considered all information the auditor knows. In Australia the auditor must consider a "relevant period" defined as approximately 12 months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period; if management assessed a shorter period the auditor must ask management to extend it. (Aus 13.1–Aus 13.2; Para. 12.)
Additional procedures where issues are identified: if there are events/conditions that may cast significant doubt, the auditor performs further procedures (e.g. test cashflow forecasts, read loan agreements and minutes, confirm third‑party support, obtain written representations, test assumptions). The auditor judges whether a "material uncertainty" exists. (Para. 16; A16–A20.)
Conclusions and reporting: the auditor concludes whether (a) management’s use of the going concern basis is appropriate, and (b) a material uncertainty exists that requires disclosure. If a material uncertainty exists and is adequately disclosed, the auditor adds a distinct "Material Uncertainty Related to Going Concern" section but issues an unmodified opinion; if disclosure is inadequate, the auditor issues a qualified or adverse opinion; if management refuses to extend its assessment or the auditor can’t obtain evidence, the auditor may disclaim an opinion. (Paras. 17–24; Appendix 2 illustrations.)
Communication and regulatory duties: the auditor must communicate going‑concern issues to those charged with governance and, for certain regulated entities or circumstances, may need to notify ASIC. (Para. 25; Aus A35.1.)
Official rationale and how the standard changes behaviour
The AUASB states the purpose is to adapt ISA 570 to Australian law and practice: to align auditor work with Corporations Act 2001 obligations and to make explicit how long an auditor should look forward (the "relevant period"). (Aus 3.1; Aus 13.1–Aus 13.2.)
Mechanically this raises the auditor’s minimum horizon for assessing management’s assumptions (auditor’s "relevant period" ~12 months from the auditor’s report date) and imposes a duty to request that management extend its own assessment if it is shorter. That shifts some procedural burden onto management (longer/firmed forecasts, documented plans) and onto auditors (evaluation and testing of those plans and forecasts). (Aus 13.1–Aus 13.2; Para. 16.)
**Costs, incentives and trade‑offs (implementation risk and compliance burden)
Who pays: audit firms and audit clients bear the direct costs (more time testing forecasts, obtaining confirmations and written representations, possible follow‑up with regulators). Management incurs costs preparing extended assessments and additional disclosures.
Incentives created: stronger disclosure/independence incentives for management to document realistic plans and for auditors to escalate issues early. Auditors face stronger procedural obligations and explicit pathways to modify opinions; management faces pressure to prepare longer, documented cash‑flow forecasts and support for third‑party funding commitments.
Trade‑offs and opportunity costs: increased auditor time and higher audit fees versus improved information for creditors and investors. Small entities may face a disproportionate burden because they often have less formal forecasting and rely on owner support (special small‑entity guidance is included). (Considerations for smaller entities.)
Implementation risk: judgements about the feasibility of management’s plans and the reliability of forecasts require professional judgement; inconsistent application across auditors could cause variability in outcomes (e.g. when a material uncertainty is reported). The standard cross‑refers to many other AUASB standards and accounting rules, increasing the chance of interpretive complexity.
**Effects on market actors and unintended consequences (mechanistic, not political)
Lenders and investors gain clearer signals when a material uncertainty exists because the auditor must call it out in a separate report section (Appendix 2 illustrations). This may affect borrowing costs or renegotiation dynamics for distressed entities.
Smaller entities and owner‑managed businesses may be more affected in practice because the standard requires verification of owner support or guarantees when those are important to going concern. (Application material on smaller entities.)
Regulatory interaction: the requirement to consider Corporations Act responsibilities and to notify ASIC in certain situations creates a concrete pathway from audit findings to regulator awareness (Aus A35.1).
Bottom line: ASA 570 (Going Concern) sets detailed, step‑by‑step auditor procedures and reporting rules for going‑concern assessments, and the AUASB has layered Australia‑specific requirements (timing horizon, Corporations Act linkages, illustrative report wording and regulator contact duties). That increases documentation and testing obligations for auditors and management while giving users clearer, standardised auditor signalling about an entity’s survival risks. (See: Aus 3.1; Aus 13.1–Aus 13.2; Para. 16; Paras. 21–24; Aus A35.1.)
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard..................................................1
Going Concern Basis of Accounting...............................................2
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern..........3-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions are Identified.....................16
Auditor Conclusions.......................................................17-20
Implications for the Auditor’s Report...........................................21-24
Communication with Those Charged with Governance.................................25
Significant Delay in the Approval of Financial Report..................................26
Application and Other Explanatory Material
Scope of this Auditing Standard.................................................A1
Going Concern Basis of Accounting..............................................A2
Risk Assessment Procedures and Related Activities................................A3-A7
Evaluating Management’s Assessment........................................A8-A13
Period beyond Management’s Assessment................................A14-Aus A15.1
Additional Audit Procedures When Events or Conditions are Identified................A16-A20
Auditor Conclusions.....................................................A21-A25
Implications for the Auditor’s Report....................................A26-Aus A35.1
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
Appendix 2: Illustrations of Auditor’s Reports Relating to Going Concern
The most recently compiled versions of Auditing Standards, original Standards and amending Standards (see Compilation Details) are available on the AUASB website: www.auasb.gov.au
| Auditing and Assurance Standards BoardLevel 20, 500 Collins StreetMelbourne Victoria 3000AUSTRALIA | Phone: (03) 8080 7400E‑mail: enquiries@auasb.gov.auPostal Address:PO Box 204Collins Street WestMelbourne Victoria 8007AUSTRALIA |
|---|
© 2023 Commonwealth of Australia. The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use subject to the inclusion of an acknowledgment of the source as being the Australian Auditing and Assurance Standards Board (AUASB).
Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Otherwise, no part of this Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law.
This Auditing Standard reproduces substantial parts of the corresponding International Standard on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC), in the manner described in the statement on Conformity with International Standards on Auditing. The AUASB acknowledges that IFAC is the owner of copyright in the International Standard on Auditing incorporated in this Auditing Standard throughout the world.
All existing rights in this material are reserved outside Australia. Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non‑commercial use only.
Further information and requests for authorisation to reproduce this Auditing Standard for commercial purposes outside Australia should be addressed to the Technical Director, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria 8007 or sent to enquiries@auasb.gov.au. Any decision to approve a request may also require the agreement of IFAC.
ISSN 1833‑4393
COMPILATION DETAILS
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Paragraphs
Application......................................................Aus 0.1-Aus 0.2
Operative Date.........................................................Aus 0.3
Introduction
Scope of this Auditing Standard..................................................1
Going Concern Basis of Accounting...............................................2
Responsibility for Assessment of the Entity’s Ability to Continue as a Going Concern..........3-7
Effective Date...............................................................8
Objectives..................................................................9
Requirements
Risk Assessment Procedures and Related Activities.................................10-11
Evaluating Management’s Assessment..........................................12-14
Period beyond Management’s Assessment..........................................15
Additional Audit Procedures When Events or Conditions are Identified.....................16
Auditor Conclusions.......................................................17-20
Implications for the Auditor’s Report...........................................21-24
Communication with Those Charged with Governance.................................25
Significant Delay in the Approval of Financial Report..................................26
Application and Other Explanatory Material
Scope of this Auditing Standard.................................................A1
Going Concern Basis of Accounting..............................................A2
Risk Assessment Procedures and Related Activities................................A3-A7
Evaluating Management’s Assessment........................................A8-A13
Period beyond Management’s Assessment................................A14-Aus A15.1
Additional Audit Procedures When Events or Conditions are Identified................A16-A20
Auditor Conclusions.....................................................A21-A25
Implications for the Auditor’s Report....................................A26-Aus A35.1
[Aus] Appendix 1: Linking Going Concern Considerations and Types of Audit Opinions
Appendix 2: Illustrations of Auditor’s Reports Relating to Going Concern
This compilation takes into account amendments made up to and including 15 March 2023 and was prepared on 22 March 2023 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (December 2015) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 1 December 2015 | Financial reporting periods ending on or after 15 December 2016 |
| ASA 2020-2 [B] | 30 June 2020 | Financial reporting periods ending on or after 15 July 2020 |
| ASA 2020-1 [C] | 3 March 2020 | Financial reporting periods commencing on or after 15 December 2021[*] |
| ASA 2021-5 [D] | 5 November 2021 | Financial reporting periods commencing on or after 15 December 2021 |
| ASA 2023-1 [E] | 15 March 2023 | Financial reporting periods commencing on or after 1 January 2023 |
[A] Federal Register of Legislation – registration number F2015L02015, 15 December 2015
[B] Federal Register of Legislation – registration number F2020L00885, 7 July 2020
[C] Federal Register of Legislation – registration number F2020L00252, 13 March 2020
[D] Federal Register of Legislation – registration number F2021L01525, 8 November 2021
[E] Federal Register of Legislation – registration number F2023L00295, 21 March 2023
| Paragraph affected | How affected | By … [paragraph] |
|---|---|---|
| Appendix 2 | Amended | ASA 2020-2 [41] to [44] |
| 10Footnote 3 | Amended | ASA 2020-1 [190] |
| A7Footnote 10 | Amended | ASA 2020-1 [191] |
| Appendix 2[Aus] Illustration 4A | Amended | ASA 2021-5 [25] |
| Appendix 2 | Amended | ASA 2023-1 [20] to [23] |
Auditing Standard ASA 570 Going Concern (as amended to 15 March 2023) is set out in paragraphs Aus 0.1 to Aus A35.1 and Appendices 1 and 2.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to AUASB Standards, which sets out how AUASB Standards are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
This Auditing Standard conforms with International Standard on Auditing ISA 570 Going Concern issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following requirements are additional to ISA 570:
Paragraph Aus 3.1 refers to requirements under the Corporations Act 2001.
Paragraph Aus 13.1 requires the auditor to assess the appropriateness of management’s going concern assumption for the relevant period.
Paragraph Aus 13.2 defines the relevant period to be approximately twelve months from the date of the auditor’s current report to the expected date of the auditor’s report for the next reporting period.
ISA 570 requires the auditor to consider the appropriateness of management’s going concern for a period of at least twelve months from the date of the financial statements.
The following application and other explanatory material are additional to ISA 570:
Paragraph Aus A15.1 contains application material around the auditor’s responsibility in the period beyond management’s assessment.
Aus A21.1/[Aus] Appendix 1 contains an explanatory diagram mapping going concern considerations and types of audit opinions.
Appendix 2 contains [Aus] Illustration 1A, [Aus] Illustration 2A, [Aus] Illustration 3A and [Aus] Illustration 4A example auditors’ reports that conform with the requirements of the Corporations Act 2001.
This Auditing Standard incorporates terminology and definitions used in Australia.
Compliance with this Auditing Standard enables compliance with ISA 570.
This compilation takes into account amendments made up to and including 15 March 2023 and was prepared on 22 March 2023 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard made by the AUASB. Instead, it is a representation of ASA 570 (December 2015) as amended by other Auditing Standards which are listed in the Table below.
| Standard | Date made | Operative Date |
|---|---|---|
| ASA 570 [A] | 1 December 2015 | F |
This is an opening excerpt, not the complete document.