Boosting Business Sustainability: IAASB Proposed Revisions to ISA 570, Going Concern Standard

The International Auditing and Assurance Standards Board (IAASB) has recently released an exposure draft (ED), titled ‘Proposed International Standard on Auditing 570 (Revised 202X) Going Concern.’ The IAASB approved the ED of the revised ISA 570 in March 2023 subject to comments. The final approval of the standard is expected to be issued in December 2024.

Proposed International Standard on Auditing 570 (Revised 202X) Going Concern

When it comes to auditing and financial reporting, one concept stands as the cornerstone of fiscal transparency and trust: a company’s ability to continue as a going concern. It’s a term that reverberates through meeting rooms and the minds of investors, creditors, and stakeholders alike. Recent corporate failures, growing attention from stakeholders for enhanced transparency, and the heightened economic risks posed by global events such as wars and pandemics have spurred significant momentum for re-evaluating and strengthening the standards governing going concern assessments.

Recognising these driving forces, the IAASB has taken a momentous step by proposing new requirements and revisions to ISA 570 (Revised).

Key Changes Proposed

The IAASB’s exposure draft proposes several significant changes to existing auditing standards. Here’s a breakdown of the key changes:

How do these changes make a difference?

In today’s interconnected global economy, businesses have stakeholders, investors, and creditors from diverse geographical locations. These stakeholders depend on financial statements and auditor reports to make informed decisions about their investments and business relationships. However, variations in how auditors assess and report going concern can create confusion and hinder effective decision-making.

The IAASB’s proposed changes aim to tackle this challenge by establishing a standardised and enhanced framework for auditor reports ongoing concern assessments to achieve:

This exposure draft represents a significant step forward in ensuring the accuracy and transparency of auditor reports in relation to this critical aspect of financial reporting. Auditors and corporates should familiarise themselves with these proposed changes to better serve the interests of stakeholders and maintain the integrity of financial reporting worldwide. The exposure draft is available for reference on this web link. In addition, ISCA has also shared its review and feedback on this draft, which is accessible here.

Reference:

Exposure Draft – Proposed International Standard on Auditing 570 (Revised 202X) Going Concern and Proposed Conforming and Consequential Amendments to Other ISAs | IAASB

ISCA Comment – comment-letter-on-ed—isa-570-(revised-202x)(for-submission).pdf (isca.org.sg)

All materials have been prepared for general information purposes only. The information presented in this document is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice. Professional advisory should be sought before taking or refraining from any action as a result of the contents of this document.