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Canadian Auditing Standards

Going Concern

Summary

Auditors are required to obtain sufficient appropriate audit evidence on the appropriateness of management's use of the going concern basis of accounting, and to conclude whether a material uncertainty exists about the entity's ability to continue as a going concern. Auditors are also required to remain alert throughout the audit for evidence that there may be a going concern issue.

Several high-profile corporate failures in recent years have sparked a public debate about auditors' responsibilities. Users have raised questions about how much auditors should be able to detect from their audit procedures regarding the going concern of the entity, and what is communicated to users about the entity's ability to continue as a going concern for the foreseeable future. This led to a project to revise Canadian Auditing Standard (CAS) 570, Going Concern.

Staff Contact(s)

David Hirst, CPA, CA Principal, Auditing and Assurance Standards Board

Phone number  +1 604 757 3967
Email address  [email protected]

Project Status

  • Information gathering

    The IAASB issued Discussion Paper Fraud and Going Concern in an Audit of Financial Statements in September 2020 with a comment deadline of February 1, 2021

    The AASB submitted its response to the IAASB’s Discussion Paper on February 1, 2021

    The IAASB deliberated feedback received on the Discussion Paper

  • Approving project

    IAASB approved the project proposal on going concern in March 2022

  • Engaging Communities

    The IAASB issued Exposure Draft – ISA 570 (Revised 202X), Going Concern in April 2023

    The AASB issued Exposure Draft – CAS 570, Going Concern in June 2023

    Exposure Draft
  • Deliberating feedback

    The AASB submitted a response to the IAASB’s Exposure Draft – “ISA 570, Going concern”

    The IAASB is deliberating feedback on its Exposure Draft – “ISA 570, Going Concern” and the AASB is forming Canadian views on key issues identified

    AASB Response
  • Final pronouncement

On-demand Webinar – CAS 570, Going Concern organized by CPA Canada

Watch the recorded AASB and CPAB webinar, hosted by CPA Canada, on CAS 570, Going Concern.


English – On-demand webinar
French – On-demand webinar

News

September 15, 2023

News

AASB responds to the IAASB’s Exposure Draft of ISA 570, Going Concern

On August 22, 2023, the Board submitted a response letter to the IAASB’s Exposure Draft, Proposed International Standard on Auditing 570 (Revised) Going Concern. Read our response letter to learn about the matters we raised to the IAASB for further consideration.

June 9, 2023

Resource, Webinar, News

On-demand Webinar - CAS 570, Going Concern

Interested in learning more about the proposed changes to CAS 570 and ISA 570? Watch the recorded AASB and CPAB webinar, hosted by CPA Canada, to learn about going concern considerations in the current macroeconomic and geopolitical environments, and the recent Exposure Draft on CAS 570, Going Concern.


May 30, 2023

Document for Comment, News

AASB Exposure Draft – Proposed Amendments to CAS 570, Going Concern

Share your views on the AASB’s Exposure Draft, “Proposed Amendments to CAS 570, Going Concern”. Read the full proposed standard and the related conforming and consequential amendments, and respond to the Exposure Draft by July 31, 2023.

May 1, 2023

International Activity

IAASB issues Exposure Draft on proposed ISA 570 (Revised 202X), Going Concern

The International Auditing and Assurance Standards Board (IAASB) issued its Exposure Draft on the proposed revisions to International Standard on Auditing (ISA) 570 (Revised 202X), Going Concern. The Exposure Draft aims to enhance an auditor’s work and reporting relating to an entity’s going concern. Submit your comments on the IAASB’s Exposure Draft by August 24, 2023, and provide a copy of your response to the AASB at [email protected].

November 8, 2022

International Activity

IAASB Issues Non-Authoritative Guidance on Going Concern

The International Auditing and Assurance Standard Board (IAASB) issued non-authoritative guidance, Reporting Going Concern Matters in the Auditor’s Report. This guidance addresses some of the common questions in relation to the use of and the interrelationship of Material Uncertainty Related to Going Concern and Key Audit Matters sections, and Emphasis of Matter paragraphs, in the auditor’s report prepared in accordance with International Standards on Auditing (ISAs). Read for full details.

Meeting & event summaries

October 23, 2024

AASB Decision Summary – September 10-11, 2024

The AASB discussed issues related to the IAASB’s proposed revisions to ISA 570, Going Concern. Key issues discussed included:

  • scalability;
  • the clarification of “significant judgments” in the auditor’s evaluation of management’s assessment of going concern;
  • the inclusion of the term “intent and ability” in the requirements for evaluating management’s plans for future actions;
  • documentation; and
  • key changes since June 2024, including transparency about going concern in the auditor’s report.

June 11, 2024

AASB Decision Summary – June 10-11, 2024

The AASB discussed issues related to the International Auditing and Assurance Standards Board’s (IAASB) proposed revisions to International Standard on Auditing (ISA) 570, Going Concern. Key issues discussed included:

  • themes from the significant issues raised by respondents to the IAASB’s Exposure Draft;
  • the timeline to be used for the going concern assessment;
  • the explicit statement about going concern in the auditor’s report; and
  • the filter to determine a close call and the appropriate placement for the disclosure in the auditor’s report. 

April 8, 2024

AASB Decision Summary – March 11-12, 2024

The AASB received an update on the feedback the International Auditing and Assurance Standards Board (IAASB) received on its Exposure Draft of International Standard on Auditing (ISA) 570 (Revised 202X), Going Concern.

August 15, 2023

AASB Decision Summary – August 15, 2023

The AASB reviewed the responses received to the Canadian Exposure Draft on Canadian Auditing Standards (CAS) 570, Going Concern, and the Board’s response to the International Auditing and Assurance Standards Board (IAASB) on the proposed ISA 570, Going Concern. Key issues discussed included:

  • that the AASB’s response letter should highlight our concerns regarding the misalignment between financial reporting and auditing standards and the expectations gap arising from the proposed auditor’s statements in the auditor’s report; and
  • that the AASB response letter should clearly state that the AASB does not support the proposed auditor’s conclusion on the appropriateness of management’s use of the going concern basis of accounting and the statement that the auditor did not identify any material uncertainty relating to going concern.

The AASB concluded that robust, meaningful, and appropriate engagement has been obtained in developing the response letter. 

The response letter to the IAASB was submitted before its comment deadline of August 24, 2023.

April 26, 2023

AASB Decision Summary – April 5, 2023

The AASB approved the exposure draft on Going Concern. Key issues discussed included:

  • the exposure period; and 
  • the planned outreach and engagement with interested and affected parties.

Pending the timing of the IAASB’s issuance of its Exposure Draft and the comment period, the AASB’s exposure draft is expected to be issued in early June with comments due by mid-July.

April 4, 2023

AASB Decision Summary – March 13-14, 2023

The AASB discussed issues related to the IAASB’s proposed revisions to International Standard on Auditing (ISA) 570, Going Concern. Key issues discussed included:

  • the IAASB’s proposed draft of ISA 570 (Revised), Going Concern;
  • the conforming and consequential amendments;
  • the exposure period;
  • the effective date;
  • the topics to be included in the IAASB’s explanatory memo; and
  • the outreach plan to engage with interested and affected parties.

The IAASB expects to approve an exposure draft at its March 2023 meeting. The AASB would then approve a Canadian exposure draft shortly thereafter.

December 13, 2022

AASB Decision Summary – November 28-29, 2022

The AASB discussed issues related to the IAASB’s project to revise ISA 570 (Revised), Going Concern. Key issues included:

  • the auditor’s evaluation of management’s going concern assessment;
  • the going concern disclosures in the auditor’s report; and
  • the repositioning and redrafting of certain paragraphs to enhance clarity of the ISA.

October 3, 2022

AASB Decision Summary – September 8-9 2022

The AASB discussed issues related to the IAASB’s project to revise ISA 570 (Revised), Going Concern. Key issues included:

  • terminology;
  • risk identification and assessment;
  • management’s assessment of going concern;
  • professional skepticism; and
  • transparency about going concern in the auditor’s report.

June 27, 2022

AASB Decision Summary – June 6-7 2022

The AASB discussed issues related to the IAASB’s project to revise ISA 570, Going Concern. Key issues discussed included:

  • the timeline over which the going concern assessment is made; and
  • transparency about going concern in the auditor’s report.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.