The International Auditing and Assurance Standards Board released additional information Thursday on its new going concern standard.
The new Frequently Asked Questions document aims to support stakeholders as they implement International Standard on Auditing 570 (Revised 2024), Going Concern.
The FAQ document discusses the main questions on the enhanced auditor reporting model for going concern that’s included in the revised standard. It focuses on the implications for the auditor’s report when reporting entity specific going concern matters in a section titled ‘Going Concern’ or ‘Material Uncertainty Related to Going Concern.’ It also provides an illustrative example of an auditor’s report that provides a description of how the auditor evaluated management’s assessment of going concern.
ISA 570 (Revised 2024) was published in April and introduced a number of key changes to strengthen the auditor’s work when evaluating management’s assessment of going concern. Some of those changes include:
Stronger risk assessment procedures that support auditors in determining, on a timely basis, whether events or conditions have been identified that could cast significant doubt on an entity’s ability to continue as a going concern;Enhanced evaluation of management’s assessment of going concern, including the significant judgments on which such evaluation is based;A required evaluation of management’s assessment of going concern covering a period of at least 12 months from the date of approval of the financial statements;Reinforced communications and increased transparency in reporting going concern matters.
The new FAQ document doesn’t actually amend or override ISA 570 (Revised 2024), as the text of the standard remains authoritative. The IAASB also cautioned that the FAQ is not exhaustive and is intended to complement the standard, which takes effect on or after Dec. 15, 2026.
IPSASB proposal on materiality
Separately on Thursday, the International Public Sector Accounting Standards Board released the IPSAS Exposure Draft (ED) 93, Definition of Material (Amendments to IPSAS 1, IPSAS 3, and the Conceptual Framework) for public comment.
The exposure draft aims to offer more consistent guidance on materiality across the IPSASB’s financial reporting literature to aid entities in its application, and help them to develop clearer, more useful financial reports.
IPSAS ED 93 proposes to align the definition of material between the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities and IPSAS Standards by:
Clarifying that an entity is required to consider the information needs of primary users instead of other users of GPFRs; andAligning the definition of material in IPSAS 1, Presentation of Financial Statements, with Chapter 3: Qualitative Characteristics of the Conceptual Framework.
“Getting the definition of materiality right is critical because it affects what information is presented in public sector financial reports,” said IPSASB chair Ian Carruthers in a statement. “The clear and consistent definition of material proposed in this ED will not only help entities with its application but will also provide a strong foundation for developing non-authoritative guidance on making materiality judgments in the second phase of this project.”
The IPSASB is asking for feedback on the proposed standard and other matters in the exposure draft to help shape the final pronouncement by July 14, 2025.
