Going Concern

Financial reporting frameworks generally require the adoption of the going concern basis of accounting in financial statements unless management intends to liquidate, cease trading or has no other realistic alternative. When there are material uncertainties about whether the entity will be able to continue as a going concern, these uncertainties need to be disclosed in the financial statement.

CPAB explored how auditors, audit committees and management can better apply best practices and we published our report on our going concern thematic review in early 2020 and provided additional insights in 2022. Our objectives were to gather factual evidence-based data that could be shared with standard-setters and encourage the adoption of good practices by auditors to enhance the protection of the public interest.

CPAB engaged with the International Auditing and Assurance Standards Board (IAASB) and the Canadian Auditing and Assurance Standards Board (AASB) and responded to the IAASB’s exposure draft on proposed revisions to International Standard on Auditing (ISA) 570, Going Concern. The revised standard was finalized introducing enhancements to the auditor’s responsibilities in the audit of financial statements relating to going concern and increased transparency in the auditor’s report. The standard was adopted by the AASB as Canadian Auditing Standard (CAS) 570 in 2025 and becomes effective for audits of financial statements for periods beginning on or after December 15, 2026. 

Refer to the Resources section below for more information on our thematic reviews and our engagement with standard-setters.