When an entity's economic or operating conditions raise questions about its ability to continue operating, readers of its financial statements usually want to know two things: how management assessed those conditions, and how the auditor evaluated that assessment. The two questions are related but not the same. Management prepares the financial statements and makes its assessment; the auditor obtains audit evidence and reports in accordance with the applicable standards.
On 9 April 2025, the International Auditing and Assurance Standards Board (IAASB) issued ISA 570 (Revised 2024), Going Concern. The international standard is designed to strengthen the auditor's responsibilities when evaluating management's assessment of the entity's ability to continue as a going concern. The IAASB states that the standard is effective for audits of financial statements for periods beginning on or after 15 December 2026.
Position in Indonesia
For readers in Indonesia, the key context is the status of the local standard. The Public Accountant Professional Standards page on the website of the Indonesian Institute of Certified Public Accountants (IAPI) lists SA 570 (Revised 2021) on going concern, effective for audits of financial statements for periods beginning on or after 1 January 2022. The IAASB's issuance of ISA 570 (Revised 2024) therefore does not by itself change the standard in force in Indonesia. Adopting or updating the national standard still requires a process and a decision by IAPI.
Going Concern Is Not a Prediction of the Future
The going concern basis of accounting assumes that the entity will continue its operations for the foreseeable future. That assumption, however, is no guarantee that the entity will not face difficulties. Market conditions, the ability to meet obligations, access to financing, or operational disruptions may call for a more careful assessment.
Nor is it the auditor's role to guarantee the entity's survival. Under SA 570 (Revised 2021), the auditor's objectives include obtaining sufficient appropriate audit evidence regarding the appropriateness of management's use of the going concern basis of accounting, concluding whether a material uncertainty exists related to events or conditions that may cast significant doubt, and reporting in accordance with the standard. Audit conclusions rest on the available evidence and professional judgement, not on certainty about the future.
Keeping these roles separate prevents two errors. First, management's assessment must not be treated as a formality accepted without testing. Second, the auditor's report must not be read as a guarantee that the entity will survive. Users of financial statements should read the disclosures, the entity's facts and the form of the auditor's report as a whole.
How ISA 570 (Revised 2024) Strengthens the Audit
According to the IAASB press release, the revision contains several key enhancements:
- More robust and timelier risk assessment. Auditors are expected to identify earlier the events or conditions that may cast significant doubt on the entity's ability to continue as a going concern.
- Evaluating management's assessment. Auditors evaluate management's going concern assessment even when no events or conditions have been identified, including the method, assumptions and data used and the potential for management bias.
- An extended assessment period. The period evaluated extends at least twelve months from the date of approval of the financial statements.
- Greater transparency. Communication in the auditor's report becomes clearer, together with stronger communication with those charged with governance and external parties.
In a publication dated 21 July 2025, the IAASB also explained how the revision helps auditors apply professional scepticism more consistently. This matters because going concern assessments often involve projections, assumptions and planned actions that need to be challenged: understanding the basis of management's assumptions, weighing evidence that supports and contradicts them, and considering whether disclosures are adequate. Specific steps still depend on the risks and facts of each engagement.
The IAASB then issued an FAQ on 15 May 2025 on reporting going concern matters in the auditor's report. The FAQ explains reporting entity-specific going concern matters in a section titled "Going Concern" or "Material Uncertainty Related to Going Concern". It states that it does not amend or override ISA 570 (Revised 2024); the text of the standard remains authoritative.
ISA 570 (Revised 2024) takes effect together with ISA 240 (Revised) on fraud. The link between the two is discussed in Revised ISA 240: The Auditor's Responsibilities Relating to Fraud.
Sensible Preparation for Audit Practice
The international effective date still leaves time to learn, but preparation need not wait. Audit firms can map the methods and documentation they currently use when evaluating going concern. The aim is not to treat the new international standard as automatically in force in Indonesia, but to understand the direction of travel and identify areas that may need updating if local adoption proceeds.
Some questions that can be used in internal training:
- Does the team identify going concern risk indicators quickly enough?
- Is the challenge of management's assumptions clearly documented?
- How is evidence that contradicts management's assumptions considered?
- Is communication with those charged with governance adequately recorded?
These questions are not a new list of mandatory procedures but a framework for discussion to strengthen the quality of professional judgement.
Entity management also benefits from an orderly process. Cash flow projections, financing plans, contractual commitments and key assumptions should be explainable and supported. When conditions change, the assessment and related disclosures should be revisited. Well-prepared documents do not replace the auditor's evaluation, but they make the exchange of information more focused.
Keeping the Terminology Precise
Any discussion of ISA 570 (Revised 2024) should always make clear whether it refers to the international standard or to the standard in force in Indonesia. For current engagements, auditors and users of financial statements refer to the Indonesian Public Accountant Professional Standards (SPAP) and applicable Indonesian requirements, including SA 570 (Revised 2021). Monitoring IAPI announcements remains important, particularly if an exposure draft or new standard on going concern is issued. The phrase "effective internationally" is more accurate than "already in force in Indonesia".
Conclusion
ISA 570 (Revised 2024) reflects an international shift towards earlier risk assessment, more robust evaluation of management's assessment, more consistent professional scepticism, and more transparent communication and reporting on going concern. The standard is effective internationally for periods beginning on or after 15 December 2026. In Indonesia, SA 570 (Revised 2021) remains the reference until IAPI issues an official update.
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Official References
- IAASB, "IAASB Strengthens Auditor Responsibilities for Going Concern through Revised Standard", press release, 9 April 2025.
- IAASB, "FAQ: Reporting Going Concern Matters in the Auditor's Report", 15 May 2025.
- IAASB, "IAASB Highlights How Revised Standards Reinforce Professional Skepticism", 21 July 2025.
- Indonesian Institute of Certified Public Accountants (IAPI), Public Accountant Professional Standards: SA 570 (Revised 2021) Going Concern.
This article is general information and is not audit, accounting, legal, or tax advice for any particular situation. Application of the standards must consider the facts of the engagement and applicable requirements. The Indonesian version is the original text.