In applying ASA 315, the auditor shall design and perform risk assessment procedures, including those required by paragraph 12, to obtain audit evidence that provides an appropriate basis for determining whether events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern. The identification of such events or conditions shall be before consideration of any related mitigating factors included in management’s plans for future actions. (Ref: Para. A7–A15)

In applying ASA 315, the auditor shall perform risk assessment procedures to obtain an understanding of: (Ref: Para. A9–A15)

The Entity and Its Environment

The entity's business model, objectives, strategies and related business risks relevant to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. (Ref: Para. A16)

Industry conditions, including the competitive environment, technological developments, and other external factors affecting the entity’s financing.

The measures used, internally and externally, to assess the entity's financial performance, including forecasts, future cash flows, and management's budgeting processes. (Ref: Para. A17)

The Applicable Financial Reporting Framework

The requirements of the applicable financial reporting framework relating to going concern, and the related disclosures that are required to be included in the entity's financial report. (Ref: Para. A18, A20)

The basis for management’s intended use of the going concern basis of accounting. (Ref: Para. A19–A20)

The Entity’s System of Internal Control

Unless all of those charged with governance are involved in managing the entity, how those charged with governance exercise oversight over management’s assessment of the entity's ability to continue as a going concern. (Ref: Para. A21–A22)

The entity's risk assessment process to identify, assess and address business risks relating to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern.

How management identifies the relevant method, significant assumptions and data that are appropriate in assessing the entity's ability to continue as a going concern. (Ref: Para. A23–A24)

How the entity’s financial reporting process addresses disclosures related to the entity's ability to continue as a going concern. (Ref: Para. A25)

The auditor shall remain alert throughout the audit for information about events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. (Ref: Para. A26–A29)

In applying ASA 315, the auditor shall determine whether the audit evidence obtained from risk assessment procedures and related activities indicates the existence of events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern that management has not previously identified or disclosed to the auditor. (Ref: Para: A30–A31)

In applying ASA 315, based on the auditor’s evaluation of each of the components of the entity’s system of internal control, the auditor shall determine whether one or more control deficiencies in respect of management’s assessment of going concern have been identified. (Ref: Para. A32)

Where management has not yet performed an assessment of the entity’s ability to continue as a going concern, the auditor shall request management to make its assessment. If management is unwilling to make its assessment, the auditor shall consider the implications for the audit. (Ref: Para. A33)

The auditor shall design and perform audit procedures to evaluate management’s assessment of the entity’s ability to continue as a going concern, including the significant judgements on which management’s assessment is based. (Ref: Para. A34–A36)

In designing and performing the audit procedures required by paragraph 17, the auditor shall do so in a manner that is not biased towards obtaining audit evidence that may be corroborative or towards excluding audit evidence that may be contradictory. (Ref: Para. A37)

The audit procedures required by paragraph 17 shall include evaluating the method, significant assumptions and data used by management in assessing the entity’s ability to continue as a going concern. In determining the nature and extent of such audit procedures, the auditor shall take into account the results of the risk assessment procedures performed. Such audit procedures shall address: (Ref: Para. A35, A38, A46)

The method used by management to assess the entity’s ability to continue as a going concern, including whether the: (Ref: Para. A39)

Method selected is appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from the method used in prior periods are appropriate; and (Ref: Para. A40)

Calculations, if applicable, are applied in accordance with the method and are mathematically accurate. (Ref: Para. A41)

Whether the significant assumptions on which management’s assessment is based are: (Ref: Para. A42)

Appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from prior periods are appropriate; and

Consistent with each other and with related assumptions used in other areas of the entity’s business activities, based on the auditor’s knowledge obtained in the audit.

Whether the data is:

Relevant and reliable; and (Ref: Para. A43–A44)

Appropriate in the context of the applicable financial reporting framework, and, if applicable, changes from prior periods are appropriate. (Ref: Para. A45)

The auditor shall enquire of management as to its knowledge of events or conditions beyond the period of management’s assessment that may cast significant doubt on the entity’s ability to continue as a going concern. If management or the auditor identifies such events or conditions, the auditor shall request management to evaluate the potential significance of the events or conditions on its assessment of the entity’s ability to continue as a going concern. (Ref: Para. A47–A49)

If management’s assessment of the entity’s ability to continue as a going concern covers less than twelve months from the date of approval of the financial report as defined in ASA 560, the auditor shall request management to extend its assessment period to at least twelve months from that date. (Ref: Para. A50–A53)

If management is unwilling to extend its assessment when requested to do so by the auditor, the auditor shall discuss the matter with management and, where appropriate, those charged with governance. (Ref: Para. A54–A56)

If, following the discussion required by paragraph 22, in the auditor’s professional judgement it is necessary for management to extend its assessment and management remains unwilling to do so, the auditor shall determine the implications for the audit. (Ref: Para. A57)

In evaluating management’s assessment of the entity’s ability to continue as a going concern, the auditor shall consider whether management’s assessment includes all relevant information of which the auditor is aware.

If the auditor identifies events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern that management has not previously identified or disclosed to the auditor, the auditor shall:

Discuss the matter with management to understand the effects of those events or conditions on management’s assessment of the entity’s ability to continue as a going concern and request management to evaluate their potential significance;

Determine whether it is necessary to request management to revise its going concern assessment to address the effect of those events or conditions; and (Ref: Para. A58)

If applicable, design and perform additional audit procedures to evaluate management’s assessment of the entity’s ability to continue as a going concern in accordance with paragraphs 17-19.

If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern, the auditor shall evaluate management’s plans for future actions in relation to its going concern assessment, including whether: (Ref: Para. A59–A62)

The outcome of these plans is likely to be sufficient to mitigate the effects of the identified events or conditions;

Management’s plans are feasible in the circumstances; and

Management has both the intent and ability to carry out specific courses of action.

If management’s plans for future actions include the use of significant assumptions or data, the auditor shall perform the audit procedures required by paragraph 19(b)-(c).

If management’s plans for future actions include financial support by third parties or related parties, including the entity’s owner-manager, the auditor shall obtain audit evidence about the intent and ability of those parties to maintain or provide the necessary financial support. (Ref: Para. A63–A65)

If additional information becomes known to the auditor after the date of the auditor’s report but before the date the financial report is issued that is related to management’s assessment of the entity’s ability to continue as a going concern, the auditor shall perform procedures in accordance with ASA 560. (Ref: Para. A66)

The auditor shall evaluate whether sufficient appropriate audit evidence has been obtained regarding, and shall conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial report. In doing so, the auditor shall: (Ref: Para. A67)

Evaluate whether the judgements and decisions made by management in making its assessment of the entity’s ability to continue as a going concern, even if they are individually reasonable, are indicators of possible management bias. When indicators of possible management bias are identified, the auditor shall evaluate the implications for the audit. (Ref: Para. A68–A71)

Consider all audit evidence obtained, including audit evidence that is consistent or inconsistent with other audit evidence, and regardless of whether it appears to corroborate or contradict the assertions in the financial report.

Based on the audit evidence obtained, the auditor shall conclude whether, in the auditor’s professional judgement, a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. (Ref: Para. A72)

If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern but, based on the audit evidence obtained, the auditor concludes that no material uncertainty exists, the auditor shall evaluate whether, in view of the requirements of the applicable financial reporting framework, the financial report provides adequate disclosures about these events or conditions, including, as applicable, when significant judgements are made by management in concluding that there is no material uncertainty. (Ref: Para. A73–A76)

If the auditor concludes that management’s use of the going concern basis of accounting is appropriate in the circumstances but a material uncertainty exists, the auditor shall determine whether the financial report: (Ref: Para. A77)

Adequately discloses the principal events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern and management’s plans for future actions to address these events or conditions; and

Discloses clearly that there is a material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern and, therefore, that the entity may be unable to realise its assets and discharge its liabilities in the normal course of business and continue its operations for the foreseeable future.

When a material uncertainty exists, adequate disclosure of the nature and implications of the uncertainty is necessary for:

In the case of a fair presentation financial reporting framework, the fair presentation of the financial report, or

In the case of a compliance framework, the financial report not to be misleading.

If the auditor concludes that the going concern basis of accounting is appropriate and no material uncertainty exists, the auditor shall include a separate section in the auditor's report with the heading “Going Concern", and: (Ref: Para. A78–A79)

State that: (Ref: Para. A80–A81)

In the context of the audit of the financial report as a whole, and in forming the auditor’s opinion thereon, the auditor concluded that management’s use of the going concern basis of accounting in the preparation of the financial report is appropriate;

Based on the audit evidence obtained, the auditor has not identified a material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern; and

The auditor’s conclusions are based on the audit evidence obtained up to the date of the auditor’s report and are not a guarantee as to the entity’s ability to continue as a going concern.

For an audit of financial report of a listed entity, when significant judgements are made by management in concluding that there is no material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern: (Ref: Para. A82–A83, A89)

Include a reference to the related disclosure(s) in the financial report, if any; and (Ref: Para. A73–A76)

Describe how the auditor evaluated management’s assessment of the entity’s ability to continue as a going concern. (Ref: Para. A84–A88)

If adequate disclosure about the material uncertainty is made in the financial report, the auditor shall express an unmodified opinion and the auditor’s report shall include a separate section under the heading “Material Uncertainty Related to Going Concern” and: (Ref: Para. A78–A79, A90–A91)

Include a reference to the related disclosure(s) in the financial report; (Ref: Para. A73, A77)

For an audit of financial report of a listed entity, describe how the auditor evaluated management’s assessment of the entity’s ability to continue as a going concern; (Ref: Para. A84–A88)

State that these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern;

State that:

The auditor’s opinion is not modified in respect of the matter;

In the context of the audit of the financial report as a whole, and in forming the auditor’s opinion thereon, the auditor concluded that management’s use of the going concern basis of accounting in the preparation of the financial report is appropriate; and

The auditor’s conclusions are based on the audit evidence obtained up to the date of the auditor’s report and are not a guarantee as to the entity’s ability to continue as a going concern.

If adequate disclosure about the material uncertainty is not made in the financial report, the auditor shall: (Ref: Para. A78–A79, A90, A92)

Express a qualified opinion or adverse opinion, as appropriate, in accordance with ASA 705;

In the Basis for Qualified (Adverse) Opinion section of the auditor’s report, state that a material uncertainty exists and that the financial report does not adequately disclose this matter;

Include in the auditor’s report a separate section under the heading “Material Uncertainty Related to Going Concern” and:

Draw attention to the Basis for Qualified (Adverse) Opinion section of the auditor’s report that states that a material uncertainty exists that has not been adequately disclosed in the financial report;

State that:

In the context of the audit of the financial report as a whole, and in forming the auditor’s opinion thereon, the auditor concluded that management’s use of the going concern basis of accounting in the preparation of the financial report is appropriate; and

The auditor’s conclusions are based on the audit evidence obtained up to the date of the auditor’s report and are not a guarantee as to the entity’s ability to continue as a going concern.

When the auditor disclaims an opinion on the financial report, unless required by law or regulation, the auditor shall not include separate sections on Going Concern or Material Uncertainty Related to Going Concern in the auditor’s report. (Ref: Para. A93–A94)

If the financial report has been prepared using the going concern basis of accounting but, in the auditor’s professional judgement, management’s use of the going concern basis of accounting in the preparation of the financial report is inappropriate: (Ref: Para. A95–A96)

The auditor shall express an adverse opinion; and

Unless required by law or regulation, the auditor shall not include separate sections on Going Concern or Material Uncertainty Related to Going Concern in the auditor’s report.

The auditor shall request written representations from management and, where appropriate, those charged with governance addressing: (Ref: Para. A97)

Whether management’s use of the going concern basis of accounting in the preparation of the financial report is appropriate;

Whether the method, significant assumptions and data used in management’s assessment of going concern and any related disclosures are appropriate in the context of the applicable financial reporting framework;

That management’s assessment of going concern reflects all events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern that management is aware of, and all such events or conditions, if any, have been disclosed to the auditor; and

That matters relevant to going concern have been adequately disclosed in the financial report, including, when applicable, significant judgements made by management in concluding that there is no material uncertainty.

If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern the written representations required by paragraph 39 shall also address: (Ref: Para. A97)

Management’s plans for future actions and whether such plans mitigate the effects of the identified events or conditions;

The feasibility of these plans; and

Whether management has the intent to carry out specific courses of action and has the ability to do so.

Unless all those charged with governance are involved in managing the entity, the auditor shall communicate on a timely basis with those charged with governance events or conditions identified that may cast significant doubt on the entity’s ability to continue as a going concern. (Ref: Para. A98–A99)

If events or conditions are identified that may cast significant doubt on the entity’s ability to continue as a going concern, the auditor shall communicate with those charged with governance: (Ref: Para. A100)

Whether the events or conditions constitute a material uncertainty;

Whether management’s use of the going concern basis of accounting is appropriate in the preparation of the financial report;

An overview of the audit procedures performed and the basis for the auditor’s conclusions, including the auditor’s evaluation of management’s plans for future actions;

The adequacy of related disclosures in the financial report, including disclosures that describe the significant judgements made by management and the mitigating factors in management’s plans that are of significance to overcoming the adverse effects of the events or conditions;

When applicable, management’s unwillingness to make or extend its assessment of the entity’s ability to continue as a going concern when requested; and

The implications for the audit or the auditor’s report. (Ref: Para. A101)

When the auditor considers including a separate section under the heading “Material Uncertainty Related to Going Concern” in the auditor’s report, or issuing a modified opinion in respect of matters related to going concern, the auditor shall determine whether law, regulation or relevant ethical requirements: (Ref: Para. A102–A105)

Require the auditor to report to an appropriate authority outside the entity.

Establish responsibilities or rights under which reporting to an appropriate authority outside the entity may be appropriate in the circumstances.

In applying ASA 230, the auditor shall include in the audit documentation significant professional judgements made relating to the auditor’s:

Conclusions on:

The appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial report; and

Whether or not a material uncertainty exists; and

Determination of the adequacy of management’s disclosures in the financial report related to going concern.

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