ICAI Implementation Guide to Standard on Auditing (SA) 570 (Revised) Going Concern
The first edition of the “Implementation Guide to SA 570, Going Concern” was brought out by Auditing and Assurance Standards Board of ICAI in the year 2013.
On account of revision of SA 570, there was a need to revise the Implementation Guide.
The preparation of financial statements and going concern is one of the fundamental accounting assumptions. Under the going concern basis of accounting, the financial statements are prepared on the assumption that the entity is viewed as a going concern and will continue its operations for the foreseeable future. Their disclosure is necessary if they are not followed.
However, when the use of the going concern basis of accounting is not appropriate in the circumstances, management may be required, or may elect, to prepare the financial statements on another basis.
Under these circumstances, assets and liabilities are recorded in the financial statements assuming that the entity will be able to realise its assets and discharge its liabilities in the normal course of business. If this assumption is unjustified, the amounts and classification of assets and liabilities in the financial statements may require adjustments.
This Implementation Guide provides a framework to assist in determining whether the use of going concern basis of accounting in preparation of the financial statements and the related disclosures are appropriate and in making balanced, proportionate and clear disclosures.
The guide has been divided into 6 chapters as under:
| Chapter 1 | Introduction and Overview |
| Chapter 2 | The Implementation Guidance and Suggested Questionnaire |
| Chapter 3 | Template for Checklists for Evaluating Management’s Use of Going Concern Basis of Accounting |
| Chapter 4 | Practical Case Studies and Illustrative Examples |
| Annexure-I | Illustrative Template for the Format of Auditor’s Report under Different Scenarios as Illustrated in this Implementation Guide |
| Annexure-II | Illustrative Format of Support letter |
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