IFAC SMPAG Response to the IAASB's Going Concern Consultation

The IFAC SMP Advisory Group (SMPAG) welcomes the opportunity to provide input to the International Auditing and Assurance Standards Board’s (IAASB’s) Exposure Draft for the Proposed International Standard on Auditing 570 (Revised 202X) Going Concern and Proposed Conforming and Consequential Amendments to Other ISAs.

The SMPAG appreciates the efforts IAASB have taken in drafting the proposed changes, and the attempts that have been made to consider scalability, but there are some concerns we wish to express. The SMPAG cautions that the IAASB should be aware that some of the proposals may result in a widening of the expectation gap concerning the role of the auditor versus the role of management. The standard will also create additional work and audit report disclosures for all audits, irrespective of the risk around going concern or material uncertainties, which may lead to inefficiencies but no added value for users of financial information. The proposed change in commencement date for the period of assessment of going concern may also create challenges in jurisdictions where this does not align with the applicable financial reporting framework. This could cause unnecessary contention on audits where going concern risks are low.