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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Subsequent events and going concern

Bramley Foods Ltd is a client with a 31 December 2025 year end. During planning, the audit senior notes that the company's main bank loan falls due for repayment in June 2026 and no renewal has yet been agreed. According to ISA 570 (Revised), when should the auditor first consider events or conditions that may cast significant doubt on going concern?

The auditor must consider going concern from risk assessment onwards and stay alert throughout the audit. ISA 570 (Revised) does not allow the auditor to wait until completion, until management raises concerns, or until a lender formally refuses renewal before considering the issue.

  1. AOnly at the completion stage, after the draft financial statements are prepared
  2. BOnly if management voluntarily raises concerns about going concern
  3. CThroughout the audit, starting at risk assessment, and not just at the endCorrect
  4. DOnly after the bank formally refuses to renew the loan

Explanation

ISA 570 (Revised) requires the auditor to consider going concern when performing risk assessment procedures and to remain alert to relevant events or conditions throughout the audit. Waiting until completion or until management raises the matter would breach this approach. Waiting for a formal bank refusal is also wrong, since an unresolved loan maturity is already an indicator.

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