NFRA lists 35 questions an audit committee may put to the statutory auditor on going concern under SA 570 (Revised)
Series 6 of NFRA’s Auditor–Audit Committee Interaction papers deals with the going concern assessment. It sets out six situations under SA 570 (Revised) with the reporting outcome of each, explains why the CARO 2020 clause 3(xix) answer can differ from the SA 570 conclusion, and lists 35 questions an auditor may expect.
Key facts
- In force
- Guidance paper by NFRA staff; not a standard
- Who it affects
- Audit committees and boards of companies, statutory auditors, CFOs and finance teams
- What it is
- New facility
- Section
- Accounting & Audit
- Published
- 30 September 2026
In 30 seconds
- The paper is Series 6 of NFRA’s Auditor–Audit Committee Interaction series: “Dealing with Going Concern Assessment — SA 570 (Revised)”.
- Management’s assessment under Ind AS 1 covers at least twelve months from the end of the reporting period; the auditor evaluates that assessment and does not prepare it.
- Six situations are tabulated, from “no events or conditions identified” (unmodified opinion) to “going concern basis inappropriate” (adverse opinion).
- CARO 2020 clause 3(xix) is a separate requirement: it looks at the capability to meet existing liabilities within one year of the balance sheet date, as on the date of the audit report.
- The board’s statement and the audit committee’s review are their own responsibilities and are not satisfied by adopting the auditor’s conclusion.
- The paper is an NFRA staff publication for awareness; it says it is not a policy, standard or recommendation of the Authority.
हिंदी में सार
NFRA ने Auditor–Audit Committee Interaction Series 6 जारी की है, जो SA 570 (Revised) के तहत going concern आकलन पर है। इसमें छह स्थितियाँ और हर स्थिति में ऑडिट रिपोर्ट का नतीजा बताया गया है, और 35 सवाल दिए गए हैं जो ऑडिट कमेटी statutory auditor से पूछ सकती है। यह NFRA स्टाफ़ का जागरूकता प्रकाशन है, कोई मानक या बाध्यकारी निर्देश नहीं।
What NFRA has published
The National Financial Reporting Authority (NFRA) has published Series 6 of its Auditor–Audit Committee Interaction papers, on the going concern assessment under SA 570 (Revised). It is written as a list of questions a statutory auditor can expect from the audit committee, grouped by the situation the audit is in.
Who has to do what
| Who | Obligation noted in the paper |
|---|---|
| Management | Assess the entity’s ability to continue as a going concern. Under Ind AS 1, the assessment covers at least, but is not limited to, twelve months from the end of the reporting period, and material uncertainties are to be disclosed. For entities not applying Ind AS, going concern is a fundamental accounting assumption under AS 1 |
| Board of Directors | State in the Directors’ Responsibility Statement under section 134(5) of the Companies Act, 2013 that the annual accounts are prepared on a going concern basis |
| Audit committee | Under section 177 and Regulation 18 of the SEBI LODR Regulations, 2015 read with Part C of Schedule II, review the annual financial statements with management before they go to the board |
| Statutory auditor | Obtain sufficient appropriate audit evidence on, and conclude on, the appropriateness of the going concern basis and whether a material uncertainty exists. It is not the auditor’s responsibility to rectify a lack of analysis by management |
Six situations, six outcomes
| Situation | Reporting outcome |
|---|---|
| No events or conditions casting significant doubt are identified | Unmodified opinion; no going concern reporting arises |
| Events or conditions identified, but the auditor concludes no material uncertainty exists | Unmodified opinion, with no Material Uncertainty Related to Going Concern (MURGC) section |
| Basis appropriate, material uncertainty exists, disclosure adequate | Unmodified opinion with a separate MURGC section |
| Basis appropriate, material uncertainty exists, disclosure not adequate | Qualified opinion where the effects are material but not pervasive; adverse where material and pervasive. In rare cases with multiple uncertainties, the auditor may consider a disclaimer |
| Going concern basis used but inappropriate | Adverse opinion |
| Going concern basis inappropriate and another acceptable basis used | Unmodified opinion with an Emphasis of Matter, with adequate disclosure of that basis |
CARO 2020 clause 3(xix) is a different test
Clause 3(xix) asks whether, on the basis of financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities and other information, no material uncertainty exists as on the date of the audit report and the company can meet liabilities existing at the balance sheet date as they fall due within one year. The paper says this is factual reporting on a specified evidence base, so the answer may differ from the SA 570 conclusion — and the auditor should be able to explain any apparent difference to the audit committee.
The questions
The paper lists 35 numbered questions. Among them:
- Does management’s assessment cover the period the standard requires, or is it shorter than 12 months?
- Was the auditor able to evaluate the reliability of the data behind cash flow projections, and compare past forecasts with actual results?
- Are there existing or potential breaches of covenants?
- Where a parent or promoter has given support: is there written confirmation from the supporting party, is it enforceable, and can that party actually perform?
- Was it a “close call”, and are the disclosures reasonable in that case?
- For regulated entities: is the company meeting capital, solvency, liquidity or other prudential requirements?
What audit committees and auditors should do
The questions assume the audit committee has first engaged with management, which prepares the assessment. Auditors can use the list to prepare for the audit committee meeting according to the situation they are in. NFRA’s disclaimer says the paper is a staff publication for awareness and is not a substitute for obligations under law.
Questions and answers
Is NFRA’s Series 6 paper binding on auditors?
No. The paper’s disclaimer says it is a publication by NFRA staff intended to promote awareness of auditing and accounting standards and audit quality, that it is not a policy, standard, recommendation or statement of the Authority, and that it is not a substitute for obligations provided in law.
Who prepares the going concern assessment — management or the auditor?
Management. The paper stresses that under SA 570 (Revised) the auditor is required to evaluate and not prepare the analysis, and that it is not the auditor’s responsibility to rectify a lack of analysis by management.
Can the CARO clause 3(xix) answer differ from the going concern conclusion?
Yes. The paper explains that clause 3(xix) looks at the capability to meet existing liabilities within one year of the balance sheet date, assessed as at the date of the audit report, while SA 570 is about the appropriateness of the going concern basis. The two may lead to different answers.
What does the auditor report when a material uncertainty exists and is adequately disclosed?
An unmodified opinion with a separate Material Uncertainty Related to Going Concern section.
Published 30 September 2026. Updated 9 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.