Going Concern – Key Considerations For Auditors Amid COVID-19

The Board of Directors of every company are required to make a statement in the Directors’ Responsibility Statement referred to in Section 134(5) of the Companies Act, 2013 that the annual accounts are prepared on a going concern basis i.e. the Board has a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment.

Given the economic uncertainty created by the pandemic COVID-19 coupled with significant business disruptions for entities across almost all sectors, there is likely to be an increase in events and circumstances which may cast significant doubt on an entity’s ability to continue as a going concern. Therefore, management may need to assess whether going concern assumption is still appropriate as a basis for the preparation of the company’s financial statements.

On 10th May 2020, Auditing and Assurance Standard Standards Board (AASB) of the Institute of Chartered Accountants of India (ICAI) have issued guidance on going concern assessment amid COVID-19 by management and considerations for an auditor while evaluating the management’s assessment. This guidance includes specific 11 FAQs to deal with the various situations in the current environment.

For details, please refer the attached document:Going Concern – Key Considerations for Auditors amid COVID 19


The information contained herein is in summary form based on Guidance Issued by Auditing and Assurance Standards Board of ICAI and information available in public domain. While the information is believed to be accurate to the best of our knowledge, we do not make any representations or warranties, express or implied, as to the accuracy or completeness of this information. Recipients should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. This note is not an offer, invitation, advice or solicitation of any kind. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.

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