The National Financial Reporting Authority (NFRA) has flagged serious gaps in how auditors are assessing going concern, and the message is clear - stop taking management forecasts and promoter funding promises at face value.

NFRA Chairperson Nitin Gupta highlighted a critical problem - many audit files show management’s assessment + the auditor’s final conclusion… but almost nothing in between. No clear evidence of how the conclusion was actually reached.

Key takeaways from the recent NFRA webinar on SA 570 (Going Concern):
* Cash flow projections need real scrutiny, not just filing them away. Auditors must test the reliability of data and the reasonableness of assumptions.
* Promoter/parent support letters are not enough. Auditors must examine whether the promised funding can actually be delivered.
* Rigor must come before documentation. A well documented weak assessment is still a weak assessment.
* Going concern is not a checklist. Firm methodologies help, but they can’t replace professional skepticism tailored to the entity’s specific circumstances.
* Generic, copy paste disclosures on material uncertainty fail users of financial statements. Specificity matters.

The broader signal from NFRA is powerful. A going concern conclusion cannot rest on optimistic projections, a support letter or a completed checklist. It must rest on evidence, challenge and judgment.

In today’s environment of evolving business models, episodic funding and heightened scrutiny, this is no longer optional. It’s fundamental to audit quality and public trust.