NFRA SA 570 Going Concern Guidance: Six Outcomes for Audit Committees

The National Financial Reporting Authority (NFRA) has published the sixth instalment of its Auditor–Audit Committee Interaction Series, and this NFRA going concern guidance deals with going concern assessment under SA 570 (Revised). It lands in the week companies are finalising Q2 FY27 numbers and audit committees are starting to plan FY26 sign-off. What makes it worth an hour of a committee's time is that it names the exact point at which a routine disclosure note tips into a Material Uncertainty paragraph, an Emphasis of Matter, or a qualified or adverse opinion.

Going concern is the assumption that an entity will continue operations for the foreseeable future and will realise its assets and discharge its liabilities in the normal course of business.

What does NFRA's SA 570 going concern guidance cover?

NFRA has issued "Auditor – Audit Committee: Interactions Series 6 dealing with Going Concern Assessment: SA 570 (Revised)" to promote awareness of auditing and accounting standards and audit quality.

The series itself isn't new. NFRA released the first part of the Auditor–Audit Committee Interaction Series in January 2025, aimed at potential questions that audit committees or boards of directors may ask regarding accounting estimates and judgements. Since then the regulator has worked through impairment, related-party transactions, expected credit losses and, in March 2026, the audit of provisions, contingent liabilities and contingent assets in line with Ind AS 37 under Series 5. Going concern is sixth in line.

The structure is what sets this note apart from its predecessors. Rather than simply listing questions, it explains the going-concern basis, sets out the separate responsibilities of management, the Board of Directors, the audit committee and the statutory auditor, and then maps those responsibilities onto six possible going-concern situations with their corresponding audit-reporting outcomes. Those outcomes run from an unmodified opinion with no going-concern reporting at all, through a separate Material Uncertainty Related to Going Concern section, to qualified or adverse opinions and an Emphasis of Matter. The note then sets out thirty-five specific questions an audit committee should be ready to ask, grouped by which of the six situations applies.

Who is responsible for the going concern assessment?

Most companies treat the going-concern statement as something the auditor signs off. NFRA's note is explicit that four parties carry four separate, non-delegable obligations, each rooted in a different piece of law.

Under Ind AS 1, that assessment takes into account all available information about the future, covering at least, but not limited to, twelve months from the end of the reporting period, and material uncertainties which are required to be disclosed. For companies outside the Ind AS framework, the going concern assumption is a fundamental accounting assumption under AS 1.

The auditor's role is narrower than many audit committees assume. The standard states that it is not the auditor's responsibility to rectify a lack of analysis by management, and that the auditor is required to evaluate, not prepare, the analysis. If management hasn't done the work, it is not the auditor's job to do it for them.

Key number: 35 — the number of specific questions NFRA expects audit committees to be ready to put to statutory auditors on going concern this results season.

When does a going concern issue lead to a qualified or adverse opinion?

This table is the core of the guidance, and the one to benchmark against before any FY26 sign-off meeting. SA 570 (Revised) recognises the complexity of situations that could exist in an entity and lays out a sequence of situations to be assessed, where the answer to each determines which question arises next and what the auditor needs to ultimately report.

The auditor first considers, at the risk assessment stage, whether events or conditions exist that may cast significant doubt on the entity's ability to continue as a going concern. Where none are identified, the auditor still concludes on the appropriateness of the basis. Where events or conditions are identified, the standard mandates further procedures, following which the auditor must conclude whether a material uncertainty exists. Everything downstream follows mechanically from that one conclusion.

The jump from Situation 3 to Situation 4 is where most friction between auditors and audit committees happens. The accounting conclusion in both rows is identical: going concern is appropriate, a material uncertainty exists. Only the adequacy of the disclosure differs, and that is what separates an unmodified opinion carrying an MURGC paragraph from a qualified or adverse one. We'd read draft notes with that distinction in mind rather than as a tick-box exercise, because the drafting of the note is the thing under the committee's control.

Indian reports do carry these paragraphs. Tata Steel's FY 2025-26 accounts, for instance, disclose a material uncertainty over Tata Steel Nederland's going concern, though the front half of the integrated report leaves it out.

In practice: before the audit committee meeting that reviews FY26 draft accounts, ask the CFO's team to map the going-concern disclosure note against rows 3 and 4 of this table and state, in writing, which row it believes applies and why.

CARO 2020 Clause 3(xix) and SA 570: the same word, a different test

A recurring source of confusion is that the CARO going-concern-adjacent clause and the SA 570 conclusion are not the same test, and can legitimately produce different answers in the same audit.

Clause 3(xix) of the Companies (Auditor's Report) Order 2020 requires the auditor to state whether, on the basis of the financial ratios, the ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements, and the auditor's knowledge of the plans of the Board of Directors and management, the auditor is of the opinion that no material uncertainty exists as on the date of the audit report, and that the company is capable of meeting its liabilities existing at the date of the balance sheet as and when they fall due within a period of one year from the balance sheet date.

Although the subject matter overlaps with SA 570, Clause 3(xix) is a distinct requirement, directed at the capability of meeting existing liabilities rather than the appropriateness of the going concern basis, and assessed as at the date of the audit report rather than a specific duration from the financial statements. The two assessments may therefore produce different answers.

A company may hold sufficient current assets or short-term financing to discharge existing liabilities within the stipulated period, making Clause 3(xix) reporting unqualified, even where recurring operating losses or erosion of net worth give rise to significant doubt under the wider SA 570 lens. The reverse can also be true, with a short-term liquidity mismatch flagged under CARO while a credible, evidenced mitigating plan resolves the matter under SA 570.

The audit committee should expect to question these differing responses when it reads the Clause 3(xix) statement alongside the main auditor's report at year end, and the auditor should be able to provide a rationale for any apparent difference. Treating the two as interchangeable is the gap this guidance is trying to close.

The order audit committees are expected to work in

One of the sharper points in the guidance concerns sequencing, and it corrects a habit NFRA has evidently seen often enough to call out directly. The board's statement and the audit committee's review of the going-concern basis are their respective responsibilities, expected to be discharged independent of the work undertaken by the auditors; neither is satisfied by either adopting or depending on the auditor's conclusion.

The audit committee's first engagement on this subject is with management, since management is required to prepare the assessment under Ind AS 1 or AS 1, and the auditor's role under SA 570 (Revised) is to evaluate that assessment. This is the part most committees get backwards.

An audit committee cannot discharge its Section 177 obligation by asking the auditor "are we a going concern?" and accepting a yes. It has to satisfy itself separately, on management's own assessment, before it tests the auditor's evaluation of that assessment. The thirty-five questions are built on the assumption that the committee has already met this prior obligation.

The sequencing point sits alongside a broader tightening of NFRA's posture on audit oversight. Earlier in 2026, top audit firms faced quality inspections by NFRA under new guidelines requiring remediation plans for deficiencies within three months, fully implemented within six months, and the same guidelines encourage firms to share inspection reports, which critique how the auditor functions, with client audit committees. Read together, both moves point the same way: NFRA wants audit committees interrogating audit judgement rather than passively receiving a signed opinion.

A benchmarking checklist for this results season

Mapping the six-situation table onto a working checklist, ahead of Q2 FY27 results under Regulation 33 and FY26 annual report planning:

• Situations 1 and 2 (no material uncertainty): Confirm management performed a documented risk-assessment exercise rather than a one-line confirmation. Ask whether any indicators were identified and dismissed as mitigated, and on what basis.
• Situation 3 (MURGC, adequate disclosure): Check that the note discloses the principal events or conditions, management's plans, and states clearly that a material uncertainty exists. Confirm whether the auditor has concluded the matter is a Key Audit Matter.
• Situation 4 (inadequate disclosure): This is the row that moves the opinion type. Get the auditor's specific view, in writing, on what disclosure is missing and whether the gap is material or pervasive. That word decides qualified versus adverse.
• Situations 5 and 6 (basis inappropriate): Rare, but if raised, this is an adverse-opinion conversation by default, unless an acceptable alternative basis with adequate disclosure converts it into an Emphasis of Matter.
• Group and third-party support cases: Insist on written confirmation of terms from any parent, promoter or lender whose support underpins the assessment, and ask the auditor for a view on enforceability and the supporting party's financial capacity.
• CARO cross-check: Reconcile the Clause 3(xix) statement against the SA 570 conclusion before the board meeting, not during it.

What changes for company secretaries, CFOs and audit committees

For the secretarial team, the task is procedural. Put a standing item on the FY26 sign-off agenda titled "going-concern situation mapping", with management's own written assessment tabled before the auditor's evaluation, consistent with the sequencing NFRA has now made explicit. If you are already building a sign-off calendar for the next annual report, this slots in alongside the Directors' Responsibility Statement work.

The implication for finance is evidentiary. Cash-flow projections, sensitivity analysis and any reliance on parent or promoter support need to be documented as they are prepared, not reconstructed at year-end when the auditor asks. Where related-party support is load-bearing to the assessment, get written confirmation of its terms before the audit committee meets.

Audit committees can treat the thirty-five questions as a working script. Select the subset relevant to whichever of the six situations applies, and record in the minutes both the questions asked and the auditor's specific responses. NFRA's inspection push means those minutes are increasingly likely to be read by someone outside the committee.

None of this changes the accounting conclusion in most companies. It changes how carefully the going-concern paragraph gets read before sign-off, because a single word in it (material, pervasive, adequate) decides which of six very different outcomes the auditor's report lands on. Building the Q2 FY27 review calendar around that distinction is cheap now and expensive later.