The Dutch Authority for the Financial Markets published an exploratory report on how external auditors address going concern and discontinuity in statutory audits, and set expectations for the sector to keep prioritising this work and professional scepticism. The review points to an increase in audit reports that include a material uncertainty paragraph for audit clients that later went bankrupt, and the AFM indicates it wants this trend to continue so financial statement users are warned earlier. Interviews suggest auditors generally pay serious attention to evaluating management’s going concern assumption, but face challenges including the forward-looking nature of audit evidence and rapidly changing external conditions. The AFM also notes instances where auditors did not adequately discharge their responsibilities, citing causes such as insufficient distance from the audit client and a lack of holistic understanding of the client and its environment, which can lead to missed red flags. The AFM describes itself as moderately positive about the findings and does not see grounds for a deeper investigation at this stage. It plans to maintain supervisory focus on going concern through ongoing data analysis and follow-up of signals and incidents.
Dutch Authority for the Financial Markets 2025-10-20
Dutch Authority for the Financial Markets sets expectations for stronger going concern audit work as material uncertainty paragraphs increase
The Dutch Authority for the Financial Markets released a report urging auditors to prioritize going concern and discontinuity in audits, emphasizing professional scepticism. It highlights increased audit reports with material uncertainty for clients that later went bankrupt, stressing early warnings. While auditors generally evaluate management’s assumptions seriously, challenges include insufficient distance from clients and a lack of holistic understanding.