The Financial Services Agency will revise the auditing standards and expand audit reporting on the going-concern assumption. It plans to extend the GC assessment period by about one month and include assessments of future events. The changes are targeted for FY2026, with application from the fiscal year ending March 2028.
The Financial Services Agency has made clear its policy of enhancing the auditing standards used to assess whether a company can continue as a going concern, calling for expanded audit reporting on going concern (GC). The move comes against a backdrop of successive accounting fraud cases and wavering confidence in audits.
The main feature of the new provisions will be to extend the GC assessment period by about one month from the current period. Assessments will include future events, allowing the latest information to be communicated to investors. This will require audit reports to describe how the assessment was conducted even when there is little uncertainty about the company’s ability to continue as a going concern.
Financial statements are prepared on the assumption that a company will continue as a going concern. If that assumption may no longer hold, the audit report must state this. The revisions are intended to align the standards with International Standard on Auditing ISA570, with application targeted from the fiscal year ending March 2028.
The Financial Services Agency has indicated that it intends to complete revisions to the Cabinet Office Ordinance during FY2026, as part of its announcement dated 2 October.