On September 22, 2014, the Public Company Accounting Oversight Board (PCAOB) issued Staff Audit Practice Alert No. 13 to remind auditors that they must continue following existing PCAOB standards when considering a company's ability to continue as a going concern. The PCAOB issued the Alert in light of recent changes to US GAAP on disclosure of uncertainties about a company's ability to continue as a going concern (see Legal Update, FASB Issues ASU Requiring Assessment and Disclosure of Going Concern Uncertainties).

The Alert states that auditors should assess management's going concern evaluation and should look to the applicable financial reporting framework (either US GAAP or International Financial Reporting Standards (IFRS)) when making this assessment. Auditors should also separately look at the requirements of the PCAOB's AU sec. 341, The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern (AU 341), which, among other things, requires the auditor to include an explanatory paragraph in the auditor's report when substantial doubt exists about the company's ability to continue as a going concern. Because the auditor's evaluation of whether substantial doubt exists is qualitative based on the relevant events and conditions and other considerations set out in AU 341, a determination that no disclosure is required under US GAAP or IFRS, as applicable, is not conclusive as to whether an explanatory paragraph is required under AU 341.

The Alert also states that the PCAOB staff is currently reviewing and evaluating potential revisions to AU 341. Any proposed revisions would be made through the PCAOB's standard-setting process and would be made available for public comment.

For a discussion of auditing standards relating to the going concern presumption, see Practice Note, Auditing: An Overview.