Going concern, modelled month by month.
Build base, downside and severe cash-flow scenarios, test covenants against each, and track the indicators that bear on a material uncertainty. An agent drafts the assessment; the engagement team concludes.
ISA 570 (Revised)
Three scenarios from one set of inputs.
Enter monthly revenue and expenses, their growth rates and opening cash. ClairAudit projects cash for 24 months under a base case and two revenue stresses, and reports the first month cumulative cash falls below zero.
Headroom, tested under every scenario.
Each covenant is recorded with its threshold and current value. Headroom is recalculated with each scenario applied, so the team sees which covenant tightens first and by how much.
headroom % = (threshold − value) / |threshold| × 100Covenants and manual indicators can be added to an assessment at any time.
Model boundary. Scenarios stress revenue only. Expense and financing assumptions are entered by the team, and the projection supports their judgement rather than replacing it.
Five indicators, each with a trend.
Every indicator is marked improving, stable, deteriorating or critical. Revenue factors for the three scenarios are fixed by the model.
- KRI-1
Negative working capital
Uses projected month-12 cash as the working-capital proxy, with the indicator referenced to ISA 570.A4.
- KRI-2
Covenants breached
Counts covenants whose tested value is past threshold.
- KRI-3
Projected cash depletion
Depletion within twelve months is marked as a signal of material uncertainty.
- KRI-4
Lowest covenant headroom
The tightest covenant, flagged when headroom falls below 10%.
- KRI-5
Severe-scenario cash at month 12
Flags negative cash at month twelve under the severe scenario.
A draft the reviewer can check clause by clause.
The going-concern agent drafts a 200 to 350 word conclusion from the scenarios, covenants and indicators. It is instructed to cite ISA 570 paragraphs 6, 16, 19 and 25, and to address the separate report section under paragraph 22.
The draft is saved as the assessment’s audit response. It is a draft: conclusions are reviewed, approved and signed through the workpaper, by people.
How sign-off worksBring an engagement. We will walk the file with you.
A demo covers your audit methodology, the standards you report under, and how agents, citations and review gates would fit your team. Pricing is discussed on the call.