For UK auditors, the going concern assessment has always been a high-wire act. But in today’s volatile economic climate, that wire is being stretched further than ever. As businesses grapple with fluctuating interest rates, supply chain unpredictability, and tightening credit markets, nervous lenders and stakeholders are demanding longer horizons of financial certainty. Increasingly, clients are asking their auditors to assess going concern over extended periods—often 15, 18, or even 24 months from the date of approval of the financial statements.

At first glance, accommodating a client’s request to look a few months further into the future might seem like a standard exercise in client service. However, as recent guidance from the ICAEW Audit and Assurance Faculty starkly warns, these extension requests are laden with hidden liability risks. When coupled with the acute skills shortage currently plaguing the UK accountancy sector, firms find themselves caught in a perilous squeeze between commercial pressures, risk management, and resource constraints.

The Catalyst for Extended Requests

Under ISA (UK) 570, management is required to assess the entity's ability to continue as a going concern for at least, but not limited to, twelve months from the date the financial statements are authorized for issue. The auditor’s responsibility is to conclude on the appropriateness of management's use of the going concern basis of accounting.

However, the commercial reality often diverges from this baseline. A business looking to refinance a major loan facility, secure a pivotal long-term contract, or appease an anxious credit insurer may be asked by these third parties to provide a longer going concern runway. Consequently, the client turns to their auditor, requesting that the audit procedures—and implicitly, the auditor's seal of approval—cover this extended timeframe.

"The danger arises when the auditor’s assessment of an extended period is perceived not as a statutory duty to the shareholders, but as a bespoke assurance engagement performed for the benefit of a specific third party, such as a lending bank."

The Unintended Duty of Care Trap

The core risk embedded in extended going concern requests is the inadvertent creation of a duty of care to third parties. In UK law, stemming from the landmark Caparo Industries plc v Dickman case, an auditor’s statutory duty is owed to the company's shareholders as a body, not to individual investors, potential investors, or lenders.

If an auditor explicitly agrees to a client's request to extend the going concern assessment period specifically because a bank requires it for a loan renewal, the auditor risks stepping outside the protective boundary of their statutory role. If the business subsequently collapses and the bank loses its money, the bank may argue that the auditor assumed a direct responsibility to them by tailoring the audit work to meet their specific lending criteria.

Protecting the Firm's Position

To navigate this liability minefield, audit partners must establish strict boundaries when these requests arise. The ICAEW advises several critical defensive strategies:

Understand the Motivation: Always ask why the extension is being requested. If it is driven by a third party's requirements, alarm bells should ring.
Maintain Statutory Focus: Reiterate to the client that the audit is a statutory function. Any extension of the going concern period evaluated by the auditor is done because management has chosen to assess a longer period, not because the auditor is performing a separate assurance engagement for a lender.
Deploy Bannerman Clauses: Ensure that standard disclaimer language (the Bannerman paragraph) is robustly applied in the audit report, explicitly stating that the auditor accepts no responsibility to anyone other than the company and its members as a body.
Control Communications: Never address correspondence regarding the going concern assessment directly to the third party (e.g., the bank), and explicitly prohibit the client from sharing audit working papers or private auditor-client correspondence with lenders.

Key Takeaway: An auditor's silence or passive agreement to a client's email stating, "The bank needs you to check our 18-month forecast," can be legally construed as accepting a duty of care to that bank. Explicit, documented pushback is essential.

The Skills Gap Complication

Managing the legal risks of extended going concern assessments is only half the battle. The other half is actually performing the work. Forecasting 12 months into the future is challenging; forecasting 18 to 24 months requires sophisticated professional judgement, deep industry knowledge, and advanced financial modelling skills.

This demand for high-level analytical capability collides directly with the ongoing talent crunch in the UK finance sector. According to an insightful analysis by AAT Comment, accountancy firms and finance departments are struggling to bridge a widening skills gap, driven by technological shifts, retiring senior professionals, and a lack of mid-level talent.

When a client requests an extended going concern assessment, it cannot simply be delegated to junior audit staff. It requires the time and attention of experienced managers and partners who can critically challenge management's assumptions about long-term inflation, market demand, and supply chain resilience. Because these senior resources are already stretched thin, firms must be highly strategic about how they allocate their time.

How Firms Are Adapting

To cope with the dual pressures of complex audit demands and resource scarcity, forward-thinking UK firms are adopting several strategies:

Targeted Upskilling: Firms are investing heavily in training their mid-level staff not just in standard audit methodology, but in advanced commercial awareness and forecasting analysis, empowering them to better support partners on going concern work.
Leveraging Technology: Advanced data analytics and AI-driven forecasting tools are being deployed to stress-test management's models more efficiently, reducing the manual hours required to validate extended cash flow projections.
Client Triage: Perhaps most importantly, firms are becoming more selective. If a client has poor internal forecasting capabilities and demands an extended going concern sign-off to satisfy a lender, audit firms are increasingly willing to walk away rather than absorb the disproportionate risk and resource drain.

Strategic Framework for Going Concern Requests

To help audit teams standardize their response to these high-risk scenarios, firms should implement a clear triage framework. The table below outlines the differences in approach between standard statutory requirements and third-party driven extension requests.

Scenario	Auditor's Primary Obligation	Liability Risk Level	Recommended Firm Action
Standard 12-Month Assessment (ISA UK 570 minimum)	Assess management's conclusion on going concern for 12 months from approval.	Standard (Statutory duty to shareholders as a body).	Proceed with standard audit methodology; ensure standard Bannerman wording is in place.
Management-Driven Extension (e.g., 15 months due to internal planning cycle)	Evaluate the longer period as presented by management in their statutory accounts.	Moderate (Increased complexity in forecasting, but duty remains to shareholders).	Document that the extension was management's choice for statutory reporting purposes; allocate senior resources for complex forecasting.
Third-Party Driven Extension (e.g., Bank demands 18-month sign-off for loan)	None to the third party. Statutory duty remains solely to shareholders.	High (Severe risk of assuming unintended duty of care to the lender).	Explicitly refuse to address the third party. Ensure engagement letter clearly defines statutory limits. Advise client that separate assurance engagements (e.g., reporting accountant roles) require separate contracts.

As we move deeper into an era characterized by both economic fragility and intense regulatory scrutiny, the pressure on UK auditors will only intensify. The demand for extended going concern assessments is a symptom of a broader market anxiety, where lenders seek to transfer their commercial risk onto the shoulders of the audit profession.

Audit partners must stand firm. By combining a rigorous, legally defensive approach to engagement terms with smart resource allocation to combat the skills gap, firms can protect their liability while continuing to deliver robust, high-quality statutory audits. In the current climate, knowing when to say "no" to a client's seemingly simple request is just as important as the audit work itself.