22 July 2025
Sure! In the context of SA 570 — Going Concern, “mitigating factors” are circumstances or actions that reduce or eliminate the risks or uncertainties about an entity’s ability to continue as a going concern.
More simply: When an auditor identifies events or conditions that may cast significant doubt on the entity’s ability to continue operating, mitigating factors are things that help ease or resolve those doubts.
Examples of mitigating factors: A confirmed financial support from a parent company or lender.
A plan to dispose of assets to generate cash.
Successful refinancing or obtaining new credit facilities.
Significant cost reductions or restructuring plans.
Expected improvement in cash flows or revenues based on contracts or orders.
Why is it important? Auditors evaluate whether such mitigating factors are sufficient and reliable to conclude that the entity will likely continue as a going concern despite challenges.
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