Regulatory Alerts2025-10-20
Exploration of the Approach to (Dis)continuity in Statutory Audits
The Dutch Authority for the Financial Markets (AFM) issued a 2025 report evaluating how external auditors address going concern risks, noting a positive trend in material uncertainty paragraphs but identifying persistent failures due to bias and insufficient independence. The regulator highlights that while auditors generally take the challenge seriously, specific causes like confirmation bias and lack of holistic client understanding lead to missed red flags. Consequently, the AFM sets expectations for auditors to maintain professional skepticism and a comprehensive understanding of the client to better protect stakeholders from impending bankruptcies.
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