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Whose responsibility is the going concern assessment? What basis of accounting is used if an entity is not a going concern? What is the difference between going concern doubt and actual insolvency? Why is going concern important to users of financial statements? What are indicators that going concern may be in doubt? How does the auditor evaluate management's going concern assessment? What time period does the going concern assessment cover? What are mitigating factors in a going concern assessment? What disclosures are required when there is significant going concern doubt? How does going concern relate to Key Audit Matters (KAMs)?
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Auditing & Assurance › Going Concern

What is a support letter (comfort letter) in a going concern context?

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Answer

A support (or comfort) letter is a written commitment, typically from a parent company or shareholder, to provide financial support to the entity for a period (e.g., not to demand repayment and to fund it for at least 12 months). Auditors assess the provider's ability and intent to honor it before relying on it as a mitigating factor for going concern.
Real-world example A subsidiary relies on a parent's support letter confirming funding for 12 months, which the auditor evaluates for credibility.

Common follow-ups: Who typically provides a support letter? | What does the auditor assess about it?

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All 18 Going Concern questions