What is the auditor's responsibility regarding independence and ethical requirements when auditing Premium Service Brands, LLC, the parent company of 360 Painting?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Premium Service Brands, LLC and Subsidiaries, and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the independent auditor, Robinson, Farmer, Cox Associates, PLLC, is required to be independent of Premium Service Brands, LLC and its subsidiaries. They must also adhere to ethical responsibilities based on the relevant ethical requirements pertaining to their audits. This requirement ensures that the audit is conducted without bias, and the auditor's judgment is not compromised.
The auditor's responsibilities include obtaining reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and issuing an auditor's report that includes their opinion. While reasonable assurance is a high level of assurance, it is not absolute, and there is no guarantee that an audit will always detect a material misstatement. The risk of not detecting a material misstatement resulting from fraud is higher than that of error because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
In conducting the audit, the auditor must exercise professional judgment and maintain professional skepticism. They identify and assess the risks of material misstatement of the financial statements, design and perform audit procedures responsive to those risks, and examine evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also obtains an understanding of internal control relevant to the audit to design appropriate audit procedures but does not express an opinion on the effectiveness of Premium Service Brands, LLC's internal control.
Furthermore, the auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements. They also conclude whether there are conditions or events that raise substantial doubt about Premium Service Brands, LLC's ability to continue as a going concern. The auditor is required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit.