For All County, what is the purpose of designing audit procedures appropriate to the circumstances?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial stDtePents 7Ke proFedures seOeFted depend on tKe Duditor's MudJPent inFOudinJ tKe DssessPent oI risNs oI PDteriDO misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internDO FontroO reOeYDnt to tKe entit's prepDrDtion Dnd IDir presentDtion oI tKe IinDnFiDO stDtePents in order to desiJn Dudit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entit's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, the auditor designs audit procedures appropriate to the circumstances to obtain audit evidence about the amounts and disclosures in the financial statements. The selection of these procedures depends on the auditor's judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error.
In making risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements. However, the audit procedures are designed to fit the circumstances and are not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. The auditor does not express such an opinion.
The audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. The auditor's report included in the FDD states that the audit evidence obtained is sufficient and appropriate to provide a basis for their audit opinion.