What does the audit include in terms of accounting policies for All States M.E.D.?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
es our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness All States M.E.D. Franchising, LLC.'s internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about All States M.E.D. Franchising, LLC.'s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Miami, Florida April 25, 2024
Balance Sheet
December 31, 2023
Assets
| Cash | $ 121,914 |
|---|---|
| Total assets | $ 121,914 |
| Liabilities and Members' Equity | |
| Liabilities | $ - |
| Deferred franchise fee | - |
| Total liabilities | - |
| Members' Equity | 121,914 |
| Total Members' Equity | 121,914 |
| Total Liabilities and Members' Equity | $ 121,914 |
Statement of Operations and Members' Equity
For the Period from July 11, 2023("Commencement of operations") to December 31, 2023
| Franchise sales | $ - | |--------------------------------------|----------------| | | - | | Total revenues | - | | Expenses: | | | Bank fees | 87 | | Marketing expense | 499 | | Total expenses | 586 | | Net income (loss) | (586) | | Contributions | 122,500 | | Members' Equity, beginning of period | - - | | Members' Equity, end of period | $ 121,914- |
Statement of Cash Flows
For the Period from July 11, 2023 ("Commencement of operations") to December 31, 2023
| Cash flows from operating activities: Net income (loss) Adjustments to reconcile net income to net cash provided by operating activities: | $ (586) |
|---|---|
| Amortization | - |
| (Increase) decrease in assets: | |
| Accounts receivable | - |
| Increase (decrease) in liabilities: | - |
| Deferred revenue | - |
| Net cash used by operating | (586) |
| activities | |
| Cash flows from investing activities: | - |
| Fixed asset dispositions, net | - |
| Net cash used by investing | - |
| activities | - |
| Cash flows from financing activities: | 122,500 |
| Contributions | - |
| Distributions | - |
| Net cash provided by financing | 122,500- |
| activities | |
| Net increase in cash and cash equivalents | 121,914 |
| Cash and cash equivalents, beginning of period | - - |
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the audit evaluates the appropriateness of accounting policies used by management. This includes assessing the reasonableness of significant accounting estimates and the overall presentation of the financial statements. The audit aims to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error.
The summary of significant accounting policies for All States M.E.D. includes the method of accounting, which is the accrual basis where assets, liabilities, revenues, and expenses are recognized when they are earned or incurred, regardless of when cash changes hands. It also covers property and equipment, which are stated at cost and depreciated using the straight-line method over an estimated useful life of 5 years. For federal income tax purposes, depreciation is computed using accelerated methods.
Furthermore, the accounting policies address franchise revenues, which primarily consist of revenues earned from franchise sales. These revenues are recognized according to specific accounting standards (ASC 606), which dictate that franchise fees are recognized net of allowances for uncollectible amounts if the initial franchise fee is distinct from the franchise license. A portion of the initial franchise fee is allocated to distinct performance obligations and recognized as revenue when the company has fulfilled its material obligations related to those performance obligations. These initial franchise fees generally cover pre-opening services determined by All States M.E.D. that are separate and distinct.