What must be evaluated regarding significant accounting estimates made by All Team Franchise Corporation's management?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with generally accepted auditing standards, we:
- Exercise professional judgement 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 procedure 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 of All Team Franchise Corporation'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 judgement, there are conditions or events, considered in the aggregate, that raise substantial doubt about All Team Franchise Corporation's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 33)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, when an audit is performed, the reasonableness of significant accounting estimates made by All Team's management must be evaluated. This evaluation is part of ensuring that the financial statements are presented fairly and accurately.
This means that the auditors will scrutinize the judgments and assumptions made by All Team's management when preparing the financial statements. These estimates can include things like allowance for doubtful accounts, depreciation methods, and other areas where precise figures are not available and management must make informed guesses. The auditors will assess whether these estimates are reasonable and in line with generally accepted accounting principles.
For a potential All Team franchisee, this indicates that the financial statements have been subjected to external scrutiny regarding the estimates made. While it doesn't guarantee the estimates are perfect, it does provide a level of assurance that they have been reviewed by an independent party. This can be important for franchisees who rely on the financial statements to make informed decisions about their investment.