During the audit, is the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management evaluated for Angry Chickz Franchising, LLC?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, we:
- x Exercise professional judgment and maintain professional skepticism throughout the audit.
- x 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.
- x 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 Angry Chickz Franchising, LLC's internal control. Accordingly, no such opinion is expressed.
- x 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.
- x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Angry Chickz Franchising, LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, the auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. This evaluation is part of the audit procedures conducted in accordance with Generally Accepted Auditing Standards (GAAS). The auditor's objective is to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes their opinion.
Specifically, the auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They 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. These procedures involve examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditor obtains an understanding of internal control relevant to the audit to design appropriate audit procedures, though they do not express an opinion on the effectiveness of Angry Chickz's internal control. The auditor also evaluates the overall presentation of the financial statements and concludes whether there are conditions or events that raise substantial doubt about Angry Chickz's ability to continue as a going concern for a reasonable period of time.
This process is crucial for ensuring the reliability and accuracy of the financial statements, providing stakeholders, including potential franchisees, with confidence in the financial health and stability of Angry Chickz. The auditor also communicates 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.