What aspects of Annex Brands' accounting policies does the auditor evaluate?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
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 consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company'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.
Lavine, Lofgen, Marin & Engelberg, UP
La Jolla, California December 30, 2024
| 2024 | 2023 | |
|---|---|---|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 12,219,000 | $ 11,992,000 |
| Accounts receivable, net of allowance for doubtful | ||
| accounts of $910,000 and $948,000, respectively | 1,377,000 | 1,642,000 |
| Prepaid expenses and other current assets | 1,220,000 | 704,000 |
Source: Item 21 — Financial Statements (FDD page 109)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the independent auditor evaluates several aspects of the company's accounting policies. These include assessing the appropriateness of the accounting policies used by Annex Brands and the reasonableness of significant accounting estimates made by the management team. The auditor also evaluates the overall presentation of the consolidated financial statements to ensure they are fairly presented.
Furthermore, the auditor's responsibilities extend to identifying and assessing the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. To address these risks, the auditor designs and performs audit procedures, which include examining 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, although they do not express an opinion on the effectiveness of Annex Brands' internal control.
In addition to evaluating accounting policies and financial statement presentation, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit. The auditor also has to conclude whether there are conditions or events that raise substantial doubt about Annex Brands' ability to continue as a going concern for a reasonable period of time. Finally, 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.