What is the auditor's responsibility regarding professional skepticism throughout the audit of Aw?

According to Aw's 2025 Franchise Disclosure Document, the auditor is required to exercise professional judgment and maintain professional skepticism throughout the audit. This means the auditor must have a questioning mind and critically assess the audit evidence.

The auditor's objectives include obtaining reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and issuing an auditor's report that includes their opinion. However, reasonable assurance is not absolute, and there is no guarantee that an audit will always detect a material misstatement. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

In addition to maintaining professional skepticism, the auditor must identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. They must also design and perform audit procedures responsive to those risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor must obtain an understanding of internal control relevant to the audit in order to design appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of Aw's internal control.

Finally, the auditor must 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. The auditor must also conclude whether there are conditions or events that raise substantial doubt about Aw's ability to continue as a going concern for a reasonable period of time.