What specific procedures are included when the auditor examines evidence regarding amounts and disclosures in Aw's financial statements?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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 of Rayyan Pizza Franchise 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 Rayyan Pizza Franchise LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the auditor's procedures include several key steps to ensure the accuracy and reliability of the financial statements. These procedures are conducted in accordance with auditing standards generally accepted in the United States of America (GAAS). The auditor's overall objectives are 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 will exercise professional judgment and maintain professional skepticism throughout the audit. They will 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. As part of these procedures, the auditor examines, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Additionally, the auditor obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. However, it's important to note that this understanding is not for the purpose of expressing an opinion on the effectiveness of Aw's internal control, and accordingly, no such opinion is expressed. The auditor also evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluates the overall presentation of the financial statements. Finally, the auditor concludes whether, in their judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Aw's ability to continue as a going concern for a reasonable period of time.