Does the audit of B Bops' financial statements include evaluating the appropriateness of accounting policies used by management?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with generally accepted auditing standards, 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 B-Bop's Franchising 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 judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about B-Bop's Franchising Corporation's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 52–53)
What This Means (2025 FDD)
According to B Bops' 2025 Franchise Disclosure Document, the audit of the company's financial statements does include evaluating the appropriateness of the accounting policies used by its management.
The independent auditor's report outlines the responsibilities undertaken during the audit process. These responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. The auditors 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 include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditors obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. As part of the audit, the auditors 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. Finally, the auditors conclude whether, in their judgment, there are conditions or events that raise substantial doubt about B Bops' ability to continue as a going concern for a reasonable period of time.