What is the auditor required to evaluate regarding the accounting policies used by Bambu?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
In perfonning 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 perfonn 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 Bambu Franchising, 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 Bambu Franchising, LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the auditor is required to evaluate the appropriateness of the accounting policies used by the company. This evaluation is part of a broader audit performed in accordance with generally accepted auditing standards (GAAS). The auditor's role includes forming an opinion on whether the financial statements present fairly the financial position, results of operations, and cash flows of Bambu Franchising, LLC.
In addition to assessing accounting policies, the auditor also evaluates the reasonableness of significant accounting estimates made by management and the overall presentation of the financial statements. This ensures that the financial information provided is reliable and conforms to standard accounting principles. The auditor must exercise professional judgment and maintain professional skepticism throughout the audit to identify and assess the risks of material misstatement, whether due to fraud or error.
The auditor's responsibilities extend to obtaining an understanding of internal controls relevant to the audit. However, the purpose is to design appropriate audit procedures and not to express an opinion on the effectiveness of Bambu's internal control. Furthermore, the auditor must conclude whether there are conditions or events that raise substantial doubt about Bambu's ability to continue as a going concern. This comprehensive evaluation provides stakeholders with a higher level of confidence in the accuracy and reliability of Bambu's financial statements.