Does the audit of Beard Papas' financial statements include expressing an opinion on the effectiveness of the company's internal control?

According to Beard Papas's 2025 Franchise Disclosure Document, the audit of their financial statements does not include an opinion on the effectiveness of the company's internal control. The audit is conducted in accordance with U.S. Generally Accepted Auditing Standards (GAAS). As part of this process, the auditors obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, but not to express an opinion on the effectiveness of the company's internal control. Therefore, the audit report will not provide assurance about the quality of Beard Papas' internal controls.

This means that while the auditors assess the risk of material misstatement in the financial statements and design audit procedures accordingly, they do not specifically evaluate whether Beard Papas' internal controls are well-designed or operating effectively. This is a standard practice in many financial statement audits, where the primary focus is on the fairness of the financial statements rather than the effectiveness of internal controls.

Prospective franchisees should be aware that the absence of an opinion on internal controls does not necessarily indicate weaknesses in Beard Papas' internal control system. However, it does mean that the audit provides no explicit assurance about the effectiveness of those controls. If a franchisee is concerned about the internal controls at Beard Papas, they may want to ask the franchisor for additional information about their internal control policies and procedures.