What internal controls is the management of Beggars Pizza responsible for designing, implementing, and maintaining regarding the preparation of financial statements?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Beggars Pizza Franchise, LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, management is responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements. These controls are designed to ensure that the financial statements are free from material misstatement, whether due to fraud or error, and are prepared in accordance with generally accepted accounting principles in the United States of America. This responsibility is a standard expectation for management in any organization, ensuring the reliability and integrity of financial reporting.
Specifically, Beggars Pizza's management is required to evaluate whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern within one year after the date the financial statements are available to be issued. This assessment is a critical component of financial statement preparation, as it directly impacts the disclosures made within the financial statements and the overall confidence in the company's financial health. The auditor's report also emphasizes that their audit provides reasonable assurance that the financial statements are free from material misstatement.
For a prospective franchisee, this indicates that Beggars Pizza's financial statements are prepared with a certain level of internal oversight and control, which aims to ensure accuracy and compliance with accounting standards. While the auditor does not express an opinion on the effectiveness of Beggars Pizza's internal controls, the fact that management is responsible for these controls provides a degree of confidence in the reliability of the financial information presented. Franchisees can review these audited financial statements to gain insight into the financial stability and performance of Beggars Pizza.