What does the audit of Benihana's financial statements include regarding accounting principles and estimates?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
sibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the audit of the company's financial statements includes an evaluation of the accounting principles used and significant estimates made by management. The purpose of this evaluation is to ensure that the financial statements are presented fairly and in accordance with accounting standards.
The audit also involves performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. These procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Furthermore, Benihana's FDD states that the company's significant accounting estimates are discussed in additional detail in Note 2 to their consolidated financial statements. These estimates are based on historical experience and various assumptions. Actual results may differ from these estimates under different assumptions or conditions, and these estimates involve a higher degree of judgment and/or complexity.