What aspects of Benjamin Franklin Plumbing's accounting policies and estimates do the auditors evaluate?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with US GAAS, we:
- x Exercise professional judgment and maintain professional skepticism throughout the audit.
- x Identify and assess the risks of material misstatement of the consolidated 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 consolidated financial statements.
- x 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 the Company's internal control. Accordingly, no such opinion is expressed.
- x 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 consolidated financial statements.
- x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 FDD, the auditors evaluating Benjamin Franklin Plumbing's consolidated financial statements focus on several key areas. These include assessing the appropriateness of the accounting policies used by the company and evaluating the reasonableness of significant accounting estimates made by the management team. The auditors also consider the overall presentation of the consolidated financial statements to ensure they are fairly presented.
In addition to evaluating policies and estimates, the auditors identify and assess the risks of material misstatement within the financial statements, whether these misstatements are due to fraud or error. To address these risks, they design and perform audit procedures, which include examining evidence related to the amounts and disclosures presented in the consolidated financial statements on a test basis.
Furthermore, the auditors obtain an understanding of the internal controls relevant to the audit. This understanding is used to design audit procedures that are appropriate for the given circumstances. However, the auditors do not express an opinion on the effectiveness of the company's internal control as part of this process. The auditors also consider whether there are conditions or events that, when taken together, raise substantial doubt about the company's ability to continue as a going concern for a reasonable period of time.