With whom are the auditors required to communicate regarding the audit of Benjamin Franklin Plumbing?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial
likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
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
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 FDD, the auditors' responsibilities include obtaining reasonable assurance about whether Benjamin Franklin Plumbing's consolidated financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes their opinion. The auditors' objectives also include exercising professional judgment and maintaining professional skepticism throughout the audit. They 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.
This basically means the auditors must be thorough in their assessment and base their report on solid evidence. The FDD does not specify with whom the auditors of Benjamin Franklin Plumbing are required to communicate during the audit process.
As the FDD does not specify with whom the auditors are required to communicate, a prospective franchisee should ask the franchisor for more details about the audit process, including who the auditors communicate with and what their responsibilities are.