What internal controls is the management of Bens Soft Pretzels responsible for designing, implementing, and maintaining regarding the preparation of financial statements?
Bens_Soft_Pretzels 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 Ben's Soft Pretzels Franchising Corporation's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 FDD, Bens Soft Pretzels' 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 the financial statements are free from material misstatement, whether due to fraud or error. This responsibility is a standard expectation for management in any organization, ensuring the reliability and accuracy of financial reporting.
In practical terms, this means Bens Soft Pretzels' management must establish and oversee procedures and policies that govern the company's financial operations. These controls can include things like segregation of duties, reconciliation processes, and authorization protocols. The goal is to prevent errors and detect any irregularities that could impact the accuracy of the financial statements.
Prospective franchisees should understand that while Bens Soft Pretzels' management is responsible for these internal controls at the corporate level, franchisees themselves will also need to implement sound financial management practices at their individual locations. This includes accurately tracking revenue, managing expenses, and maintaining proper documentation to ensure compliance with reporting requirements.
The FDD also mentions that the auditor's responsibility is to obtain an understanding of internal control relevant to the audit, but not for the purpose of expressing an opinion on the effectiveness of Ben's Soft Pretzels Franchising Corporation's internal control. Accordingly, no such opinion is expressed.