What does the auditor evaluate regarding accounting policies used by Best Brains?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with generally accepted auditing standards, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the 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 financial statements.
- 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 Best Brains Inc's internal control. Accordingly, no such opinion is expressed.
- 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 financial statements.
- Conclude whether, in our judgment, there are conditions or events considered in the aggregate that raise substantial doubt about Best Brains Inc's ability to continue as a going concern for a reasonable period of time
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, the auditor evaluates the appropriateness of the accounting policies used by Best Brains, as well as the reasonableness of significant accounting estimates made by the management team. The auditor also evaluates the overall presentation of the financial statements. This evaluation is a standard part of an audit conducted in accordance with generally accepted auditing standards.
This means the auditor assesses whether Best Brains' chosen accounting methods are suitable for their business and comply with accounting principles. They also check if the estimates made by the management, such as those related to potential losses or the value of assets, are reasonable and well-supported. Finally, the auditor ensures that the financial statements are presented in a clear and understandable manner.
For a prospective Best Brains franchisee, this indicates that the company's financial statements are subject to scrutiny by an independent auditor. This process aims to provide assurance that the financial information is reliable and fairly presented. Franchisees can review the auditor's report and the financial statements to gain a better understanding of Best Brains' financial health and accounting practices.