What is the auditor's responsibility regarding professional judgment and skepticism during the audit of 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 has specific responsibilities regarding professional judgment and skepticism. During the audit, the auditor is required to exercise professional judgment and maintain professional skepticism throughout the process. This means the auditor must make informed decisions based on their expertise and maintain a questioning mind, critically assessing the information provided by Best Brains.
In addition to exercising professional judgment and skepticism, the auditor is responsible for identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error. They must design and perform audit procedures that are responsive to these risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor must also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, although they do not express an opinion on the effectiveness of Best Brains' internal control.
The auditor also evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements. Finally, the auditor must conclude whether there are conditions or events that raise substantial doubt about Best Brains' ability to continue as a going concern for a reasonable period of time. These responsibilities ensure that the financial statements are presented fairly and accurately, providing prospective franchisees with reliable information.