What internal controls are Best Brains' management responsible for designing, implementing, and maintaining regarding the financial statements?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the preparation and fair presentation of these 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 Best Brains Inc.'s ability to continue as a going concern within one year from the date the financial statements are available to be issued.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, management is responsible for designing, implementing, and maintaining 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. Additionally, management must evaluate whether there are conditions or events that raise substantial doubt about Best Brains' ability to continue as a going concern within one year from the date the financial statements are available to be issued.
In practical terms, this means Best Brains' management must establish and oversee procedures and policies that ensure the accuracy and reliability of the company's financial reporting. This includes controls over how financial transactions are recorded, how assets are safeguarded, and how financial data is processed and summarized. These internal controls are crucial for providing stakeholders, including potential franchisees, with confidence in the financial health and stability of Best Brains.
Prospective franchisees should understand that while Best Brains' management is responsible for these internal controls, the independent auditor's role is to assess the financial statements and not to express an opinion on the effectiveness of the company's internal controls. Therefore, it is advisable for potential franchisees to review the financial statements and auditor's report carefully and to seek professional financial advice to fully understand the financial risks and opportunities associated with investing in a Best Brains franchise.