In judging Better Blend's financial statements, what must be concluded regarding conditions or events?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
statements that is 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 the Company's ability to continue as a going concern within one year after the date that the financial statement is issued or available to be issued.
3565 Piedmont Road, NE Building One, Suite 400 Atlanta, GA 30305 T: 678.456.5157 | F: 470.558.3884
Board of Managers Better Blend Franchising, LLC Page 2
Auditor's Responsibility for the Audit of the Financial Statement
Our objectives are to obtain reasonable assurance about whether the financial statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's 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 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 financial statements. In performing an audit in accordance with GAAS, we:
- · Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statement, 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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, the company's management is required to evaluate whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern within one year after the financial statement is issued. This evaluation is a standard accounting practice, ensuring that financial statements provide a realistic view of the company's financial health.
Additionally, the auditor's responsibility includes concluding whether any conditions or events, considered in the aggregate, raise substantial doubt about Better Blend's ability to continue as a going concern for a reasonable period. This assessment is part of the auditor's broader objective to obtain reasonable assurance that the financial statements are free from material misstatement. The auditor's report includes their opinion on the financial statements.
Furthermore, the notes to the financial statements reveal specific conditions and events that could impact Better Blend. For the year ended December 31, 2023, two customers represented 85% of total revenues and 69% of royalties and marketing fees receivable. This concentration of customers represents a risk. Better Blend also faces potential legal matters that arise in the normal course of business; however, management believes that any resolution of such matters will not have a material adverse effect on the company's financial position. Better Blend opened one new location on January 27, 2024, in Independence, KY.