What judgment must be made concerning Better Blend's ability to continue as a going concern?
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.
- 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 the Company'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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, management is responsible for evaluating whether there are conditions or events that could raise substantial doubt about the company's ability to continue as a going concern within one year after the financial statement is issued. The auditor must also conclude whether there is substantial doubt about Better Blend's ability to continue as a going concern for a reasonable period of time.
Specifically, when preparing financial statements, Better Blend's management must evaluate if any conditions or events, when considered together, might create significant uncertainty about the company's ability to operate as a viable business for at least the next year. This assessment is crucial for ensuring the accuracy and reliability of the financial statements.
The independent auditor's report for 2023 states that the auditor's 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 their opinion. The auditor must conclude whether, in their judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Better Blend's ability to continue as a going concern for a reasonable period of time.
This evaluation by both management and the auditor is a standard practice in financial reporting, designed to provide transparency and inform stakeholders about the financial health and stability of Better Blend. A prospective franchisee should review the financial statements and auditor's report carefully to understand any potential risks related to the company's ability to continue operating.