What is the auditor's responsibility in evaluating the appropriateness of accounting policies used by Bevaris Alliance?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 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 Bevaris Alliance Franchise System, LLC'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 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, the auditor has a responsibility to evaluate the appropriateness of the accounting policies used by the company. This evaluation is part of a broader audit performed in accordance with generally accepted auditing standards. The auditor's role includes exercising professional judgment and maintaining professional skepticism throughout the audit process.
Specifically, the auditor must 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. These procedures involve examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also needs to obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, although the audit does not aim to express an opinion on the effectiveness of Bevaris Alliance's internal control.
In addition to evaluating accounting policies, the auditor also assesses the reasonableness of significant accounting estimates made by management and the overall presentation of the financial statements. Furthermore, the auditor concludes whether there are conditions or events that raise substantial doubt about Bevaris Alliance's ability to continue as a going concern. The auditor is required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control related matters identified during the audit.
This process ensures that the financial statements of Bevaris Alliance are presented fairly and in accordance with generally accepted accounting principles. For a prospective franchisee, this indicates that the financial information provided by Bevaris Alliance has been scrutinized by an independent auditor, adding a level of credibility and assurance to the financial data presented.