What is the auditor's responsibility in examining evidence regarding the amounts and disclosures in Bevaris Alliance's financial statements?
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's responsibility includes specific actions when examining evidence related to the financial statements. The auditor must exercise professional judgment and maintain professional skepticism throughout the audit. This means the auditor should have a questioning mind and critically assess the information provided by management.
Specifically, the auditor's procedures involve examining evidence regarding the amounts and disclosures in the financial statements on a test basis. This indicates that the auditor does not review every single transaction but instead uses sampling techniques to gain reasonable assurance about the accuracy and completeness of the financial statements. The auditor also needs to 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.
Furthermore, the auditor must obtain an understanding of internal control relevant to the audit to design appropriate audit procedures. However, the auditor's report explicitly states that no opinion is expressed on the effectiveness of Bevaris Alliance's 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 evaluating the overall presentation of the financial statements. These steps ensure that the financial statements are presented fairly and in accordance with generally accepted accounting principles.