What is the auditor's responsibility in exercising professional judgment throughout the audit of 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 the 2024 FDD, in performing an audit in accordance with generally accepted auditing standards, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit of Bevaris Alliance. This means the auditor should have a questioning mind and critically assess the audit evidence.
The auditor is also responsible for identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, and for designing and performing audit procedures responsive to those risks. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
Additionally, the auditor must obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. However, the auditor's responsibility does not extend to expressing an opinion 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.