What is the auditor's responsibility in identifying the risks of material misstatement of 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 has several responsibilities in assessing the risk of material misstatement in the company's financial statements. The auditor must identify and assess the risks of material misstatement, whether due to fraud or error. To address these risks, the auditor designs and performs audit procedures, which include examining evidence related to the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditor is required to obtain an understanding of internal control relevant to the audit. This understanding is used to design audit procedures appropriate for the specific circumstances, though the audit does not aim to express an opinion on the effectiveness of Bevaris Alliance's internal control. The auditor also evaluates the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management, ensuring the overall presentation of the financial statements is sound.
In addition to these responsibilities, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit. The auditor also has to conclude on whether there are conditions or events that raise substantial doubt about Bevaris Alliance's ability to continue as a going concern. Finally, 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.