When conducting an audit for Bevaris Alliance, what level of judgment and skepticism must be applied?
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.
To the Member Bevaris Alliance Franchise System, LLC
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Bevaris Alliance Franchise System, LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 FDD, when performing an audit for Bevaris Alliance, the auditors must exercise professional judgment and maintain professional skepticism throughout the audit. This means the auditors should have a questioning mind and critically assess the audit evidence. They need 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.
The audit procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditors also need to obtain an understanding of internal control relevant to the audit in order to design appropriate audit procedures. However, the audit is not for the purpose of expressing an opinion on the effectiveness of Bevaris Alliance's internal control, and no such opinion is expressed.
Furthermore, the auditors must 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. Finally, the auditors must conclude whether there are conditions or events that raise substantial doubt about Bevaris Alliance's ability to continue as a going concern for a reasonable period of time.