What risks must the auditor identify and assess regarding Bevaris Alliance's financial statements?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
isk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
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.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
April 12, 2024
Joseph A. Martin, C.P.A., P.C.
Josepha Martin, CPA, PC
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Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 FDD, the auditor of Bevaris Alliance's financial statements must identify and assess the risks of material misstatement, whether due to fraud or error. This involves designing and performing audit procedures responsive to those risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
The auditor must also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, though not for the purpose of expressing an opinion on the effectiveness of Bevaris Alliance's internal control. The auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements.
Furthermore, the auditor 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. Communication with those charged with governance is required regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit. The auditor's responsibilities also include obtaining reasonable assurance about whether the financial statements are free from material misstatement, whether due to fraud or error, and issuing an auditor's report that includes their opinion.