What significant accounting estimates made by management are evaluated for reasonableness during the Bevaris Alliance audit?
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 evaluates the reasonableness of significant accounting estimates made by the management of Bevaris Alliance. This evaluation is a standard part of an audit performed in accordance with generally accepted auditing standards. The auditor also assesses the appropriateness of the accounting policies used and the overall presentation of the financial statements.
Management is responsible for preparing financial statements that are free from material misstatement. This includes making estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates are based on management's judgment and assumptions about future events. Actual results could differ from those estimates.
For a prospective Bevaris Alliance franchisee, this means that the financial statements have been reviewed by an independent auditor who has assessed the reasonableness of the estimates made by management. While the FDD does not specify which particular accounting estimates are deemed significant, it assures franchisees that these estimates have been scrutinized as part of the audit process. This helps provide a level of confidence in the financial information presented.