When auditing Bft, is the auditor expressing an opinion on the effectiveness of the company's internal control?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, 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 the Company'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.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the auditor is not expressing an opinion on the effectiveness of the company's internal control. While the auditor obtains an understanding of internal control relevant to the audit to design appropriate audit procedures, the audit's purpose is not to express an opinion on the effectiveness of Bft's internal control. Therefore, the auditor's report will not include such an opinion.
This means that while the auditor assesses Bft's internal controls to plan the audit, they do not provide a separate, explicit assurance about how well those controls are designed or operating. The focus is on whether the financial statements are fairly presented, not on whether the company's internal controls are perfect.
For a prospective Bft franchisee, this implies that the financial statements have been audited for accuracy and reliability, but there is no independent verification of the strength of Bft's internal controls. A franchisee may want to independently assess Bft's internal controls or seek additional assurances in this area.