For Bft, is the auditor required to obtain an understanding of internal control relevant to the audit?
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.
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.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, when performing an audit in accordance with Generally Accepted Auditing Standards (GAAS), the auditor is required to obtain an understanding of internal control relevant to the audit. However, this understanding is specifically for the purpose of designing audit procedures that are appropriate for the circumstances and not for expressing an opinion on the effectiveness of Bft's internal control. Therefore, the auditor will not express an opinion on the effectiveness of the company's internal controls.
This means that the auditor will assess Bft's internal controls to determine the appropriate scope and nature of the audit tests needed to ensure the financial statements are free from material misstatement. The focus is on identifying potential risks and tailoring the audit approach accordingly.
Furthermore, the auditor is required to communicate with those charged with governance regarding the planned scope and timing of the audit, any significant audit findings, and certain internal control-related matters identified during the audit. This communication ensures that relevant parties are informed about the audit process and any important issues that arise.