When performing an audit for Bhc, what should the auditor exercise throughout the process?

According to Bhc's 2025 Franchise Disclosure Document, when performing an audit in accordance with generally accepted auditing standards, the auditor should exercise professional judgment and maintain professional skepticism throughout the audit. This means the auditor must use their expertise and experience to make informed decisions and maintain a questioning mind when evaluating the financial statements.

Maintaining professional skepticism is crucial because it helps the auditor to critically assess the information provided by the company's management and to identify any potential misstatements or fraud. This involves not automatically assuming that management is honest but instead seeking corroborating evidence to support their representations. Professional judgment is necessary to determine the scope and nature of the audit procedures, as well as to evaluate the results of those procedures.

For a prospective Bhc franchisee, this indicates that the company's financial statements are subject to a rigorous audit process. This can provide a level of comfort that the financial information being presented is reliable and fairly stated. However, it is important to note that even with a thorough audit, there is always a risk that material misstatements may not be detected, especially those resulting from fraud.