What is the auditor's objective in auditing the financial statement for Bigfoot Forestry?
Bigfoot_Forestry Franchise · 2025 FDDAnswer from 2025 FDD Document
enance of internal control relevant to the preparation and fair presentation of financial statement that are free from material misstatement, whether due to fraud or error.
In preparing the financial statement, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Bigfoot Franchising, LLC's ability to continue as a going concern within one year after the date that the financial statement is available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statement
Our objectives are to obtain reasonable assurance about whether the financial statement is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk 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 are considered material if there is a substantial likelihood that, individually or in aggregate, they would influence the judgment made by a reasonable user based on the financial statement.
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 statement, 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 statement.
- Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Bigfoot Franchising, LLC's internal control. Accordingly, no such opinion is expressed.
Source: Item 23 — RECEIPT (FDD pages 42–162)
What This Means (2025 FDD)
According to Bigfoot Forestry's 2025 Franchise Disclosure Document, the auditor's primary objective is to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. The auditor then issues a report that includes their opinion on the financial statements. While reasonable assurance is a high level of assurance, it is not absolute, meaning there is no guarantee that an audit will always detect a material misstatement.
The auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They identify and assess the risks of material misstatement, whether due to fraud or error, and design and perform audit procedures responsive to those risks. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
The auditor also obtains an understanding of internal control relevant to the audit to design appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of Bigfoot Franchising, LLC'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. Finally, the auditor concludes whether there are conditions or events that raise substantial doubt about Bigfoot Franchising, LLC's ability to continue as a going concern for a reasonable period.
Prospective franchisees should understand that the audit is designed to provide reasonable, but not absolute, assurance about the accuracy of the financial statements. The auditor's report offers an independent opinion on the financial health of Bigfoot Forestry, but it is not a guarantee against all potential financial risks.