What level of assurance does the audit of Black Bear Diner's financial statements provide?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audito 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 GAAS 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 the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
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
- 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 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 fi that we identified during the audit.
Crowe LLP
Oakbrook Terrace, Illinois March 27, 2025
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the audit of the financial statements aims to provide reasonable assurance that the statements are free from material misstatement, whether due to fraud or error. The auditor's objective is to issue an opinion on the financial statements.
However, this reasonable assurance is not absolute. The audit, conducted in accordance with Generally Accepted Auditing Standards (GAAS), does not guarantee that all material misstatements will be detected. There's a higher risk of not detecting misstatements resulting from fraud compared to those from error, as fraud may involve intentional concealment or misrepresentation.
Material misstatements are those that could likely influence the judgment of a reasonable user of the financial statements. As part of the audit, the auditor exercises professional judgment, assesses risks of misstatement, examines evidence on a test basis, evaluates accounting policies and estimates, and considers the overall presentation of the financial statements. The auditor, Crowe LLP, communicated with those charged with governance regarding the audit's scope, timing, and significant findings. The audit was completed as of March 27, 2025.