What is the auditor's objective in auditing the financial statements of Body Brain Center?
Body_Brain_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
ica and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether 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 one year after the date that the financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
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 auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exist. The risk of not detecting a material misstatement resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users made on the basis of these financial statements.
ABC CPAs
3435 Wilshire Blvd. Suite 600 Los Angeles, CA 90010 T +1 213 738 6000 F +1 213 738 6062
In performing an audit in accordance with GAAS we:
- Exercise professional judgement and maintain professional skepticism throughout the audit.
- Identify and assess the risk 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\ninclude 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\neffectiveness 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.
Source: Item 23 — RECEIPT (FDD pages 43–178)
What This Means (2025 FDD)
According to the 2025 FDD, the auditor's objective is to obtain reasonable assurance that Body Brain Center's financial statements are free from material misstatement, whether due to fraud or error. The auditor then issues a report containing their opinion on the financial statements. The FDD clarifies that while reasonable assurance is a high level of assurance, it does not guarantee that all material misstatements will be detected. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error.
The auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error, and design audit procedures to respond to those risks. These procedures involve examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditor obtains an understanding of internal control relevant to the audit to design appropriate audit procedures, but not to express an opinion on the effectiveness of Body Brain Center's internal control. The auditor evaluates the appropriateness of the accounting policies used, the reasonableness of significant accounting estimates made by management, and the overall presentation of the financial statements. The auditor also determines whether there are conditions or events that raise substantial doubt about Body Brain Center's ability to continue as a going concern.
Finally, the auditor is required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit. This communication ensures transparency and provides stakeholders with important information about the audit process and its findings.