What internal controls are Body Brain Center's management responsible for designing, implementing, and maintaining?
Body_Brain_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
In preparing the financial statement, management is required to evaluate whether there are conditions or events considered in the aggregate that raise substantial doubt that Body and Brain Center, LLC's ability to continue as a going concern within 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 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 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 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 Body and Brain Center, LLC'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 Body Brain Center Franchise Disclosure Document, the auditor's responsibilities include obtaining an understanding of internal controls relevant to the audit. However, this understanding is specifically for designing audit procedures and not for expressing an opinion on the effectiveness of Body Brain Center's internal control. Therefore, the auditor does not express an opinion on the effectiveness of Body Brain Center's internal controls.
Management is responsible for evaluating whether conditions or events raise substantial doubt about Body Brain Center's ability to continue as a going concern within one year after the financial statements are available. The auditor's role is to identify and assess the risk of material misstatement of the financial statements, whether due to fraud or error, and to design and perform audit procedures responsive to those risks.
The audit procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
In summary, while the auditor assesses internal controls to design appropriate audit procedures, the responsibility for designing, implementing, and maintaining these internal controls lies with the management of Body Brain Center. The auditor's focus is on the fair presentation of the financial statements and the assessment of risks of material misstatement.