What must auditors conclude regarding Bombs Away's ability to continue as a going concern?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
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 of 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 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.
924 W. 75th Street Suite 120 - 189 Naperville, IL 60565 +1 (815) 348-2421 omar@napercpa.com
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the auditor must conclude whether there are conditions or events that raise substantial doubt about Bombs Away's ability to continue as a going concern for one year after the date that the financial statements are available to be issued. This evaluation is a standard part of the audit process. The auditor's responsibility is to express an opinion on the financial statements based on their audit, conducted in accordance with auditing standards generally accepted in the United States of America. These standards require the auditor to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
To reach a conclusion, the auditor must 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. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor must also obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
Furthermore, the auditor must 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. 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. The auditor's report includes their opinion on whether the financial statements present fairly the financial position of Bombs Away, and the results of its operations and its cash flows for the period, in accordance with accounting principles generally accepted in the United States of America.