How do auditors determine the appropriateness of accounting policies used by Bombs Away?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the auditor's responsibility includes evaluating the appropriateness of the accounting policies used by Bombs Away. This evaluation is part of a broader audit conducted in accordance with auditing standards generally accepted in the United States of America. The auditor plans and performs the audit to obtain reasonable assurance that the financial statements are free from material misstatement.
To assess the risk of material misstatement, the auditor considers Bombs Away's internal control relevant to the preparation and fair presentation of the financial statements. This helps the auditor design appropriate audit procedures but does not result in an opinion on the effectiveness of Bombs Away's internal control. The audit procedures involve obtaining evidence about the amounts and disclosures in the financial statements, with the selection of procedures based on the auditor's judgment.
In addition to evaluating accounting policies, the auditor also assesses the reasonableness of significant accounting estimates made by Bombs Away's management and the overall presentation of the financial statements. The auditor then forms an opinion on whether the financial statements present fairly the financial position, results of operations, and cash flows of Bombs Away in accordance with accounting principles generally accepted in the United States of America. The auditor issues a report expressing this opinion, as seen in the Independent Accountant Audit Report.