What is the auditor's responsibility in evaluating 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 has specific responsibilities in evaluating the appropriateness of the accounting policies used by the company. The auditor's role includes assessing whether the chosen accounting policies are suitable for Bombs Away's business and ensuring that management's significant accounting estimates are reasonable. This evaluation is a crucial part of the audit process, providing assurance that the financial statements present a fair view of the company's financial position.
The auditor's evaluation extends to the overall presentation of Bombs Away's financial statements. This involves reviewing how financial information is displayed and organized to ensure clarity and compliance with accounting standards. The auditor's objective is to provide an opinion on whether the financial statements are free from material misstatement, which requires a thorough examination of the accounting policies and estimates used in their preparation.
In conducting the audit, the auditor follows 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 that the financial statements are free from material misstatement. The auditor's procedures include obtaining audit evidence about the amounts and disclosures in the financial statements, with the specific procedures selected based on the auditor's professional judgment and risk assessment.