What is the scope of the evaluation of Bombs Away's overall presentation of financial statements by the auditors?
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 auditors' responsibilities include evaluating the overall presentation of the financial statements. This evaluation is part of a broader audit conducted in accordance with auditing standards generally accepted in the United States of America. The goal of the audit is to obtain reasonable assurance that the financial statements are free from material misstatement.
To achieve this, the auditors perform procedures to gather evidence about the amounts and disclosures in the financial statements. These procedures are selected based on the auditor's judgment, which includes assessing the risks of material misstatement due to fraud or error. The auditors also consider Bombs Away's internal control relevant to the preparation and fair presentation of the financial statements to design appropriate audit procedures. However, the auditors do not express an opinion on the effectiveness of Bombs Away's internal control.
In addition to evaluating the overall presentation, the auditors assess the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by Bombs Away's management. The auditors also determine whether there are conditions or events that raise substantial doubt about Bombs Away's ability to continue as a going concern. This comprehensive evaluation provides a basis for the auditor's opinion on the fairness of Bombs Away's financial statements.