What is the auditor's responsibility regarding Bonchon Franchise, LLC's internal control?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Bonchon Franchise, LLC's internal control. Accordingly, no such opinion is expressed.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the auditor's responsibility regarding internal control is explicitly limited. The auditor's role is to gain an understanding of Bonchon's internal control relevant to the audit, but not to express an opinion on its effectiveness. This means the auditor designs audit procedures appropriate for the circumstances but does not provide assurance that Bonchon's internal controls are effective.
This disclaimer is standard practice in financial auditing. The auditor's primary goal is to assess the financial statements for material misstatements, whether due to fraud or error. While evaluating internal controls helps the auditor plan the audit, it's not the same as a full-scale assessment of the internal control system itself. The auditor's focus is on the financial statements, not on providing a separate opinion on the company's internal controls.
For a prospective Bonchon franchisee, this means the financial statements have been audited to ensure they are free of material misstatements. However, the audit does not guarantee the effectiveness of Bonchon's internal controls. Franchisees may want to consider this when evaluating the overall financial health and stability of Bonchon. It's also important to note that management is responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements.
In addition to understanding the auditor's limited role, prospective franchisees should also be aware that 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. This communication provides an additional layer of oversight and transparency, but it does not change the fact that the auditor does not express an opinion on the effectiveness of Bonchon's internal control.