When auditing Bor Restoration's financial statements, what must be identified and assessed?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
In performing an audit in accordance with generally accepted auditing standards, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- 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. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- 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 the Company's internal control. Accordingly, no such opinion is expressed.
- 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.
- Conclude whether, in our judgment, 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 a reasonable period of time.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, during an audit conducted in accordance with generally accepted auditing standards, the auditor must identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. As part of this process, the auditor designs and performs audit procedures responsive to those risks, which includes examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditor must obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. However, the audit is not for the purpose of expressing an opinion on the effectiveness of Bor Restoration's internal control, and accordingly, no such opinion is expressed.
The auditor also evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, and evaluates the overall presentation of the financial statements. Finally, the auditor concludes whether there are conditions or events that raise substantial doubt about Bor Restoration's ability to continue as a going concern for a reasonable period of time.