What must the auditor evaluate regarding accounting policies used by Boulder Designs?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, 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 — RECEIPT (FDD pages 50–217)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, the auditor must evaluate the appropriateness of the accounting policies used by the company. This evaluation is part of a broader audit conducted in accordance with auditing standards generally accepted in the United States of America (GAAS). The auditor's role is to exercise professional judgment and maintain professional skepticism throughout the audit.
In addition to evaluating accounting policies, the auditor must also assess the reasonableness of significant accounting estimates made by Boulder Designs's management and evaluate the overall presentation of the financial statements. The audit procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also needs to obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, although they do not express an opinion on the effectiveness of the company's internal control.
The auditor's responsibilities extend to identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, and designing and performing audit procedures responsive to those risks. Furthermore, the auditor must conclude whether there are conditions or events that raise substantial doubt about Boulder Designs's ability to continue as a going concern for a reasonable period of time.
Ultimately, the auditor's objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, providing an opinion on whether the financial statements present fairly the financial position, results of operations, and cash flows of Boulder Designs in accordance with accounting principles generally accepted in the United States of America.