Does the auditor express an opinion on the effectiveness of Browns Chicken, LLC's internal control?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with generally accepted accounting 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 Brown's Chicken, LLC'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 Brown's Chicken, LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the auditor does not express an opinion on the effectiveness of Browns Chicken, LLC's internal control. The auditor's objectives are to obtain reasonable assurance about whether the financial statements are free from material misstatement and to issue an auditor's report that includes their opinion on the financial statements themselves.
The audit procedures are designed to be appropriate to the circumstances, but specifically not for the purpose of expressing an opinion on the effectiveness of Browns Chicken's internal control. The auditor's report outlines the responsibilities of both the management and the auditor in relation to the financial statements. Management is responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements.
This means that while the auditor gains an understanding of internal controls to design appropriate audit procedures, they do not evaluate or provide an opinion on how well those controls function. A prospective franchisee should be aware that the financial statements have been audited for accuracy and fair presentation, but there is no independent assessment of the effectiveness of Browns Chicken's internal controls over financial reporting.