In the audit of Brueggers Bagels, what must the auditors evaluate regarding the accounting policies?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with US GAAS, we:
- x Exercise professional judgment and maintain professional skepticism throughout the audit.
- x Identify and assess the risks of material misstatement of the consolidated 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 consolidated financial statements.
- x 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.
- x 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 consolidated financial statements.
- x 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 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, during the audit of the company's consolidated financial statements, the auditors must evaluate the appropriateness of the accounting policies used by management. They also assess the reasonableness of significant accounting estimates made by management. This evaluation is part of ensuring that the financial statements provide a fair and accurate representation of the company's financial position and performance.
This process involves the auditors exercising professional judgment and maintaining professional skepticism throughout the audit. They identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. These procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
For a prospective Brueggers Bagels franchisee, this means that the financial information presented in the FDD has been scrutinized by independent auditors. The auditors have assessed whether Brueggers Bagels' accounting practices are in line with generally accepted accounting principles and whether the estimates used in the financial statements are reasonable. This provides a level of assurance that the financial data is reliable and can be used to make informed decisions about investing in a Brueggers Bagels franchise.