What aspects of Bumble Roofing's accounting are evaluated by the auditors?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements can arise from fraud or error and are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
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 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.
- 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 consolidated 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.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
Emphasis of Matter – Related Party Transactions
As discussed in Notes 2, 5, 6, and 7, the Company has significant transactions with related parties.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, the auditors evaluate several aspects of the company's accounting practices to ensure the consolidated financial statements are free from material misstatement, whether due to fraud or error. The auditors' objectives include obtaining reasonable assurance about the financial statements and issuing a report that includes their opinion. This involves assessing risks of material misstatement, examining evidence related to amounts and disclosures, and understanding internal controls relevant to the audit.
The auditors evaluate the appropriateness of the accounting policies used by Bumble Roofing's management, as well as the reasonableness of significant accounting estimates. They also assess the overall presentation of the consolidated financial statements. The audit is conducted in accordance with auditing standards generally accepted in the United States of America (GAAS). The auditors must exercise professional judgment and maintain professional skepticism throughout the audit.
Furthermore, the auditors must determine if there are any conditions or events that raise substantial doubt about Bumble Roofing's ability to continue as a going concern. They are also 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. The FDD also notes that the company has significant transactions with related parties, which the auditors would likely scrutinize to ensure they are properly disclosed and accounted for.