Does the auditor express an opinion on the effectiveness of Bumper Man's internal control?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with U.S. generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. Accordingly, I express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to the 2025 Bumper Man Franchise Disclosure Document, the auditor does not express an opinion on the effectiveness of the company's internal control. The auditor's report states that while the audit includes consideration of internal controls relevant to the preparation and fair presentation of financial statements, it is not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Therefore, the auditor explicitly states, "Accordingly, I express no such opinion."
This means that the audit focused on whether the financial statements are presented fairly and in accordance with U.S. generally accepted accounting principles, rather than specifically evaluating the strength and reliability of Bumper Man's internal controls. Internal controls are processes designed to ensure the integrity of financial reporting, compliance with laws and regulations, and effectiveness and efficiency of operations.
For a potential Bumper Man franchisee, this indicates that the financial statements have been reviewed for accuracy and fairness, but there is no independent assessment of the systems and procedures Bumper Man has in place to prevent errors or fraud. While not uncommon, especially for smaller companies, franchisees may want to inquire further about Bumper Man's internal control practices to gain a better understanding of the company's financial management and risk mitigation strategies.