What is the auditor required to do regarding internal control when auditing Bw Premier Collection?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
ibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor's 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 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 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 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.
Report of Independent Auditors
• 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.
Other Information
Management is responsible for the other information.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to Bw Premier Collection's 2025 Franchise Disclosure Document, the auditor's responsibilities regarding internal control are specific and limited. The auditor's objective is to gain an understanding of internal control relevant to the audit to design appropriate audit procedures, but not to express an opinion on the effectiveness of the company's internal control. Therefore, the auditor's report will not include any opinion on Bw Premier Collection's internal controls.
The auditor must also communicate with those in charge of governance regarding the planned scope and timing of the audit, any significant findings, and certain internal control-related issues identified during the audit. This communication ensures that relevant parties are informed of any potential weaknesses or issues discovered during the audit process.
This approach is standard in financial auditing, where the focus is on the accuracy and reliability of the financial statements rather than a comprehensive assessment of internal control systems. A prospective franchisee should be aware that while the audit provides some insight into internal control, it does not offer a guarantee of the effectiveness of those controls.