What level of assurance does an audit provide for Bw Premier Collection's financial statements?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to Bw Premier Collection's 2025 Franchise Disclosure Document, an audit aims to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. The auditor issues a report including their opinion on the financial statements. The audit is conducted following Generally Accepted Auditing Standards (GAAS).
Reasonable assurance, as stated in the FDD, is considered a high level of assurance, but it is not absolute. Therefore, an audit does not guarantee that all material misstatements will be detected. The risk of not detecting a misstatement resulting from fraud is higher than from error because fraud may involve intentional concealment or misrepresentation.
During the audit, the auditor exercises professional judgment and maintains skepticism, assesses the risk of material misstatement, examines evidence on a test basis, and evaluates the appropriateness of accounting policies and estimates. They also consider Bw Premier Collection's ability to continue as a going concern. Ultimately, the auditor's objective is to provide an opinion on whether the financial statements present fairly the company's financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States of America.