What do the audit procedures for C12 Group include regarding evidence related to amounts and disclosures in the combined financial statements?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
atements 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 generally accepted auditing standards, 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\nerror, and design and perform audit procedures responsive to those risks. Such procedures include\nexamining, on a test basis, evidence regarding the amounts and disclosures in the combined 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\nestimates made by management, as well as evaluate the overall presentation of the combined financial statements.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, the audit procedures include examining evidence regarding the amounts and disclosures in the combined financial statements. This is done on a test basis as part of identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, and designing and performing audit procedures responsive to those risks.
This means that the auditor reviews a sample of transactions and disclosures to ensure they are accurate and comply with accounting standards. The auditor's objective is to obtain reasonable assurance that the financial statements are free from material misstatement. However, it's important to note that reasonable assurance is not absolute, and there is always a risk that a material misstatement may not be detected.
For a prospective C12 Group franchisee, this indicates that the financial statements have been subjected to scrutiny by an independent auditor. While it doesn't guarantee the complete absence of errors or fraud, it does provide a level of confidence in the reliability of the financial information presented. Franchisees may want to review the auditor's report and the financial statements carefully as part of their due diligence process.