When auditing C12 Group, is an opinion expressed on the effectiveness of The C12 Group, LLC's internal control?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
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 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 C12 Group, LLC's internal control. Accordingly, no such opinion is expressed.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 FDD, the independent auditor's report for C12 Group specifically states that while an understanding of internal control is obtained during the audit, the purpose is not to express an opinion on the effectiveness of C12 Group's internal control. Therefore, the auditor's report explicitly confirms that no such opinion is provided. This means that the audit focuses on the financial statements themselves, rather than evaluating the strength and reliability of the company's internal controls.
This disclaimer is a standard practice in financial auditing. Auditors are primarily concerned with whether the financial statements present a fair and accurate view of the company's financial position and performance. While they do assess internal controls to design appropriate audit procedures, this assessment is not for the purpose of forming a separate opinion on those controls.
For a prospective C12 Group franchisee, this means they should not expect the audit report to provide any assurance about the effectiveness of the company's internal controls. If a franchisee is particularly interested in the internal control environment at C12 Group, they may need to conduct their own due diligence or seek additional information from the franchisor.