What is the auditor's responsibility regarding internal controls during the audit of C12 Group?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
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 auditor's responsibility regarding C12 Group's internal controls is to obtain an understanding of internal control relevant to the audit. This understanding is used to design audit procedures that are appropriate for the circumstances. However, the audit is not performed for the purpose of expressing an opinion on the effectiveness of C12 Group's internal control, and therefore, no such opinion is expressed.
This means that while the auditor must consider C12 Group's internal controls to plan the audit, they are not responsible for verifying or guaranteeing the effectiveness of these controls. The auditor's focus is on whether the financial statements are free from material misstatement.
Prospective franchisees should understand that the audit provides assurance on the financial statements, but it does not provide assurance that C12 Group's internal controls are effective. If a franchisee wants to assess the strength of C12 Group's internal controls, they would need to conduct a separate assessment specifically for that purpose.