What should be concluded regarding C12 Group LLC's ability to continue as a going concern?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about The C12 Group, LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from 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 generally accepted auditing standards 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, including omissions, 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.
Independent Auditor's Report (Continued)
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.
- 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.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about The C12 Group LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 FDD, the independent auditor's report indicates that the financial statements of C12 Group present fairly, in all material respects, the company's financial position as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America. This positive opinion suggests that the auditors have not identified any significant issues that would cast substantial doubt on C12 Group's ability to continue as a going concern.
The management of C12 Group is responsible for evaluating whether there are conditions or events that could raise substantial doubt about the company's ability to continue as a going concern within one year after the financial statements are issued. The auditor's responsibility includes concluding whether, in their judgment, such conditions or events exist. The fact that the auditor issued an unqualified opinion implies they did not find such conditions.
Prospective franchisees should note that while the audit provides a level of assurance, it is not a guarantee. The auditor's opinion is based on the audit evidence obtained and their professional judgment. Factors that could affect C12 Group's future financial stability may arise after the period covered by the audit. Therefore, potential franchisees should conduct their own due diligence and consider seeking independent financial advice to assess the risks and opportunities associated with investing in a C12 Group franchise.