What is the first action the auditor takes when performing an audit of C12 Group?
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.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 FDD, when performing an audit in accordance with generally accepted auditing standards, the first action the auditor takes is to exercise professional judgment and maintain professional skepticism throughout the audit. This means the auditor must approach the audit with a questioning mind and critically assess the information provided by C12 Group.
Following this initial step, the auditor will then identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. Based on this risk assessment, the auditor will design and perform audit procedures responsive to those risks, which may include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
These steps are crucial for ensuring the accuracy and reliability of C12 Group's financial statements. By exercising professional judgment and skepticism, the auditor aims to provide reasonable assurance that the financial statements are free from material misstatement. This process helps protect the interests of stakeholders who rely on these financial statements for making informed decisions.