What significant accounting estimates made by C12 Group's management does the auditor evaluate?
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.
- 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.
Use of Estimates: The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements, and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 FDD, the auditor evaluates the reasonableness of significant accounting estimates made by C12 Group's management. This includes assessing the appropriateness of the accounting policies used and the overall presentation of the financial statements. The auditor also determines if there are conditions or events that raise substantial doubt about C12 Group's ability to continue as a going concern.
Specifically, management is required to evaluate whether there are conditions or events 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. This evaluation is a critical part of preparing the financial statements and involves considering various factors that could impact the company's financial stability.
In addition, C12 Group's management makes estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting year. These estimates are necessary because some financial statement items cannot be precisely measured and require judgment. Actual results could differ from those estimates. For example, the collectability of the note receivable from the sale of C12 Atlanta requires estimation.
Prospective franchisees should understand that these accounting estimates can significantly impact the financial statements and, therefore, the perceived financial health of C12 Group. It is important for potential franchisees to review the financial statements and related notes carefully and to seek professional advice if they have any questions or concerns about the accounting estimates or the company's financial condition.