What is the auditor's objective regarding the consolidated financial statements of Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Our objectives are to obtain reasonable assurance about whether the consolidated 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 are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgement made by a reasonable user based on the consolidated financial statements.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 FDD, the auditor's objective, as stated in the Independent Auditor's Report, is to obtain reasonable assurance about whether the consolidated financial statements of M & T Pizza Incorporated and Subsidiaries are free from material misstatement, whether due to fraud or error. The auditor aims to issue a report that includes their opinion on the financial statements. The auditor's report for the 2024 and 2023 financial statements were prepared by DNJ & Associates.
Reasonable assurance, while a high level of assurance, is not absolute. Therefore, an audit conducted following generally accepted auditing standards does not guarantee the detection of every material misstatement. The risk of not detecting a material misstatement resulting from fraud is higher than that of one resulting from error because fraud may involve intentional actions like collusion, forgery, or misrepresentation.
For a prospective Carbones Pizzeria franchisee, this means that the financial statements presented in the FDD have been examined by an independent auditor who has provided an opinion on their fairness and accuracy. However, it is important to recognize that the audit provides reasonable, but not absolute, assurance. Franchisees should carefully review the financial statements and related notes, and if necessary, consult with their own financial advisors to fully understand the financial position of Carbones Pizzeria.