What is the auditor's responsibility regarding the appropriateness of accounting policies used in the consolidated financial statements of Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
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 consolidated 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 consolidated 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 Company'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 consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the auditor has a responsibility to evaluate the appropriateness of the accounting policies used in the preparation of the consolidated financial statements. This evaluation is part of a broader audit process conducted in accordance with generally accepted auditing standards. The auditor's objective is to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes their opinion.
To fulfill this responsibility, the auditor exercises professional judgment and maintains professional skepticism throughout the audit. They identify and assess the risks of material misstatement, design and perform audit procedures responsive to those risks, and obtain an understanding of internal control relevant to the audit. However, the auditor does not express an opinion on the effectiveness of the company's internal control.
In addition to evaluating accounting policies, the auditor also assesses the reasonableness of significant accounting estimates made by management and evaluates the overall presentation of the consolidated financial statements. The auditor also considers whether there are conditions or events that raise substantial doubt about Carbones Pizzeria's ability to continue as a going concern for a reasonable period of time. This comprehensive evaluation helps ensure that the financial statements provide a fair and accurate representation of the company's financial position and performance.