What is the auditor's responsibility regarding internal control relevant to the audit of Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 FDD, the auditor's responsibility regarding internal control at Carbones Pizzeria is to understand it well enough to design appropriate audit procedures, but not to express an opinion on its effectiveness. The auditor's objective is to obtain reasonable assurance that the consolidated financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes their opinion.
The auditor's procedures include examining evidence regarding the amounts and disclosures in the consolidated financial statements on a test basis. However, the audit is not a guarantee that all misstatements will be detected. There's a higher risk of not detecting a material misstatement resulting from fraud compared to error, as fraud may involve actions like collusion or forgery.
The auditor must exercise professional judgment and maintain professional skepticism throughout the audit. They are also required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control related matters identified during the audit. This communication ensures transparency and provides insights to those overseeing the financial reporting process at Carbones Pizzeria.