Over what period of time should the ability of Carbones Pizzeria to continue as a going concern be evaluated?

According to the 2025 Carbones Pizzeria FDD, the auditor must evaluate whether there are conditions or events that raise substantial doubt about M&T Pizza Incorporated and Subsidiaries' ability to continue as a going concern for a reasonable period of time. The auditor's responsibility is to determine if there is substantial doubt about the company's ability to continue operating.

The FDD does not specify a particular length of time to be considered as a "reasonable period of time." This determination is left to the auditor's judgment based on the specific circumstances and financial condition of M&T Pizza Incorporated and Subsidiaries. Typically, auditors consider a period of one year from the date of the financial statements when evaluating the going concern assumption.

For a prospective Carbones Pizzeria franchisee, this means that the financial statements included in the FDD should be reviewed carefully to assess the franchisor's financial stability. While the auditor is responsible for evaluating the going concern assumption, franchisees should also conduct their own due diligence and seek professional advice to determine if the franchisor is financially sound and likely to remain in business for the term of their franchise agreement. A potential franchisee might want to ask Carbones Pizzeria about the factors the auditor considered when assessing the company's ability to continue as a going concern.