What should the audit procedures for Care Plus Medical Ucc be responsive to?
Care_Plus_Medical_Ucc Franchise · 2024 FDDAnswer from 2024 FDD Document
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of 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 GAAS 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 judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the 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 financial statements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 41)
What This Means (2024 FDD)
According to Care Plus Medical Ucc's 2024 Franchise Disclosure Document, the audit procedures should be responsive to the risks of material misstatement of the financial statements, whether due to fraud or error. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
The auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. The auditor must identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error.
These procedures are designed to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, and to issue an auditor's report that includes an opinion. However, reasonable assurance is not absolute, and there is always a risk that a material misstatement may not be detected, especially if it results from fraud involving collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that they would influence the judgment made by a reasonable user based on the financial statements. This means Care Plus Medical Ucc franchisees and potential investors should be aware that while audits provide a high level of assurance, they do not guarantee complete accuracy, and some level of risk remains.