What is the auditor's responsibility regarding Casiola's internal controls during the financial statement audit?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
In performing an audit in accordance with generally accepted auditing standards, we:
- 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 Casiola Franchise, LLC's internal control. Accordingly, no such opinion is expressed.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, the auditor's responsibility regarding internal controls is to obtain an understanding of internal control relevant to the audit. This understanding is used to design audit procedures that are appropriate for the circumstances.
However, the auditor's objective is not to express an opinion on the effectiveness of Casiola's internal control. Therefore, the auditor's report will not include an opinion on the company's internal control.
In practical terms, this means that while the auditor will assess Casiola's internal controls to plan the audit, they are not providing any assurance to a prospective franchisee that these controls are effective. A prospective franchisee should not rely on the auditor's work as a guarantee that Casiola has a strong internal control environment.