What is one of the first actions auditors take when performing an audit of Chatime?

According to Chatime's 2025 Franchise Disclosure Document, when performing an audit, auditors first exercise professional judgment and maintain professional skepticism throughout the audit. They then 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. As part of this, they examine evidence regarding the amounts and disclosures in the financial statements on a test basis.

This means that the auditors approach the audit with a questioning mind and critically assess the information provided by Chatime. They look for potential errors or fraudulent activities that could significantly impact the accuracy of the financial statements. The auditors don't just accept the financial statements at face value; they scrutinize the data and supporting documentation to ensure everything is presented fairly and accurately.

For a prospective Chatime franchisee, this indicates that Chatime's financial records are subject to scrutiny by independent auditors. This process helps ensure the financial information provided to potential franchisees is reliable and trustworthy. Franchisees can have more confidence in the financial health and stability of Chatime as a franchise opportunity because of these auditing procedures.