Is the purpose of obtaining an understanding of internal control relevant to the audit to express an opinion on the effectiveness of Chatime Franchise LLC's internal control?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
ures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- 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\neffectiveness
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the purpose of obtaining an understanding of internal control relevant to the audit is to design audit procedures that are appropriate in the circumstances. However, it is explicitly stated that this understanding is "not for the purpose of expressing an opinion on the effectiveness of Chatime Franchise LLC's internal control." The auditor's report clarifies that no such opinion is expressed.
This means that while the auditor assesses Chatime's internal controls to plan the audit, they do not provide a separate, formal opinion on how effective those controls are. The auditor's primary focus is on whether the financial statements are free from material misstatement.
For a prospective Chatime franchisee, this indicates that the audit provides assurance on the accuracy of the financial statements presented, but it does not offer a guarantee about the strength of Chatime's internal control systems. A franchisee may want to independently assess Chatime's internal controls or seek additional information from Chatime regarding their risk management and compliance procedures.