When auditing Checkers' consolidated financial statements, what should the auditors identify and assess?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with US GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the consolidated 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 consolidated 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 effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the auditors, when performing an audit in accordance with US GAAS (auditing standards generally accepted in the United States of America), must exercise professional judgment and maintain professional skepticism throughout the audit. They need to identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. As part of this, they design and perform audit procedures responsive to those risks, including examining evidence regarding the amounts and disclosures in the consolidated financial statements on a test basis.
Furthermore, the auditors must obtain an understanding of internal control relevant to the audit. This understanding is used to design audit procedures appropriate for the circumstances, but it's not for expressing an opinion on the effectiveness of Checkers' internal control. The auditors also evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. They also evaluate the overall presentation of the consolidated financial statements.
Finally, the auditors conclude whether there are conditions or events that, considered in the aggregate, raise substantial doubt about Checkers' ability to continue as a going concern for a reasonable period. The auditors are required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit. This comprehensive approach ensures that the financial statements provide a fair and accurate representation of Checkers' financial position and performance.