Does the auditor express an opinion on the effectiveness of Checkers' internal control?
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the auditor does not express an opinion on the effectiveness of the company's internal control. The audit is conducted to design audit procedures appropriate to the circumstances, but not to provide an opinion on the effectiveness of Checkers' internal control.
This means that while the auditor assesses internal controls to plan the audit, they do not issue a separate opinion verifying the strength and reliability of those controls. A prospective franchisee should understand that the financial statements have been audited for accuracy and fair presentation, but the audit does not guarantee that Checkers' internal controls are effective in preventing errors or fraud.
For a potential Checkers franchisee, this highlights the importance of conducting thorough due diligence. While the financial statements are audited, the absence of an opinion on internal controls suggests a need to independently assess the company's operational and financial processes. Understanding the strength of Checkers' internal controls can provide additional insight into the overall risk and stability of the franchise system.