What is the auditor required to conclude regarding Checkers' ability to continue as a going concern?
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the auditor is required to conclude whether there are conditions or events that raise substantial doubt about Checkers' ability to continue as a going concern for a reasonable period of time. This assessment is a critical part of the audit process, ensuring that the financial statements provide a fair and accurate representation of the company's financial health. The auditor's conclusion is based on their professional judgment and evaluation of various factors.
The auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They must identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error, and design audit procedures to address those risks. This involves examining evidence related to the amounts and disclosures in the financial statements on a test basis. The auditor also needs to understand Checkers' internal control system to design appropriate audit procedures, although they do not express an opinion on the effectiveness of the company's internal control.
Furthermore, the auditor evaluates the appropriateness of the accounting policies used by Checkers and the reasonableness of significant accounting estimates made by management. This comprehensive evaluation leads to the auditor's conclusion on whether there are conditions or events that raise substantial doubt about Checkers' ability to continue as a going concern. The auditor is also 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.