What must auditors conclude regarding Checkers' ability to continue as a going concern during the audit?
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, when performing an audit, the auditors must 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 made by considering all conditions and events in the aggregate.
Specifically, the auditors must evaluate the appropriateness of the accounting policies used by Checkers and the reasonableness of significant accounting estimates made by the management. They also evaluate the overall presentation of the consolidated financial statements to ensure they are fairly presented. This process involves exercising professional judgment and maintaining professional skepticism throughout the audit.
Furthermore, the auditors are required to communicate with those charged with governance regarding the planned scope and timing of the audit, any significant audit findings, and certain internal control-related matters identified during the audit. This communication ensures transparency and provides an opportunity for those in governance to address any concerns raised during the audit process.
In summary, the audit aims to provide reasonable assurance that the financial statements are free of material misstatement, whether due to fraud or error. The auditor's conclusion about Checkers' ability to continue as a going concern is a critical component of this assurance.