What ethical responsibilities are the auditors required to meet in relation to their audits of Checkers?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
riods June 17, 2023 through January 1, 2024 (Successor) and January 3, 2023 through June 16, 2023 (Predecessor), and the fiscal years ended January 2, 2023 (Predecessor) and January 3, 2022 (Predecessor) in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Adoption of New Accounting Standard
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in the fiscal year ended January 2, 2023 due to the adoption of ASU No. 2016-02, Leases.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether 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 one year after the date that the financial statements are available to be issued.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, both Ernst & Young LLP and Grant Thornton LLP, the accounting firms that audited Checkers' financial statements, are required to adhere to specific ethical responsibilities. These firms must be independent of the company and meet all ethical standards relevant to their audits, as dictated by auditing standards generally accepted in the United States of America (GAAS). This requirement ensures that the auditors maintain objectivity and impartiality throughout the audit process, which is crucial for the integrity and reliability of the financial statements.
Specifically, the auditors' 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 and perform audit procedures responsive to those risks. These procedures involve examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditors must also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, though they do not express an opinion on the effectiveness of the company's internal control.
Furthermore, the auditors are tasked with evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. They must also conclude whether there are conditions or events that raise substantial doubt about Checkers' ability to continue as a going concern. 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. These measures collectively ensure that the audit is conducted with due diligence and in accordance with established professional standards, providing a reliable assessment of Checkers' financial position for potential franchisees and other stakeholders.