What does the auditor consider when evaluating the reasonableness of significant accounting estimates made by Checkersrallys' management?
Checkersrallys 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 Checkersrallys's 2025 Franchise Disclosure Document, the auditor evaluates the reasonableness of significant accounting estimates made by management. This evaluation is part of a broader audit performed in accordance with US Generally Accepted Auditing Standards (GAAS). The auditor's role is to ensure that the financial statements are presented fairly and are free from material misstatement, whether due to fraud or error.
To achieve this, the auditor exercises professional judgment and maintains professional skepticism throughout the audit. They identify and assess the risks of material misstatement in the financial statements and design audit procedures to respond to these risks. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also obtains an understanding of Checkersrallys's internal control relevant to the audit to design appropriate audit procedures, although they do not express an opinion on the effectiveness of the company's internal control.
In addition to evaluating accounting estimates, the auditor also assesses the appropriateness of the accounting policies used by Checkersrallys and the overall presentation of the financial statements. Furthermore, the auditor considers whether there are conditions or events that raise substantial doubt about Checkersrallys's ability to continue as a going concern. The auditor is required to communicate with those charged with governance regarding the scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit.