Does the auditor express an opinion on the effectiveness of Checkersrallys' internal control?
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to the 2025 FDD, the auditor does not express an opinion on the effectiveness of Checkersrallys' internal control. While performing the audit, the auditor obtains an understanding of internal control relevant to the audit to design appropriate audit procedures. However, this understanding is not for the purpose of expressing an opinion on the effectiveness of the company's internal control.
This means that the audit focuses on the financial statements themselves, ensuring they are free of material misstatement, rather than evaluating the systems and processes Checkersrallys has in place to maintain accurate financial reporting. The auditor's responsibility is to assess the risk of material misstatement and design audit procedures accordingly.
For a prospective franchisee, this implies that the financial statements have been reviewed for accuracy and adherence to accounting principles, but there is no independent assessment of the strength of Checkersrallys' internal controls. Franchisees may want to inquire separately about Checkersrallys' internal control practices and risk management procedures to gain a more complete understanding of the company's financial health and stability.