What is the auditor required to conclude regarding Checkersrallys' ability to continue as a going concern?
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 Checkersrallys's 2025 Franchise Disclosure Document, the auditor is required to conclude whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern for a reasonable period of time. This assessment is a critical part of the audit process. The auditor's responsibility is to evaluate the appropriateness of accounting policies, the reasonableness of significant accounting estimates made by management, and the overall presentation of the consolidated financial statements.
The auditor's conclusion is based on their professional judgment and skepticism, which they must maintain throughout the audit. They 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. This includes examining evidence regarding the amounts and disclosures in the consolidated financial statements on a test basis.
For a potential Checkersrallys franchisee, this means that the financial statements have been scrutinized by an independent auditor who has specifically considered whether Checkersrallys is likely to remain a viable business. If the auditor has concerns about the company's ability to continue as a going concern, this would likely be disclosed in the audit report, which could impact a franchisee's decision to invest. The auditor's opinion provides a level of assurance, although it is not a guarantee, about the financial health and stability of Checkersrallys.