What is the auditor's responsibility regarding the communication of certain internal control-related matters for Checkersrallys?
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 is 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 is a standard practice in audits conducted in accordance with US GAAS (Generally Accepted Auditing Standards).
For a prospective Checkersrallys franchisee, this means that the audit of Checkersrallys's financial statements includes a review of internal controls, and any significant issues found are communicated to those overseeing the company. However, it's important to note that the auditor does not express an opinion on the overall effectiveness of Checkersrallys's internal control system. The audit is designed to provide reasonable assurance that the financial statements are free from material misstatement.
This communication helps ensure transparency and accountability in the financial reporting process. While the auditor's communication focuses on internal control matters identified during the audit, it does not provide a comprehensive assessment of all internal controls. Franchisees should be aware that the audit's primary goal is to assess the fairness of the financial statements, not to guarantee the absence of any internal control weaknesses.
Therefore, while the audit provides a level of assurance, potential franchisees should conduct their own due diligence to fully understand the financial health and internal control environment of Checkersrallys. This may involve consulting with financial advisors and legal counsel to review the audited financial statements and related disclosures.