What is the auditor's responsibility regarding the design of audit procedures responsive to the risks of material misstatement of the financial statements 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's responsibility includes identifying and assessing the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. The auditor then designs and performs audit procedures that are responsive to these identified risks. These procedures involve examining evidence regarding the amounts and disclosures in the consolidated financial statements on a test basis.
Furthermore, the auditor obtains an understanding of internal control relevant to the audit. This understanding is used to design audit procedures that are appropriate for the specific circumstances, but it's important to note that the audit does not aim to express an opinion on the effectiveness of Checkersrallys's internal control. Consequently, the auditor's report does not include such an opinion.
In addition to designing audit procedures, the auditor evaluates the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by Checkersrallys's management. The auditor also evaluates the overall presentation of the consolidated financial statements to ensure they are fairly presented.
Finally, the auditor must conclude whether there are conditions or events that, when considered in the aggregate, raise substantial doubt about Checkersrallys's ability to continue as a going concern for a reasonable period. The auditor is also 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.