What is the auditor's responsibility regarding the evaluation of accounting policies used by 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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the auditor has a responsibility to evaluate the appropriateness of the accounting policies used by the company. This evaluation also extends to the reasonableness of significant accounting estimates made by the management team. Furthermore, the auditor is responsible for evaluating the overall presentation of the consolidated financial statements.
In simpler terms, the auditor must assess whether Checkersrallys is using suitable accounting methods and if the financial statements are presented in a clear and accurate manner. This ensures that the financial information provided to potential franchisees and other stakeholders is reliable and trustworthy. The auditor's role is to provide an independent opinion on the fairness of the financial statements, giving confidence to those who rely on them.
This evaluation is a standard part of an audit performed in accordance with US GAAS (Generally Accepted Auditing Standards). It aims to detect any material misstatements, whether due to fraud or error, and to ensure that the financial statements provide a true and fair view of Checkersrallys's financial position and performance. The auditor's opinion adds credibility to the financial statements, which is crucial for making informed business decisions.
Prospective franchisees should understand that this audit process is designed to protect their interests by ensuring the financial information provided by Checkersrallys is reliable. While the audit provides reasonable assurance, it is not an absolute guarantee against misstatements, especially those resulting from fraud. Therefore, it's essential for franchisees to carefully review the financial statements and seek professional advice if needed.