What is the auditor's responsibility regarding the evaluation of the overall presentation 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.
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 overall presentation of the consolidated financial statements. This evaluation is part of performing an audit in accordance with US GAAS (auditing standards generally accepted in the United States of America).
Specifically, the auditor must evaluate the appropriateness of the accounting policies used by Checkersrallys's management and the reasonableness of significant accounting estimates made by management. This goes hand-in-hand with evaluating the overall presentation of the financial statements to ensure they are fairly presented.
In addition to evaluating the presentation of the financial statements, the auditor's responsibilities include identifying and assessing the risks of material misstatement in the financial statements, whether due to fraud or error. They also need to obtain an understanding of internal control relevant to the audit and conclude whether there are conditions or events that raise substantial doubt about Checkersrallys's ability to continue as a going concern. These responsibilities are crucial for providing reasonable assurance that the financial statements are free from material misstatement.
For a prospective Checkersrallys franchisee, this means that the financial statements included in the FDD have been examined by an independent auditor who has assessed whether they are presented fairly and in accordance with accounting principles. This provides a level of confidence in the accuracy and reliability of the financial information, which is essential for making an informed investment decision.