What is the auditor's responsibility regarding internal controls when auditing Chesters International, LLC, and is an opinion expressed on their effectiveness?

According to Chesters's 2025 Franchise Disclosure Document, the auditor's responsibility regarding internal controls is to obtain an understanding of internal control relevant to the audit to design audit procedures appropriate for the circumstances. However, this understanding is not for the purpose of expressing an opinion on the effectiveness of Chesters's internal control. Therefore, the auditor does not express an opinion on the effectiveness of Chesters's internal control.

This means that while the auditors will review Chesters's internal controls to inform their audit procedures, they are not specifically evaluating whether those controls are effective. The audit is focused on the financial statements themselves, not on the systems Chesters has in place to ensure accuracy.

For a prospective franchisee, this highlights the importance of conducting their own due diligence regarding Chesters's financial management and internal controls. While the financial statements are audited, the effectiveness of the underlying systems is not explicitly assessed by the auditor. It is also important to note that the auditors are required to communicate with those charged with governance regarding the planned scope and timing of the audits, significant audit findings, and certain internal control related matters that were identified during the audits.