What is Chesters' management responsible for regarding internal controls related to the financial statements?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Chester's International, LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Source: Item 21 — **FINANCIAL STATEMENTS (FDD page 48)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, management is responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of the company's financial statements. These controls should ensure the financial statements are free from material misstatement, whether due to fraud or error. This responsibility aligns with standard accounting practices, ensuring the accuracy and reliability of financial reporting.
In addition to internal controls, Chesters's management is also required to evaluate whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern within one year after the financial statements are issued. This evaluation is a critical component of financial statement preparation, as it addresses the company's solvency and operational viability.
The independent auditor's report included in the FDD emphasizes that the audit aims to provide an opinion on whether the financial statements present fairly the financial position, results of operations, and cash flows of Chesters in accordance with accounting principles generally accepted in the United States of America. While the auditors assess internal controls to design appropriate audit procedures, they do not express an opinion on the effectiveness of Chesters's internal control system. This means that while the auditors consider internal controls, the responsibility for establishing and maintaining these controls rests solely with the management of Chesters.