What is the auditor's responsibility regarding accounting policies used in Cicis' financial statements?

According to Cicis' 2025 Franchise Disclosure Document, the auditor has specific responsibilities regarding the accounting policies used in the company's financial statements. As part of performing an audit in accordance with Generally Accepted Auditing Standards (GAAS), the auditor must evaluate the appropriateness of the accounting policies Cicis uses. This evaluation also extends to the reasonableness of significant accounting estimates made by the management team, and the auditor must evaluate the overall presentation of the financial statements.

This means the auditor must determine if the accounting policies selected by Cicis are suitable for their business and industry, and that they comply with U.S. GAAP. The auditor also assesses whether the estimates made by Cicis' management, such as those related to potential losses from uncollectible accounts receivable, are reasonable and well-supported. By evaluating these aspects, the auditor aims to provide an opinion on whether the financial statements present a fair view of Cicis' financial position, results of operations, and cash flows.

Furthermore, the auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They must also identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. These procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. The auditor must also obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

In summary, the auditor's role is to ensure that Cicis' financial statements are presented fairly and in accordance with accounting principles, providing assurance to potential franchisees and other stakeholders about the reliability of the financial information. This involves a thorough review of accounting policies, estimates, and overall presentation, as well as adherence to professional standards and ethical requirements.