What is the auditor's responsibility regarding professional judgment and skepticism during the audit of Cicis?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- 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. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the 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 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 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the auditor has specific responsibilities regarding professional judgment and skepticism during the audit of the company's financial statements. The auditor is required to exercise professional judgment and maintain professional skepticism throughout the audit process. This means the auditor must make informed decisions based on their knowledge and experience, while also maintaining a questioning mind and critically assessing the information provided.
The auditor's responsibilities extend to identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error. They must design and perform audit procedures that are responsive to these risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. This involves scrutinizing the financial records and related information to ensure accuracy and compliance with accounting standards.
Furthermore, the auditor must obtain an understanding of internal control relevant to the audit in order to design appropriate audit procedures. However, the auditor is not expressing an opinion on the effectiveness of Cicis's internal control. The auditor also evaluates the appropriateness of accounting policies used, the reasonableness of significant accounting estimates made by management, and the overall presentation of the financial statements. Finally, the auditor must conclude whether there are conditions or events that raise substantial doubt about Cicis's ability to continue as a going concern for a reasonable period of time.
These responsibilities are in accordance with auditing standards generally accepted in the United States of America (GAAS). The auditor is also required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit. This ensures transparency and accountability in the audit process.