What must be evaluated regarding accounting policies and estimates during a Cicis audit?
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, during an audit, the appropriateness of the accounting policies used by Cicis and the reasonableness of significant accounting estimates made by the management must be evaluated. Additionally, the overall presentation of the financial statements is also evaluated during the audit.
This evaluation is a standard part of an audit conducted in accordance with Generally Accepted Auditing Standards (GAAS). The auditor must exercise professional judgment and maintain professional skepticism throughout the audit to ensure that the financial statements are presented fairly and accurately. This includes assessing the risk of material misstatement, whether due to fraud or error, and designing audit procedures responsive to those risks.
For a prospective Cicis franchisee, this means that the financial statements provided in the FDD have been subjected to scrutiny by an independent auditor. The auditor's evaluation provides a level of assurance that the accounting policies are appropriate and the estimates are reasonable. However, it is important to note that an audit provides reasonable, but not absolute, assurance. Franchisees should still carefully review the financial statements and consider seeking advice from their own financial advisors.