What is the auditor's responsibility regarding Cinnaholic's ability to continue as a going concern?

According to Cinnaholic's 2025 Franchise Disclosure Document, the auditor has a responsibility to evaluate Cinnaholic Franchising, LLC's ability to continue as a going concern. As part of the audit, the auditor must conclude whether there are conditions or events that raise substantial doubt about Cinnaholic's ability to continue operating for a reasonable period of time. This evaluation is based on the auditor's professional judgment, considering all relevant conditions and events in the aggregate.

To fulfill this responsibility, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit. They 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 evidence regarding the amounts and disclosures in the financial statements on a test basis.

The auditor also obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. However, the auditor's report does not include an opinion on the effectiveness of Cinnaholic's internal control. The auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements.

Finally, the auditor is 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 communication ensures that relevant parties are informed about the audit process and its findings, including any concerns about Cinnaholic's ability to continue as a going concern.