During the audit of Circle K's consolidated financial statements, is an opinion expressed on the effectiveness of the company's internal control?

According to Circle K's 2025 Franchise Disclosure Document, the independent auditor does not express an opinion on the effectiveness of the company's internal control. The audit is conducted to obtain a reasonable assurance that the financial statements are free from material misstatement. As part of the audit, the auditor gains an understanding of internal controls relevant to the audit, but not for the purpose of expressing an opinion on the effectiveness of those controls.

The auditor's responsibilities include identifying and assessing the risks of material misstatement in the financial statements, whether due to fraud or error. They design and perform audit procedures to respond to those risks, including examining evidence related to the amounts and disclosures in the financial statements. The auditor also evaluates the appropriateness of accounting policies and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements.

Prospective Circle K franchisees should understand that while the financial statements are audited for accuracy and compliance with accounting standards, the audit does not provide a separate opinion on the effectiveness of Circle K's internal controls. This is a common practice in financial auditing, where the focus is on the fair presentation of the financial statements rather than a specific assessment of internal control systems.

This information is typically found in the 'Report of Independent Auditors' section within Item 21, which covers the financial statements of the company. Franchisees may want to inquire separately about Circle K's internal control environment and any related assessments or certifications the company may have obtained.