What do the audit procedures include when examining evidence regarding amounts and disclosures in City Publications' financial statements?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, we:
ese CPALLC
- 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 CITY PUBLICATIONS FRANCHISE GROUP, INC.'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 CITY PUBLICATIONS FRANCHISE GROUP, INC.'s ability to continue as a going concern for a reasonable period of time.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the audit procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. This means the auditors do not review every single transaction or disclosure, but rather select a sample to evaluate.
The auditors' responsibilities also include identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, and designing and performing audit procedures responsive to those risks. This involves exercising professional judgment and maintaining professional skepticism throughout the audit to ensure that the financial statements are free from material misstatements.
Furthermore, the auditors obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. However, the audit does not express an opinion on the effectiveness of City Publications' internal control. The auditors 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.
Finally, the auditors conclude whether, in their judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City Publications' ability to continue as a going concern for a reasonable period of time. This comprehensive approach aims to provide reasonable assurance that the financial statements are presented fairly in all material respects.