What is the auditor's objective in auditing City Publications' financial statements?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
ncial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether 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 one year after the date that the financial statements are issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
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- 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.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the auditor's primary objective is to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. This assurance allows the auditor to issue a report that includes their opinion on the fairness and accuracy of the financial statements. The auditor's report essentially confirms whether the financial statements present a true and fair view of City Publications' financial position, results of operations, and cash flows. This report is for the benefit of the members of City Publications Franchise Group, Inc. in Atlanta, Georgia. The financial statements audited include the balance sheets as of December 31, 2024, and 2023, and the related statements of operations, shareholders' (deficit), and cash flows for the years then ended, along with the notes to the financial statements.
The auditor's assurance is not absolute, meaning there's no guarantee that all material misstatements will be detected. The risk of not detecting a misstatement resulting from fraud is higher than one resulting from error because fraud may involve intentional concealment. Material misstatements are those that could influence the judgment of a reasonable user of the financial statements.
To achieve their objective, the auditor follows Generally Accepted Auditing Standards (GAAS). This involves exercising professional judgment, maintaining skepticism, assessing the risks of material misstatement, examining evidence on a test basis, understanding internal controls (without expressing an opinion on their effectiveness), evaluating accounting policies and estimates, and concluding on City Publications' ability to continue as a going concern. The auditor also communicates with those charged with governance regarding the audit's scope, timing, significant findings, and internal control matters identified during the audit.