What aspects of Coffee News' accounting policies and estimates do auditors evaluate?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
ol. Misstatements, including omissions, 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 generally accepted auditing standards, 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 Coffee News USA, 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.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News' 2025 Franchise Disclosure Document, the auditors evaluate the appropriateness of the accounting policies used by management and the reasonableness of significant accounting estimates made by management. The auditors also evaluate the overall presentation of the financial statements.
Specifically, the auditors' responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. As part of this, they design and perform audit procedures responsive to those risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditors obtain an understanding of internal control relevant to the audit in order to design appropriate audit procedures. However, they do not express an opinion on the effectiveness of Coffee News' internal control. The auditors also conclude whether there are conditions or events that raise substantial doubt about Coffee News' ability to continue as a going concern for a reasonable period of time.