What is the scope of the review performed by the independent accountant for Coffee News, compared to an audit?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
We have reviewed the accompanying financial statements of 2703203 Manitoba, Ltd. (a corporation), which comprise the balance sheets—income tax basis as of July 31, 2024 and 2023, and the related statements of operations and accumulated deficit—income tax basis and cash flows—income tax basis for the years then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management's financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, an independent accountant's review is substantially narrower in scope than a full audit. The review primarily involves applying analytical procedures to management's financial data and making inquiries of company management.
Unlike an audit, the objective of a review is not to express an opinion on the financial statements as a whole. Consequently, the accountant does not provide an opinion on the financial statements' accuracy or reliability. Instead, the review aims to provide limited assurance, indicating whether the accountant is aware of any material modifications needed for the financial statements to conform to the accounting basis used for income tax purposes.
For a prospective Coffee News franchisee, this means the financial statements included in the FDD have undergone a less rigorous examination than if they had been fully audited. While a review can still provide some level of comfort, it's essential to recognize its limitations and consider seeking additional financial due diligence if desired.