What is Coffee News USA, Inc.'s management responsible for regarding internal control?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial 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 Coffee News USA, Inc.'s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, management is responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements. This responsibility ensures that the financial statements are free from material misstatement, whether due to fraud or error.
In practical terms, this means Coffee News's management must establish and maintain systems and procedures to accurately record and report financial data. These controls help to prevent errors and detect fraud, ensuring the reliability of the financial information provided to potential franchisees and other stakeholders. The management's role includes creating a control environment, assessing risks, implementing control activities, ensuring information and communication systems are effective, and monitoring these controls.
Prospective franchisees should understand that the presence of robust internal controls at the Coffee News franchisor level contributes to the overall stability and transparency of the franchise system. While the independent auditor does not express an opinion on the effectiveness of Coffee News's internal control, their audit procedures do include obtaining an understanding of internal control relevant to the audit.