What is the auditor's responsibility to maintain throughout the audit of Counselor Realty?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
AP).
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with GAAP, 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 the Company's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditors' 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 auditors' 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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, the auditor is required to be independent of the company and to meet ethical responsibilities throughout the audit. This is in accordance with auditing standards generally accepted in the United States of America (GAAS). The auditor's responsibilities are further detailed in the section of the report concerning the Auditors' Responsibilities for the Audit of the Financial Statements. The audit evidence obtained by the auditor should be sufficient and appropriate to provide a basis for the audit opinion.
Specifically, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit. They need to 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. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
The auditor is also required to obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. However, the purpose of this is not to express an opinion on the effectiveness of Counselor Realty's internal control. The auditor will 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 auditor must conclude whether there are conditions or events that raise substantial doubt about Counselor Realty's ability to continue as a going concern for a reasonable period of time. They are also required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit.