What should be evaluated regarding accounting policies used by Counselor Realty during the audit?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, 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 the Company'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.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, the auditors are responsible for evaluating the appropriateness of the accounting policies used by the company. This evaluation is a key part of the audit process, ensuring that Counselor Realty's financial statements are presented fairly and in accordance with generally accepted accounting principles (GAAP). The auditors also assess the reasonableness of significant accounting estimates made by management and evaluate the overall presentation of the financial statements.
Specifically, the auditors must exercise professional judgment and maintain professional skepticism throughout the audit. This involves identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, and designing and performing audit procedures responsive to those risks. These procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
For a prospective Counselor Realty franchisee, this means that the financial statements have been subjected to scrutiny by independent auditors who have assessed whether the accounting policies are appropriate and the financial statements are fairly presented. This provides a level of assurance that the financial information is reliable and can be used to make informed business decisions. Franchisees can review the auditor's report and the notes to the financial statements to understand the accounting policies used by Counselor Realty and how they may impact the financial results.