What should be evaluated regarding the overall presentation of Counselor Realty's financial statements 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, during the audit of the company's financial statements, the auditors must evaluate the overall presentation of these statements. This evaluation is part of the auditors' responsibility to ensure the financial statements are free from material misstatement, whether due to fraud or error.
The auditors' responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They identify and assess the risks of material misstatement, design and perform audit procedures responsive to those risks, and obtain an understanding of internal control relevant to the audit. However, the auditors do not express an opinion on the effectiveness of Counselor Realty's internal control.
Specifically, the audit involves examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditors also evaluate the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management. Finally, the auditors 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.