When preparing financial statements, what accounting principles must Counselor Realty's management follow?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
t 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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, the company's management is responsible for preparing and presenting financial statements according to accounting principles generally accepted in the United States of America, also known as GAAP. This means Counselor Realty must adhere to a common set of accounting standards, procedures, and guidelines when creating financial reports. These standards ensure that the financial information is presented fairly and consistently.
GAAP covers a broad range of accounting topics, from revenue recognition to expense reporting, and provides a framework for how financial transactions should be recorded and reported. It also requires management to design, implement, and maintain internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Furthermore, Counselor Realty's management must evaluate whether there are conditions or events 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. This assessment is a critical part of GAAP compliance, ensuring that the financial statements provide a realistic view of the company's financial health and future prospects.
An independent auditor then assesses whether the financial statements present fairly the financial position, results of operations, and cash flows of Counselor Realty in accordance with GAAP. This audit provides an additional level of assurance to potential investors and franchisees that the financial statements are reliable and accurate.