Does the auditor express an opinion on the effectiveness of Crave Cookies' internal control?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
t the financial statements are 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 auditor's 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. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the auditor does not express an opinion on the effectiveness of the company's internal control. While the auditors obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, the audit's purpose is not to express an opinion on the effectiveness of Crave Cookies' internal control.
This means that the audit focuses on whether the financial statements are free from material misstatement, rather than specifically evaluating the strength and reliability of the company's internal controls. The auditors' responsibilities include identifying and assessing the risks of material misstatement, examining evidence regarding the amounts and disclosures in the financial statements, and evaluating the appropriateness of accounting policies.
For a prospective Crave Cookies franchisee, this implies that the financial statements have been reviewed for accuracy and adherence to accounting standards, but there is no independent assessment of the company's internal controls over financial reporting. Franchisees may want to inquire separately about Crave Cookies' internal control practices and risk management procedures to gain a more complete understanding of the company's financial oversight.