What ethical responsibilities are the auditors required to meet when auditing Crave Cookies?

According to Crave Cookies's 2025 Franchise Disclosure Document, the auditors are required to adhere to specific ethical responsibilities. The auditors must be independent of Crave Cookies and fulfill other ethical requirements that are relevant to their audits, in accordance with auditing standards generally accepted in the United States of America (GAAS).

These standards require the auditors to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether due to fraud or error. However, reasonable assurance is not absolute, and there is no guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

In performing an audit under GAAS, the auditors must exercise professional judgment and maintain professional skepticism throughout the audit. They 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. The auditors also obtain an understanding of internal control relevant to the audit but do not express an opinion on the effectiveness of Crave Cookies's internal control. They 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.

Furthermore, the auditors must conclude whether there are conditions or events that raise substantial doubt about Crave Cookies's ability to continue as a going concern for a reasonable period. 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. For a potential Crave Cookies franchisee, this indicates that the financial statements have been examined by an independent party who is bound by ethical and professional standards to ensure fair presentation and accuracy within reasonable limits.