What is the purpose of the audit procedures that are performed on Crave Cookies' financial statements?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
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. 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 Crave Cookies Franchising, LLC'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 Crave Cookies Franchising, LLC's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the objective of the audit procedures is to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. The goal is for the auditor to issue a report that includes their opinion on the fairness of the financial statements. This assurance is high but not absolute, so an audit is not a guarantee that all misstatements will be detected. The risk of not detecting a misstatement resulting from fraud is higher than for one resulting from error because fraud may involve intentional concealment.
The audit procedures performed by the independent auditor for Crave Cookies include exercising professional judgment and maintaining professional skepticism, identifying and assessing risks of material misstatement, examining evidence regarding amounts and disclosures, and obtaining an understanding of internal control relevant to the audit. The auditors also evaluate the appropriateness of accounting policies and the reasonableness of significant estimates made by management, as well as the overall presentation of the financial statements. They also determine if there are conditions that raise doubt about Crave Cookies' ability to continue as a going concern.
These procedures are in line with auditing standards generally accepted in the United States of America (GAAS). The auditor must communicate with those charged with governance regarding the scope and timing of the audit, significant findings, and internal control-related matters identified during the audit. For a prospective Crave Cookies franchisee, this means the financial statements have been examined by an independent party to ensure they fairly represent the company's financial position and performance, providing a degree of confidence in the information presented.