What aspects of Crawlspace Medic's accounting policies should be evaluated during the audit?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, an audit should evaluate the appropriateness of accounting policies used by the company and the reasonableness of significant accounting estimates made by management. The audit also assesses the overall presentation of the financial statements.
Specifically, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit to identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. The audit procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Furthermore, the audit aims to obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. However, the audit does not express an opinion on the effectiveness of the company's internal control.