What internal controls are Cream's management responsible for designing, implementing, and maintaining?

According to Cream's 2025 Franchise Disclosure Document, Cream's management is responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of the company's financial statements. This responsibility ensures that the financial statements are free from material misstatement, whether due to fraud or error.

In practice, this means Cream's management must establish and uphold procedures and policies that provide reasonable assurance regarding the reliability of financial reporting. These controls help to prevent and detect errors or fraudulent activities that could significantly impact the accuracy of the financial statements. The effectiveness of these internal controls is a key factor in the auditor's assessment of the financial statements.

The auditor's report also highlights that their audit procedures include obtaining an understanding of internal control relevant to the audit. However, the auditor's objective is not to express an opinion on the effectiveness of Cream's internal control, but rather to design audit procedures that are appropriate for the circumstances. This distinction is important for prospective franchisees to understand, as the audit provides assurance on the financial statements themselves, but not a guarantee of the strength of Cream's internal controls.

Prospective franchisees should be aware that while Cream's management is responsible for internal controls at the franchise level, franchisees are responsible for managing their own shops according to Cream's System Standards. Understanding the franchisor's financial stability and internal control environment can provide valuable insight into the overall health and reliability of the franchise system.