What accounting aspects should the auditor evaluate during a Crepe De Licious audit?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 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 Crepe Delicious Holding USA, Inc.'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 Crepe Delicious Holding USA, Inc.'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 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to the 2025 Crepe De Licious Franchise Disclosure Document, the auditor has several key responsibilities when auditing the company's financial statements. These responsibilities are designed to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. The auditor must exercise professional judgment and maintain professional skepticism throughout the audit to achieve this objective.
Specifically, the auditor must identify and assess the risks of material misstatement in the financial statements, whether these risks arise from fraud or error. To address these risks, the auditor designs and performs audit procedures, which include examining evidence related to the amounts and disclosures in the financial statements on a test basis. The auditor also needs to understand Crepe De Licious's internal control system to design appropriate audit procedures, although the audit does not aim to express an opinion on the effectiveness of the company's internal control.
Furthermore, the auditor evaluates the appropriateness of the accounting policies used by Crepe De Licious's management and the reasonableness of significant accounting estimates they have made. The auditor also assesses the overall presentation of the financial statements to ensure they are fairly presented. Finally, the auditor must conclude whether there are conditions or events that raise substantial doubt about Crepe De Licious's ability to continue as a going concern. The auditor is 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.