What is the auditor's responsibility in evaluating the accounting policies used by Crepe De Licious?
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.
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 a responsibility to evaluate the appropriateness of the accounting policies used by the company. This evaluation is part of a broader audit performed in accordance with Generally Accepted Auditing Standards (GAAS). The auditor's objective is to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes their opinion.
In practice, this means the auditor must exercise professional judgment and maintain professional skepticism throughout the audit. They must identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor must also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, though they do not express an opinion on the effectiveness of Crepe De Licious's internal control.
Furthermore, the auditor must evaluate the reasonableness of significant accounting estimates made by management and the overall presentation of the financial statements. 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 for a reasonable period of time. This comprehensive evaluation ensures that the financial statements provide a fair and accurate representation of Crepe De Licious's financial position and performance.