During an audit of Crisp & Green, is the reasonableness of significant accounting estimates made by management evaluated?
Crisp_Green 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 Crisp & Green 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 Crisp & Green Franchising LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, the auditors evaluate the reasonableness of significant accounting estimates made by management. The audit is conducted in accordance with generally accepted auditing standards. These standards require the auditors to exercise professional judgment and maintain professional skepticism throughout the audit.
As part of the audit process, the auditors identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. To address these risks, they design and perform audit procedures that include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditors also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, although they do not express an opinion on the effectiveness of Crisp & Green's internal control.
Specifically, the auditors evaluate the appropriateness of the accounting policies used by Crisp & Green's management and assess the reasonableness of significant accounting estimates. They also evaluate the overall presentation of the financial statements to ensure they are fairly presented. Additionally, the auditors consider whether there are conditions or events that raise substantial doubt about Crisp & Green's ability to continue as a going concern.
This evaluation provides assurance to potential franchisees that the financial statements of Crisp & Green are thoroughly reviewed by independent auditors. This process helps to ensure that the financial information presented is reliable and fairly represents the company's financial position and performance. Franchisees can rely on these audited financial statements to make informed decisions about investing in a Crisp & Green franchise.