What do the audit procedures for Deck Medic include when assessing risks of material misstatement?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
if there is a substantial likelihood that, individually or in aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards, 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\nerror, 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 to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Deck Medic, 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.
Source: Item 23 — RECEIPTS (FDD pages 43–228)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, the audit procedures include several key steps to assess the risks of material misstatement in the financial statements. These procedures are designed to provide reasonable assurance that the financial statements are free from significant errors or fraud.
Specifically, the auditors will exercise professional judgment and maintain professional skepticism throughout the audit. This means they will critically evaluate the information provided and remain alert to potential misstatements. They will also identify and assess the risks of material misstatement, 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.
Furthermore, the auditors will obtain an understanding of internal control relevant to the audit to design appropriate audit procedures. However, it's important to note that the audit is not for the purpose of expressing an opinion on the effectiveness of Deck Medic's internal control, and no such opinion will be provided. The auditors will also 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. Finally, the auditors will conclude whether there are conditions or events that raise substantial doubt about Deck Medic's ability to continue as a going concern.