What are some examples of significant audit findings that must be communicated regarding Deck Medic?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
c.'s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the 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 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 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)
Based on the 2024 Franchise Disclosure Document, the auditor's responsibilities include identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error. These risks are addressed by designing and performing audit procedures that examine evidence regarding the amounts and disclosures in the financial statements. The auditor also obtains an understanding of internal control relevant to the audit in order to design appropriate audit procedures, though they do not express an opinion on the effectiveness of Deck Medic's internal control.
Furthermore, the auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements. A key responsibility is to conclude whether there are conditions or events that raise substantial doubt about Deck Medic's ability to continue as a going concern for a reasonable period of time.
For a potential Deck Medic franchisee, this means that the independent audit aims to provide reasonable assurance that the financial statements are free from material misstatements. However, it's not an absolute guarantee. The auditor's report will include an opinion on whether the financial statements present fairly the financial position, results of operations, and cash flows of Deck Medic in accordance with generally accepted accounting principles. Any significant issues or doubts about the company's ability to continue operating would be a critical consideration for a prospective franchisee.