As part of the audit, what accounting aspects are evaluated for Deck Medic, Inc.'s financial statements?
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 of Deck Medic's financial statements includes several key responsibilities. The auditor's objectives are 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. This involves exercising professional judgment and maintaining professional skepticism throughout the audit.
Specifically, the audit involves identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error. To address these risks, the auditor designs and performs audit procedures, which include examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also obtains an understanding of internal control relevant to the audit in order to design appropriate audit procedures, although they do not express an opinion on the effectiveness of Deck Medic's internal control.
Furthermore, the audit includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. The auditor also concludes 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. These evaluations are crucial for providing a fair and reliable representation of Deck Medic's financial position to potential investors and franchisees.