What is the auditor's responsibility regarding Deer Solution's ability to continue as a going concern?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
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 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 Deer Solution 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 Deer Solution Franchising, LLC's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, the auditor has a responsibility to evaluate Deer Solution's ability to continue as a going concern. Specifically, the auditor must conclude whether, in their judgment, there are conditions or events that raise substantial doubt about Deer Solution's ability to continue operating for a reasonable period of time. This evaluation is a critical part of the audit process.
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. However, this reasonable assurance is not an absolute guarantee that all misstatements will be detected. The auditor must exercise professional judgment and maintain professional skepticism throughout the audit, assess the risks of material misstatement, and evaluate the appropriateness of accounting policies and the reasonableness of significant accounting estimates made by management.
In performing the audit, the auditor will examine evidence regarding the amounts and disclosures in the financial statements on a test basis. They will also obtain an understanding of internal control relevant to the audit in order to design appropriate audit procedures, although they will not express an opinion on the effectiveness of Deer Solution's internal control. Furthermore, the auditor is required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control related matters identified during the audit.
For a potential Deer Solution franchisee, this means that the financial statements have been examined by an independent auditor who has considered whether Deer Solution is likely to remain a viable business. While the audit provides a level of assurance, it is not a guarantee of future success. Prospective franchisees should carefully review the audited financial statements and the auditor's report, and consider seeking professional financial advice to fully understand the financial health and stability of Deer Solution.