What is the auditor's responsibility regarding professional judgment and skepticism during the audit of Deer Solution?
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.
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 specific responsibilities regarding professional judgment and skepticism. During the audit, the auditor is required to exercise professional judgment and maintain professional skepticism throughout the entire process. This means the auditor must make informed decisions based on their expertise and maintain a questioning mind, critically assessing the information provided by Deer Solution.
The auditor's role includes identifying and assessing the risks of material misstatement in the financial statements, whether due to fraud or error. They must design and perform audit procedures that respond to these identified risks, which involves examining evidence related to the amounts and disclosures within the financial statements on a test basis. This ensures that the auditor is diligent in their review and does not simply accept the information at face value.
Furthermore, the auditor needs to evaluate the appropriateness of the accounting policies used by Deer Solution and assess the reasonableness of significant accounting estimates made by the management. The auditor must also evaluate the overall presentation of the financial statements to ensure they are fairly presented. Finally, the auditor must conclude whether there are conditions or events that raise substantial doubt about Deer Solution's ability to continue as a going concern for a reasonable period of time. These responsibilities ensure a thorough and objective audit, providing a reliable assessment of Deer Solution's financial health.