What must the auditor conclude regarding Degree Wellness's ability to continue as a going concern?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Degree Wellness Franchise, 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Degree Wellness Franchise, LLC's ability to continue as a going concern for one year after the date that the financial statements are issued.
Source: Item 23 — Receipts (FDD pages 66–257)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the auditor must conclude whether there are conditions or events that raise substantial doubt about Degree Wellness's ability to continue as a going concern for a reasonable period of time. This assessment is a critical part of the audit process. The auditor's responsibility is to evaluate if Degree Wellness can continue its operations for at least one year after the financial statements are issued.
To make this determination, the auditor considers various factors and events that could impact Degree Wellness's financial stability. This involves analyzing the company's financial statements, including the balance sheet, statements of earnings and member's equity, and cash flows. The auditor also reviews the appropriateness of accounting policies and the reasonableness of significant accounting estimates made by the management of Degree Wellness.
If the auditor identifies conditions or events that create substantial doubt, they are required to communicate these concerns to those charged with governance. This communication includes discussing the planned scope and timing of the audit, significant audit findings, and any internal control-related matters identified during the audit. This ensures transparency and provides Degree Wellness with an opportunity to address any potential issues that could affect its ability to continue as a going concern.