What is the auditor's responsibility regarding internal controls during a Degree Wellness audit?

According to Degree Wellness's 2025 Franchise Disclosure Document, the auditor's responsibility regarding internal controls is to obtain an understanding relevant to the audit. This understanding is used to design audit procedures appropriate for the circumstances, but it is explicitly not for the purpose of expressing an opinion on the effectiveness of Degree Wellness's internal control. The document states that no such opinion is expressed.

In simpler terms, the auditor reviews Degree Wellness's internal controls to plan the audit effectively. This helps them understand how the company manages its finances and ensures that the audit is tailored to the specific risks and controls in place. However, the auditor's report will not provide any assurance or opinion on whether Degree Wellness's internal controls are well-designed or operating effectively.

This approach is standard in financial audits. Auditors need to understand internal controls to assess the risk of material misstatement in the financial statements, whether due to fraud or error. By understanding the controls, they can design audit procedures to address those risks. However, a full assessment of the effectiveness of internal controls would require a different type of engagement, such as an internal control audit, which is not part of the standard financial statement audit for Degree Wellness.