What is the role of an independent auditor in the preparation of Del Taco's financial statements?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
process, which included a control related to the review of the revenue growth rate assumptions used in the projected financial information. We evaluated the reasonableness of the revenue growth rate assumptions for the Del Taco brand reporting unit by comparing the revenue growth rate assumptions to industry reports. We also compared the Company's revenue growth rate assumptions to historical revenue growth rate trends to assess the Company's ability to accurately forecast. In addition, we performed sensitivity analyses over the Company's revenue growth rate assumptions to assess the impact any changes to those assumptions could have had on the Company's fair value estimate.
/s/ KPMG LLP
We have served as the Company's auditor since 1986.
San Diego, California November 20, 2024
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, KPMG LLP has served as the independent auditor for Jack in the Box Inc., the parent company of Del Taco, since 1986. As stated in the auditor's report, KPMG LLP evaluated the reasonableness of revenue growth rate assumptions for the Del Taco brand reporting unit by comparing these assumptions to industry reports and historical revenue growth rate trends. They also performed sensitivity analyses to assess the impact of changes to these assumptions on the company's fair value estimate. This process indicates that the independent auditor plays a critical role in assessing the accuracy and reliability of the financial information presented.
For a prospective Del Taco franchisee, this signifies that the financial statements included in the FDD have been vetted by an independent accounting firm. This audit provides a level of assurance that the financial data is reasonably presented and complies with accounting standards. The auditor's assessment of revenue growth rate assumptions specifically suggests that key financial projections related to Del Taco's performance have been scrutinized for their reasonableness and potential impact on the company's valuation.
The presence of an independent auditor's report from a reputable firm like KPMG LLP can be seen as a positive sign, indicating that Jack in the Box Inc. is committed to financial transparency and accountability. However, franchisees should still carefully review the financial statements and consult with their own financial advisors to fully understand the financial health and performance of Del Taco and its parent company.