What does the auditor evaluate regarding accounting policies used by Endless Summer Sweets?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 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 Endless Summer Sweets Franchising Inc.'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 Endless Summer Sweets Franchising Inc.'s ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to the 2024 FDD, the auditor evaluates the appropriateness of the accounting policies used by Endless Summer Sweets, as well as the reasonableness of significant accounting estimates made by the company's management. The auditor also evaluates the overall presentation of the financial statements. This evaluation is part of an audit performed in accordance with generally accepted auditing standards.
Specifically, the auditor aims to identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. To address these risks, the auditor designs and performs audit procedures, which include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
The auditor also obtains an understanding of internal control relevant to the audit to design appropriate audit procedures, though the audit does not express an opinion on the effectiveness of Endless Summer Sweets' internal control. Furthermore, the auditor assesses whether there are conditions or events that raise substantial doubt about Endless Summer Sweets' ability to continue as a going concern for a reasonable period of time.
Prospective franchisees should understand that these evaluations are standard practice in financial audits, providing a level of assurance regarding the accuracy and reliability of the financial statements presented in the FDD. This helps potential investors make informed decisions about investing in an Endless Summer Sweets franchise.