Is professional judgment required throughout the audit of 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 Endless Summer Sweets's 2024 Franchise Disclosure Document, the audit performed by FACT Professional, Inc. requires the exercise of professional judgment and the maintenance of professional skepticism throughout the audit. This is in accordance with generally accepted auditing standards.
Specifically, the auditors identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. They design and perform audit procedures responsive to those risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditors also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, though they do not express an opinion on the effectiveness of Endless Summer Sweets's internal control.
Furthermore, the auditors evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management. They also evaluate the overall presentation of the financial statements and conclude whether there are conditions or events that raise substantial doubt about Endless Summer Sweets's ability to continue as a going concern for a reasonable period of time. These factors all require professional judgment during the auditing process.