What does the auditor do to design audit procedures that are appropriate in the circumstances for Engel & Volkers?

According to Engel & Volkers' 2025 Franchise Disclosure Document, when performing an audit, the auditor obtains an understanding of internal control relevant to the audit. This understanding is used to design audit procedures that are appropriate for the circumstances. However, the audit is not for the purpose of expressing an opinion on the effectiveness of Engel & Völkers Americas, Inc. and Subsidiary's internal control, and accordingly, no such opinion is expressed.

This means the auditor reviews Engel & Volkers' internal controls to understand how the company ensures financial accuracy and compliance. This helps the auditor tailor their testing to focus on areas with higher risk of error or fraud. However, the auditor's report will not give an opinion on how effective Engel & Volkers' internal controls are.

For a prospective Engel & Volkers franchisee, this indicates that while the financial statements are audited, the audit's focus is on the accuracy of the financial statements themselves, not on providing assurance about the strength of the company's internal controls. Franchisees may want to inquire separately about Engel & Volkers' internal control environment and risk management practices to gain a more complete picture of the company's financial health and stability.