How are misstatements considered material by the auditor of Engel & Volkers?

According to Engel & Volkers' 2025 Franchise Disclosure Document, misstatements are considered material by the auditor if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements. This means that any inaccuracies, omissions, or errors in the financial statements are deemed significant if they could potentially sway the decisions of someone relying on those statements.

This definition is crucial for prospective Engel & Volkers franchisees because it highlights the importance of accurate and reliable financial reporting. The auditor's role is to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. However, it's important to note that reasonable assurance is not absolute, and there's always a risk that a material misstatement might not be detected.

For a potential franchisee, understanding this materiality threshold is essential for assessing the financial health and stability of Engel & Volkers. If the auditor believes that misstatements could influence the judgment of a reasonable user, it suggests that the financial statements may not accurately reflect the true financial position of the company. This could impact decisions related to investing in a franchise, securing financing, or evaluating the overall risk associated with the franchise opportunity.