What is the auditor's responsibility regarding accounting estimates made by management at Even Hotels?

According to Even Hotels' 2025 Franchise Disclosure Document, the auditor has a responsibility to evaluate the reasonableness of significant accounting estimates made by the management of Six Continents Hotels, Inc., the parent company. This evaluation is part of the broader audit of the consolidated financial statements. The auditor's objective is to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. This involves assessing the appropriateness of the accounting policies used and the overall presentation of the financial statements.

To fulfill this responsibility, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit. They identify and assess the risks of material misstatement, design and perform audit procedures responsive to those risks, and examine 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, although they do not express an opinion on the effectiveness of the company's internal control.

For a prospective Even Hotels franchisee, this means that the financial statements presented in the FDD have been scrutinized by an independent auditor who has specifically assessed the reasonableness of the accounting estimates made by management. While the auditor's assurance is not absolute, it provides a level of confidence that the financial statements present a fair view of the company's financial position. This is important for franchisees as they rely on these statements to make informed investment decisions. The auditor's report also covers their responsibility to evaluate whether there are conditions or events that raise substantial doubt about the Company's ability to continue as a going concern.