What is the auditor's responsibility regarding the evaluation of accounting policies used by Even Hotels?

According to Even Hotels' 2025 Franchise Disclosure Document, the auditor's responsibility includes evaluating the appropriateness of the accounting policies used by management. This evaluation is part of a broader audit conducted in accordance with auditing standards generally accepted in the United States of America (US GAAS). The auditor must exercise professional judgment and maintain professional skepticism throughout the audit.

The auditor's role extends to assessing the risks of material misstatement of the financial statements, whether due to fraud or error, and designing audit procedures responsive to those risks. These procedures involve 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, although they do not express an opinion on the effectiveness of the company's internal control.

Furthermore, the auditor evaluates the reasonableness of significant accounting estimates made by management and the overall presentation of the financial statements. They also conclude whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern. The auditor is required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit.

For a prospective Even Hotels franchisee, this means that the financial statements presented in the FDD have been subjected to an independent audit, providing a degree of assurance about their reliability. However, it is important to recognize that an audit provides reasonable, but not absolute, assurance that the financial statements are free from material misstatement. Franchisees should still carefully review the financial statements and consider seeking their own professional advice.