What is the auditor's responsibility regarding professional judgment and skepticism during the audit of Even Hotels?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
rovide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the financial statements are available to be issued.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material 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 financial statements.
In performing an audit in accordance with US GAAS, we:
PricewaterhouseCoopers LLP, 1075 Peachtree Street NE, Atlanta, Georgia 30309 T: (678) 419 1000, www.pwc.com/us
- 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.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to the 2025 FDD, the auditor's responsibility during the audit of Even Hotels' financial statements includes exercising professional judgment and maintaining professional skepticism throughout the audit. This means the auditor must use their expertise and experience to make informed decisions and critically assess the information provided by management.
The auditor's objective is to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes their opinion. However, reasonable assurance is not absolute, and there is always a risk that a material misstatement may not be detected, especially if it results from fraud involving collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
To achieve this, the auditor must identify and assess the risks of material misstatement, design and perform audit procedures responsive to those risks, and evaluate the appropriateness of accounting policies and the reasonableness of significant accounting estimates made by management. The auditor must also obtain an understanding of internal control relevant to the audit, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. These responsibilities are in accordance with auditing standards generally accepted in the United States of America (US GAAS).
Furthermore, the auditor must conclude whether there are conditions or events that raise substantial doubt about Even Hotels' ability to continue as a going concern. The auditor is also 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.