What is the auditor's responsibility regarding the exercise of professional judgment throughout the audit of Exit Realty Corp. International?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with generally accepted auditing standards, we:
- 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.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of EXIT Realty Corp. International's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about EXIT Realty Corp. International's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the auditor has specific responsibilities during the audit of Exit Realty Corp. International. The auditor is required to exercise professional judgment and maintain 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 Exit.
In addition to exercising professional judgment, the auditor must identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. They must also design and perform audit procedures that are responsive to those risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor's procedures also include obtaining an understanding of internal control relevant to the audit. However, the auditor will not express an opinion on the effectiveness of Exit's internal control.
The auditor is also responsible for evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Finally, the auditor must conclude whether there are conditions or events that raise substantial doubt about Exit's ability to continue as a going concern for a reasonable period of time. 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.