Do the auditors express an opinion on the effectiveness of Expense Reduction Analysts' internal control?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the consolidated 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 Expense Reduction Analysts, Inc. and subsidiaries' internal control. Accordingly, no such opinion is expressed.
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts' 2025 Franchise Disclosure Document, the auditors do not express an opinion on the effectiveness of Expense Reduction Analysts, Inc. and subsidiaries' internal control. While the auditors obtain an understanding of internal control relevant to the audit to design appropriate procedures, the audit's purpose is not to express an opinion on the effectiveness of the company's internal control. Therefore, the auditors' report will not include such an opinion.
This means that the audit focuses on the financial statements themselves, ensuring they are free from material misstatement, rather than evaluating the systems and processes Expense Reduction Analysts has in place to maintain accurate financial reporting. The auditors' responsibility is to express an opinion on the fairness of the presentation of the financial statements.
For a prospective franchisee, this implies that while the financial statements are audited for accuracy, there is no independent assessment of the strength or weakness of Expense Reduction Analysts' internal controls. A potential franchisee may want to independently assess the internal controls or seek additional assurances regarding the company's financial management practices.
This is a fairly standard practice in financial audits. The scope of a typical audit is to provide an opinion on the financial statements, not to provide assurance on the internal controls. If a company desires an opinion on internal controls, they would need to engage the auditors for a separate, specific engagement to assess and report on those controls.