What should the auditor evaluate regarding the accounting policies used by Face Foundrie?
Face_Foundrie 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 the Company'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 the Company's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, when performing an audit, the auditor should evaluate the appropriateness of the accounting policies used by Face Foundrie, as well as the reasonableness of significant accounting estimates made by management. The auditor must also evaluate the overall presentation of the financial statements to ensure they are fairly presented. This evaluation is part of obtaining reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error.
Specifically, the auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit. They must 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. These procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Furthermore, the auditor needs to obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. The auditor also has to conclude whether there are conditions or events that raise substantial doubt about Face Foundrie's ability to continue as a going concern for a reasonable period of time. These evaluations and procedures are conducted in accordance with generally accepted auditing standards.