Does the audit of Fly Fitness express an opinion on the effectiveness of Fly Fitness Franchise LLC's internal control?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ally or in the aggregate, they would influence the judgment made by a reasonable use based on the financial statements.
In performing an audit 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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 44)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the independent auditor's report does not express an opinion on the effectiveness of Fly Fitness Franchise LLC's internal control. The audit is conducted to obtain reasonable assurance that the financial statements are free from material misstatement and to issue an auditor's report that includes an opinion on the financial statements themselves. The auditor's procedures are designed to be appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control.
Fly Fitness's management is responsible 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. The auditor's responsibility is to understand the internal control relevant to the audit to design appropriate audit procedures, but not to provide assurance on the internal control's effectiveness.
This means that while the auditor assesses internal controls to plan the audit, they do not issue a separate opinion confirming whether those controls are well-designed or operating effectively. Prospective franchisees should be aware that the financial statements have been audited for accuracy and fair presentation, but the effectiveness of Fly Fitness's internal controls has not been independently verified.
It is common practice for auditors of financial statements to focus on providing an opinion on the fairness of the financial statements rather than the effectiveness of internal controls, unless specifically engaged to do so. Franchisees may want to inquire about any internal control-related matters identified during the audit, as these are required to be communicated to those charged with governance.