What is the auditor's responsibility regarding internal control when auditing Fly Fitness?

According to Fly Fitness's 2024 Franchise Disclosure Document, the auditor's responsibility regarding internal control is to obtain an understanding of internal control relevant to the audit. This understanding is used to design audit procedures that are appropriate for the circumstances. However, the audit is not for the purpose of expressing an opinion on the effectiveness of Fly Fitness's internal control, and the auditor will not express such an opinion.

This means that while the auditor will assess Fly Fitness's internal controls to plan the audit, they are not providing any assurance that those controls are effective. A prospective franchisee should understand that the financial statements have been audited, but the effectiveness of the company's internal controls has not been verified by the auditor.

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. This communication ensures that relevant parties are informed of any important issues discovered during the audit process.

In summary, the auditor's role regarding internal control is limited to understanding it sufficiently to design appropriate audit procedures, without providing an opinion on its effectiveness. This is a standard practice in financial auditing, where the focus is on the fair presentation of the financial statements rather than the internal control system itself.