What is the auditor's responsibility regarding professional judgment and skepticism during the audit of Fly Fitness?

According to Fly Fitness's 2024 Franchise Disclosure Document, the auditor has specific responsibilities regarding professional judgment and skepticism during the audit of the company's financial statements. The auditor is required to exercise professional judgment and maintain professional skepticism throughout the audit. This means the auditor must make informed decisions and maintain a questioning mind when evaluating the financial data.

As part of the audit, the auditor must identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. They design and perform audit procedures that respond to these risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditor also needs to obtain an understanding of Fly Fitness's internal control system to design appropriate audit procedures, although the audit does not aim to express an opinion on the effectiveness of the company's internal control.

Furthermore, the auditor evaluates the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management. They also assess the overall presentation of the financial statements. The auditor must conclude whether there are conditions or events that raise substantial doubt about Fly Fitness's ability to continue as a going concern for a reasonable period. Finally, 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.