What is Fly Fitness Franchise LLC management responsible for regarding internal controls related to financial statement preparation?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Fly Fitness Franchise LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 44)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, management is responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements. These controls should ensure the financial statements are free from material misstatement, whether due to fraud or error. This means Fly Fitness's management must establish and uphold procedures and policies that provide reasonable assurance that the company's financial information is reliable and accurate.
In addition to maintaining internal controls, Fly Fitness's management is also required to evaluate whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern within one year after the date the financial statements are available to be issued. This involves assessing the company's financial health and its ability to meet its obligations in the near term.
For a prospective franchisee, this indicates that Fly Fitness's management takes responsibility for the accuracy and reliability of its financial reporting. The auditor's report included in the FDD provides an opinion on whether the financial statements present fairly the financial position of Fly Fitness. Furthermore, the auditor will communicate any significant audit findings and internal control-related matters identified during the audit to those charged with governance.
It is important to note that while the auditor obtains an understanding of internal control relevant to the audit, they do not express an opinion on the effectiveness of Fly Fitness's internal control. The responsibility for maintaining these controls lies solely with the management of Fly Fitness Franchise LLC.