What is the purpose of examining evidence regarding amounts and disclosures in Fly Fitness's financial statements during an audit?
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.
- 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\neffectiveness of Fly Fitness Franchise LLC's internal control. Accordingly, no such opinion is\nexpressed.
- 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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 44)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the purpose of examining evidence regarding amounts and disclosures in the financial statements during an audit is part of the auditor's responsibility to ensure the financial statements are free from material misstatement, whether due to fraud or error. This process helps the auditor to form an opinion on the fairness of the financial statements. The auditor designs and performs audit procedures responsive to the risks identified.
Specifically, the auditor examines evidence related to the amounts and disclosures within the financial statements on a test basis. This means they don't check every single transaction but rather sample various items to gain reasonable assurance. This examination is conducted in accordance with generally accepted auditing standards.
The auditor also evaluates the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by Fly Fitness's management. Furthermore, the auditor assesses the overall presentation of the financial statements to ensure they are clear, consistent, and compliant with accounting standards.
Ultimately, the auditor aims to provide an independent opinion on whether Fly Fitness's financial statements present fairly its financial position, results of operations, and cash flows in accordance with generally accepted accounting principles.