Is the purpose of understanding internal control during the Focalpoint Coaching audit to express an opinion on the effectiveness of internal control?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance 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 effectiveness of FocalPoint Coaching, Inc.'s internal control. Accordingly, no such opinion is expressed.
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the purpose of understanding internal control during the audit is not to express an opinion on the effectiveness of internal control. The auditor's responsibility is to obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate for the circumstances.
The auditor's objectives include obtaining reasonable assurance about whether the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes their opinion. The auditor will identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. They will also 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.
For a prospective Focalpoint Coaching franchisee, this means the audit focuses on the accuracy and reliability of the financial statements rather than a comprehensive evaluation of the company's internal controls. The auditor's report will provide an opinion on whether the financial statements present fairly the financial position of Focalpoint Coaching. However, it will not offer assurance on the effectiveness of the company's internal control systems.