Under what condition are misstatements considered material in Focus Cfo's financial statements?

According to Focus Cfo's 2025 Franchise Disclosure Document, misstatements in the consolidated financial statements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. This definition is used by the independent auditor, BHM CPA Group, Inc., when assessing the fairness and accuracy of Focus Cfo's financial statements.

For a prospective Focus Cfo franchisee, this means that the financial statements presented in the FDD should be free of errors that could significantly impact their decision-making. The auditor's responsibility is to provide reasonable assurance that the financial statements are fairly presented and comply with generally accepted accounting principles. However, it's important to note that even with an audit, there is always a risk that material misstatements may not be detected, especially those resulting from fraud.

This definition of materiality aligns with standard accounting practices, where information is considered material if its omission or misstatement could influence the economic decisions of users of the financial statements. Franchisees should carefully review the audited financial statements and related notes in the FDD, and if they have any concerns or questions, they should seek advice from a qualified financial advisor.