In assessing the financial statements of Gokhale Method Institute, is it necessary to evaluate the overall presentation of the financial statements?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 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 Gokhale Method Institute, Inc.'s internal control. Accordingly, no such opinion is expressed.
- 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.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Gokhale Method Institute, Inc.'s ability to continue as a going concern for a reasonable period of time.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, when performing an audit in accordance with generally accepted auditing standards, auditors will evaluate the appropriateness of accounting policies and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. This indicates that the overall presentation of the financial statements is a necessary component of the financial statement assessment.
This evaluation is part of ensuring that the financial statements are free from material misstatement, whether due to fraud or error. Auditors must exercise professional judgment and maintain professional skepticism throughout the audit to identify and assess risks. They examine evidence regarding amounts and disclosures in the financial statements on a test basis.
For a prospective Gokhale Method franchisee, this means that the financial statements have been subjected to scrutiny to ensure they fairly represent the financial position of the company. The auditor's responsibilities include evaluating the financial statement's overall presentation, which offers a level of assurance that the statements are presented in accordance with accounting principles generally accepted in the United States of America.