What does the audit of Gokhale Method include regarding the examination of evidence?
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 Gokhale Method's 2024 Franchise Disclosure Document, the audit includes examining evidence related to the financial statements. The auditors' procedures involve examining evidence regarding the amounts and disclosures in the financial statements on a test basis. This means that not all evidence is examined, but a selection is made to provide a reasonable basis for the audit opinion.
The audit is conducted in accordance with generally accepted auditing standards, requiring the auditors to exercise professional judgment and maintain professional skepticism. They identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design audit procedures responsive to those risks. The goal is to obtain reasonable assurance that the financial statements are free from material misstatement.
It is important to note that while the audit aims to provide reasonable assurance, it is not an absolute guarantee that all misstatements will be detected. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. The auditors 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.