What is the auditor's responsibility in evaluating the accounting policies used by Gokhale Method?
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, the auditor's responsibility includes evaluating the appropriateness of the accounting policies used by management. This evaluation is a key part of the audit process. The auditor also assesses the reasonableness of significant accounting estimates made by the Gokhale Method's management and evaluates the overall presentation of the financial statements.
This evaluation ensures that the financial statements are presented fairly and in accordance with generally accepted accounting principles. By assessing the accounting policies, the auditor provides an independent opinion on whether these policies are suitable for the Gokhale Method's business and industry. This helps to ensure that the financial information is reliable and comparable to other companies.
Furthermore, the auditor must exercise professional judgment and maintain professional skepticism throughout the audit. This means the auditor should have a questioning mind and critically assess the information provided by management. This approach helps the auditor identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error. The auditor's work provides assurance to potential franchisees that the financial information presented by Gokhale Method is reasonably accurate and reliable.