What is the auditor's responsibility regarding evidence related to amounts and disclosures in Gokhale Method's 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, the auditor's responsibility includes examining evidence regarding the amounts and disclosures in the financial statements. This examination is conducted on a test basis, meaning the auditors do not review every single transaction but rather use sampling techniques to gain reasonable assurance. The auditor's objective is to obtain reasonable assurance that 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.
It is important to note that while the auditor 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 one resulting from error because fraud may involve intentional concealment. The auditor's procedures are designed to identify potential misstatements and evaluate the overall presentation of the financial statements.
In performing the audit, the auditor exercises professional judgment and maintains professional skepticism. They also evaluate the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management. Additionally, the auditor assesses whether there are conditions or events that raise substantial doubt about Gokhale Method's ability to continue as a going concern. These responsibilities are in accordance with generally accepted auditing standards.