When evaluating the financial statements for Gokhale Method, what should be evaluated regarding accounting policies?
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, when evaluating the financial statements, one should assess the appropriateness of the accounting policies used. Additionally, the reasonableness of significant accounting estimates made by the management should be evaluated, along with the overall presentation of the financial statements. This evaluation is part of the standard auditing procedures conducted to ensure the financial statements are fairly presented.
This means a prospective Gokhale Method franchisee should pay attention to whether the accounting methods used by the company are in line with generally accepted accounting principles. It's also important to consider if the estimates made by the management, such as those related to potential losses or revenues, are reasonable and well-supported. A careful review can provide insight into the financial health and stability of the franchise.
Furthermore, the auditors' report included in the FDD states that the financial statements of Gokhale Method Institute, Inc. fairly present its financial position as of December 31, 2023, and the results of its operations and cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. This opinion is based on an audit conducted according to generally accepted auditing standards, which includes evaluating the appropriateness of accounting policies.