What is the auditor's responsibility regarding internal control when auditing Goldfish Swim School?

According to the 2025 Goldfish Swim School FDD, the auditor's responsibility regarding internal control is to obtain an understanding of internal control relevant to the audit. This understanding is used to design audit procedures that are appropriate for the circumstances, but it is explicitly not for the purpose of expressing an opinion on the effectiveness of the company's internal control. Therefore, the auditor's report will not include an opinion on the effectiveness of Goldfish Swim School's internal controls.

This means that while the auditor assesses internal controls to plan the audit, they do not provide assurance to a potential franchisee that these controls are effective. The auditor's focus is on whether the financial statements are free of material misstatement.

For a prospective Goldfish Swim School franchisee, this highlights the importance of conducting their own due diligence regarding the franchisor's financial health and internal controls. While the audit provides some level of comfort, it does not substitute for a thorough investigation into the franchisor's business practices and financial stability. Understanding the limitations of the audit is crucial for making an informed investment decision.