What is the auditor's responsibility in connection with their audit of Hardees' combined consolidated financial statements, regarding the 'other information'?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the other information included in the supplemental schedules. The other information comprises the combining consolidating balance sheets and combining consolidating statements of operations included in the supplemental schedules, but does not include the combined consolidated financial statements and our auditors' report thereon. Our opinion on the combined consolidated financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the combined consolidated financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the combined consolidated financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, the auditor's responsibility regarding 'other information' in supplemental schedules is limited. Management is responsible for the 'other information', which includes combining consolidating balance sheets and statements of operations. This 'other information' does not include the combined consolidated financial statements or the auditor's report on those statements. The auditor's opinion on the combined consolidated financial statements does not extend to this 'other information', and the auditors do not express any opinion or assurance on it.
However, the auditor has a responsibility to read the 'other information' and consider whether there are any material inconsistencies between it and the combined consolidated financial statements, or if the 'other information' appears to be materially misstated. If the auditor concludes that there is an uncorrected material misstatement in the 'other information', they are required to describe it in their report.
For a prospective Hardees franchisee, this means the audited financial statements provide a certain level of assurance, but the supplemental schedules do not carry the same weight. While the auditor reviews the supplemental data for inconsistencies or misstatements, they don't perform a full audit or express an opinion on its accuracy. Therefore, franchisees should focus primarily on the audited combined consolidated financial statements when assessing Hardees' financial health, while recognizing the supplemental information is presented without an auditor's assurance.