What is the acceptable level of misstatement in Healthsource Chiropractic's financial statements that management is responsible for preventing?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about HealthSource Chiropractic, LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, management is responsible for ensuring that the financial statements are free from material misstatement, whether due to fraud or error. The document defines a 'material misstatement' as one where there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user based on the financial statements.
In simpler terms, Healthsource Chiropractic's management must ensure the accuracy and reliability of their financial reporting. Any misstatement that could potentially mislead someone relying on those statements to make decisions is considered unacceptable. This responsibility includes designing, implementing, and maintaining internal controls to prevent such misstatements.
This requirement aligns with standard accounting practices, where companies must provide transparent and reliable financial information. Prospective franchisees should be aware that the financial statements presented by Healthsource Chiropractic are prepared under these guidelines, and audited by independent CPAs to ensure fair presentation in all material respects.