What ethical responsibilities are the auditors required to meet in relation to their audit of Kidokinetics' financial statements?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, the auditors who review the company's financial statements must adhere to specific ethical responsibilities. The auditors are required to be independent of Kidokinetics and fulfill their ethical duties in accordance with the relevant ethical standards that apply to their audits.
Specifically, the auditors' responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit process. They must identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error, and design audit procedures to address those risks. This involves examining evidence related to the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditors must obtain an understanding of Kidokinetics' internal control system to design appropriate audit procedures, though they do not express an opinion on the effectiveness of the company's internal control. They evaluate the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements. The auditors also need to consider whether there are conditions or events that raise substantial doubt about Kidokinetics' ability to continue as a going concern. Finally, the auditors are required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit.