What does the auditor evaluate regarding accounting policies and estimates made by management for Ledgers?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with auditing standards generally accepted in the United States of America, 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 Loyalty Business Services, LLC'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.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers's 2025 Franchise Disclosure Document, the auditor evaluates the appropriateness of the accounting policies used by management and the reasonableness of significant accounting estimates made by management. Additionally, the auditor evaluates the overall presentation of the financial statements.
This evaluation is a standard part of an audit, ensuring that the financial statements of Ledgers are presented fairly and in accordance with generally accepted accounting principles. For a prospective franchisee, this indicates that an independent party has reviewed the financial assumptions and judgments made by Ledgers's management in preparing the financial statements.
The auditor's responsibilities also include exercising professional judgment and maintaining professional skepticism throughout the audit. They 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. These procedures include examining evidence regarding the amounts and disclosures in the financial statements on a test basis.
Furthermore, the auditor obtains an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances. However, the auditor does not express an opinion on the effectiveness of Loyalty Business Services, LLC's internal control.