Is the public accounting firm auditing Management Recruiters required to be independent?

According to Management Recruiters' 2024 Franchise Disclosure Document, the public accounting firm auditing the company's financial statements is required to be independent. Specifically, the reports of the independent registered public accounting firms state that they are registered with the Public Company Accounting Oversight Board (PCAOB) and must be independent with respect to HireQuest, Inc., the parent company of Management Recruiters. This independence is mandated by U.S. federal securities laws and the rules and regulations of both the Securities and Exchange Commission (SEC) and the PCAOB.

This requirement ensures that the audit is conducted with objectivity and impartiality, providing stakeholders, including prospective franchisees, with confidence in the reliability of the financial statements. The audit firms, including FORVIS, LLP, which served as the company's auditor since 2023, and Plante & Moran, PLLC, which served as the company's auditor from 2017 to 2023, must adhere to these independence standards.

For a prospective Management Recruiters franchisee, this signifies that the financial information presented in the FDD has been reviewed by an independent and qualified auditor, adding credibility to the financial representations. This is a standard practice in franchising, as it helps to protect potential franchisees by ensuring that the franchisor's financial statements are not misleading. The independence requirement aims to prevent any conflicts of interest that could compromise the integrity of the audit process and the accuracy of the financial statements.