What is the purpose of obtaining an understanding of internal control relevant to the audit of Moes Southwest Grill?

According to the 2025 FDD, the purpose of obtaining an understanding of internal control relevant to the audit of Moes Southwest Grill is to design audit procedures that are appropriate in the circumstances. However, this understanding is not for the purpose of expressing an opinion on the effectiveness of the company's internal control, and accordingly, no such opinion is expressed.

This means that while auditors will assess Moes Southwest Grill's internal controls to plan their audit, they won't provide a separate, formal opinion on how effective those controls are. The audit will focus on whether the financial statements are free from material misstatement, whether due to fraud or error. The auditor's responsibility includes identifying and assessing the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and designing and performing audit procedures responsive to those risks. These procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

For a prospective Moes Southwest Grill franchisee, this indicates that the financial statements have been examined by independent auditors. The auditors consider the company's internal controls to the extent necessary to conduct a thorough audit. However, franchisees should not interpret this process as a guarantee that Moes Southwest Grill has a flawless internal control system. The audit aims to provide reasonable assurance that the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America.