Is the audit of Monicals Pizza intended to express an opinion on the effectiveness of the company's internal control?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the consolidated 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 consolidated 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 the Company'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 consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we identified during the audit.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, the audit performed on the company's financial statements is not intended to express an opinion on the effectiveness of the company's internal control. While the auditors obtain an understanding of internal control relevant to the audit, it is solely for the purpose of designing audit procedures appropriate for the circumstances. The report explicitly states that no opinion is expressed regarding the effectiveness of Monicals Pizza's internal control.
This means that the audit focuses on the accuracy and fairness of the financial statements themselves, rather than evaluating the systems and processes Monicals Pizza has in place to ensure financial accuracy and compliance. The auditors' procedures include examining evidence regarding the amounts and disclosures in the consolidated financial statements on a test basis.
Prospective franchisees should understand that the audit provides assurance on the financial figures presented, but it does not guarantee that Monicals Pizza's internal controls are robust or effective. If a franchisee is concerned about the internal controls at Monicals Pizza, they may want to ask the franchisor for more information about their internal control policies and procedures.