Does the Pearce Bespoke audit evaluate the reasonableness of significant accounting estimates made by management?
Pearce_Bespoke 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 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 Pearce Bespoke Franchising, 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.
- Conclude whether, in our judgment, there are conditions or events considered in the aggregate, that raise substantial doubt about Pearce Bespoke Franchising, LLC's ability to continue as a going concern for a reasonable period of time.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the audit conducted evaluates the reasonableness of significant accounting estimates made by the management of Pearce Bespoke Franchising, LLC. This evaluation is part of the auditor's responsibilities when performing an audit in accordance with generally accepted auditing standards (GAAS).
The auditor's role includes 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 involve 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 appropriate audit procedures. However, the audit does not aim to express an opinion on the effectiveness of Pearce Bespoke's internal control. In addition to evaluating accounting estimates, the auditor also assesses the appropriateness of accounting policies used and the overall presentation of the financial statements.
Finally, the auditor concludes whether there are conditions or events that raise substantial doubt about Pearce Bespoke Franchising, LLC's ability to continue as a going concern for a reasonable period. The auditor is required to communicate with those charged with governance regarding the audit's scope, timing, significant findings, and certain internal control-related matters identified during the audit.