Does the audit of Pearce Bespoke include evaluating the appropriateness of accounting policies?
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 of the company's financial statements does include evaluating the appropriateness of accounting policies used by management. This evaluation is part of the auditor's responsibilities when conducting an audit in accordance with generally accepted auditing standards (GAAS).
Specifically, the auditor's responsibilities include evaluating not only the appropriateness of the accounting policies but also the reasonableness of significant accounting estimates made by the management team. Additionally, the auditor assesses the overall presentation of the financial statements to ensure they are fairly presented.
This process is important for prospective franchisees because it provides an additional layer of assurance that Pearce Bespoke's financial statements are reliable and comply with accounting standards. The auditor's evaluation helps to ensure that the financial information presented is accurate and can be trusted for making informed business decisions.