What is the timeframe after the financial statements are available to be issued that Remax's management must evaluate the company's ability to continue as a going concern?
Remax 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 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 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.
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, when an audit is performed in accordance with Generally Accepted Auditing Standards (GAAS), the auditors must conclude whether there are conditions or events that raise substantial doubt about Remax's ability to continue as a going concern for a reasonable period of time.
The FDD does not specify a particular timeframe that Remax's management has to evaluate the company's ability to continue as a going concern after the financial statements are issued. However, the independent auditor, when performing their audit, must 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.
Prospective franchisees should inquire with Remax about the specific procedures and timelines management follows to assess the company's ability to continue as a going concern. Understanding this process can provide valuable insight into the financial stability and long-term viability of the Remax franchise system.