What does the audit of Sonesta Simply Suites' financial statements include regarding amounts and disclosures?
Sonesta_Simply_Suites 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.
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 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, the audit conducted on Red Lion Hotels Corporation's (RLHC) consolidated financial statements adheres to auditing standards generally accepted in the United States of America (GAAS). The auditor's responsibilities include exercising professional judgment and maintaining professional skepticism throughout the audit to identify and assess the risks of material misstatement, whether due to fraud or error. As part of the audit procedures, the auditor examines evidence regarding the amounts and disclosures in the financial statements on a test basis.
The audit also involves obtaining an understanding of internal control relevant to the audit, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. The auditor evaluates the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as the overall presentation of the financial statements. Furthermore, the audit considers whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern.
In summary, the audit aims to provide reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and includes procedures to examine amounts and disclosures, assess internal controls, evaluate accounting policies and estimates, and consider the company's ability to continue as a going concern. The auditor is also required to communicate significant findings and internal control-related matters to those charged with governance.