What should the auditors evaluate regarding the accounting policies used by Sonesta Simply Suites?
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's 2025 Franchise Disclosure Document, when performing an audit, the auditors should evaluate the appropriateness of the accounting policies used by the management of Red Lion Hotels Corporation (RLHC). This evaluation is part of a broader audit process conducted in accordance with generally accepted auditing standards (GAAS). The auditors must exercise professional judgment and maintain professional skepticism throughout the audit to identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error.
To assess these risks, the auditors examine evidence regarding the amounts and disclosures in the financial statements on a test basis. They also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures, though they do not express an opinion on the effectiveness of the company's internal control. In addition to evaluating accounting policies, the auditors also assess the reasonableness of significant accounting estimates made by management and the overall presentation of the financial statements.
Furthermore, the auditors must conclude whether there are conditions or events that raise substantial doubt about Sonesta Simply Suites's ability to continue as a going concern. The auditors are also required to communicate with those charged with governance regarding the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters identified during the audit. This comprehensive evaluation ensures that the financial statements are fairly presented and free from material misstatements.