What ethical responsibilities must the auditors meet when auditing Stretch Zone's financial statements?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
We conducted our audits in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, the auditors, EisnerAmper LLP, must adhere to specific ethical responsibilities when auditing the company's financial statements. The auditors are required to be independent of Stretch Zone and fulfill other ethical duties in accordance with the relevant ethical requirements pertaining to their audits. This independence ensures that the auditors can perform their work with objectivity and integrity, without being influenced by the company's management or other stakeholders.
The auditors' responsibilities include obtaining reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, and issuing an auditor's report that includes their opinion. They must exercise professional judgment and maintain professional skepticism throughout the audit. This involves critically assessing the information provided by Stretch Zone and challenging any assumptions or representations made by management that may not be supported by evidence.
To meet these objectives, the auditors must identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error. They design and perform audit procedures that are responsive to these risks, including examining evidence regarding the amounts and disclosures in the financial statements on a test basis. The auditors 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 Stretch Zone's internal control. Finally, the auditors evaluate 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.
These measures ensure that the audit is conducted with due diligence and in accordance with generally accepted auditing standards (GAAS). By adhering to these ethical responsibilities and performing a thorough audit, the auditors provide an independent and objective assessment of Stretch Zone's financial statements, enhancing the credibility and reliability of the information presented to potential franchisees and other stakeholders.