A franchise audit is an appraisal of a franchise’s business financial health by either an external, internal, or independent auditor. Furthermore, an audit gives a snapshot of the franchise’s assets, liabilities, and financial health. An audited financial statement is part of the item 21 franchise disclosure document, and you must get a good verdict to attract new Franchisees and investors.
What are the 4 Types of Audit Opinions?
There are four types of audit reports, namely,
A Clean or Unqualified Audit Opinion
A franchise financial statement audit receives an unqualified or clean verdict when the auditor determines the franchise financial records are without any misrepresentation. It indicates that the franchise bookkeeping and accounting practices are up-to-date and compliant with the generally accepted accounting principles.
A Qualified Audit Opinion
When an auditor identifies possible financial misrepresentation and non-compliance with GAAP, a qualified opinion is issued. In this case, the franchise must re-evaluate its financial records and request another audit.
An Adverse Audit Opinion
A franchise audit receives an adverse opinion when the auditor determines the financial records and accounting practices to be non-compliant with GAAP. Furthermore, it indicates gross financial misrepresentation due to poor bookkeeping practices or financial fraud.
A Disclaimer of opinion
A disclaimer of opinion is a situation where the auditor cannot reach a conclusive assessment of the franchise financial statement audit process. Although it’s a rare possibility, a disclaimer of opinion is often a result of the absence of appropriate financial records.
Next steps
Do you need an independent financial statement audit for your Franchise Businesses? Contact us now to access professional and complaint auditors to help you assess your financial health and identify areas for growth.
Mohamed founded Metwally CPA PLLC in 2020 in the Dallas-Fort Worth metropolitan area. He holds active CPA license in the state of Texas and California. Mohamed is the firm’s Executive Director. Mohamed has a Master of Science (M.S.) degree in Accounting from University of Dallas. He has extensive assurance experience in a wide variety of industries, and he also devotes considerable time consulting and working with organizations and CPA firms on internal controls, audit quality, automation, and accounting best practices. He has over 15 years of audit experience.
Prior to founding the firm, Mohamed worked for big 4 and national firms for over than 10 years in the assurance practice. Mohamed worked on private clients as well as public clients and specialized in financial services sector.
He is a member of the Texas CPA Practice Issues, Diversity and Inclusion, and Governmental Accounting and Single Audits Conference Committees of Texas Society of CPAs.
Mohamed is a member of the American Institute of Certified Public Accountants, member of the AICPA small business group, member of the American institute of Certified Management Accountants, and Texas Society of Certified Public Accountants.
