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.
