Company: CAVA
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001628280-25-007882
Chunk: 234

Company: CAVA GROUP, INC.
Filing Date: 2025-02-26
Form: 10-K
Item: Item 8
Chunk 234
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 statements

Critical Audit Matter Description

A valuation allowance is provided when it is more likely than not that some or all of the deferred tax assets will not be realized. The factors used to assess the likelihood of realization include the Company’s historical and forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Management has determined that it is more likely than not that the existing deferred tax assets will be realized. On the basis of this evaluation, the Company fully released the valuation allowance against the deferred tax assets of $83.7 million in the fiscal year ended December 29, 2024.  The Company’s deferred tax assets as of December 29, 2024, were $71.5 million.

We identified management's determination that it is more likely than not that deferred tax assets will be realized as a critical audit matter because of the significant judgments and estimates management makes in evaluating positive and negative evidence, including taxable income. This required a high degree of auditor judgment and an increased extent of 

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effort, including the need to involve our income tax specialists when performing audit procedures to evaluate the reasonableness of management's significant judgments and estimates. 

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination that it is more likely than not that deferred tax assets will be realized included the following, among others:

•With the assistance of our income tax specialists, we evaluated the reasonableness of the methods, assumptions, and judgments used by management to determine whether a valuation allowance is necessary.

•With the assistance of our income tax specialists, we evaluated whether the sources of management's estimated future taxable income were appropriate and sufficient to utilize the deferred tax assets.

•We tested the reasonableness of management's estimates of taxable income by comparing the estimates to:

◦The Company’s financial forecasts.

◦Historical taxable income.

◦Internal communications to management and the Board of Directors.

◦Forecasted information included in Company press releases as well as in analyst and industry reports for the Company.

•We evaluated whether the estimates of future taxable income were consistent with evidence obtained in other areas of the audit.

•With the assistance of our income tax specialists, we evaluated the Company’s estimate of the timing of reversing temporary deferred items including utilization of net operating losses.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 25, 2025

We have served as the Company's auditor since 2018.

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