Explorer

The issuer initiated and processed sales at numerous business units. The firm designated certain of the issuer's business units as (1) subject to more extensive audit procedures or (2) subject to less extensive audit procedures. With respect to business units subject to less extensive audit procedures the following deficiencies were identified: · The relevant controls the firm selected for testing were two entity level controls that included monthly reviews of financial information including accounts receivable for these business units. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and/or the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control over the issuer's review of the accounting treatment for one-time or unusual transactions. The firm did not evaluate the specific review procedures that the control owners performed to assess the appropriateness of the conclusions reached regarding the accounting treatment. (AS 2201.42 and .44)

The firm subjected certain other of the issuer's business units to less extensive audit procedures. With respect to revenue from these business units the following deficiencies were identified: · To address the risks of material misstatement related to revenue for these business units the firm selected for testing a control that included the issuer's comparisons and reviews of the consolidated (1) budget to actual results and (2) prior-period actual results to current-period actual results. The firm did not evaluate the specific review procedures that the control owner performed to investigate identified variances and determine whether items identified for follow up had been appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of the allowance for doubtful accounts. The firm did not evaluate the review procedures that the control owner performed including the procedures performed to investigate certain accounts receivable balances and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's monthly review of the financial results. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing as instructed by the principal auditor a control that consisted of the review and approval of price quotes. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm's internal inspection program had inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The issuer used multiple IT systems to initiate process and record transactions related to revenue accounts receivable and long-lived assets. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to user access: The firm selected for testing controls over the assignment of privileged access rights to certain other IT systems that consisted of management's review and approval of privileged access requests. The following deficiency was identified: · The firm did not evaluate the specific review procedures that the control owners performed to determine whether access was appropriate and that the roles were adequately restricted or granted to users to prevent unauthorized and inappropriate access to these systems. (AS 2201.42 and .44)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing a control that consisted of the component's review of financial information. The firm did not evaluate the review procedures that the control owners performed to identify items for follow up. Further the firm did not sufficiently evaluate whether items identified for follow up were appropriately resolved because it limited its testing to one item. (AS 2201.42 and .44)

A component of the issuer (“component”) entered into contracts with customers in which revenue was recognized over time based on the extent of progress towards completion of the performance obligation. The following deficiency was identified: · The firm selected for testing two controls that consisted of the component's review of contracts including the review of new and modified contracts for appropriate revenue recognition. The firm did not (1) evaluate the specific review procedures that the control owner performed to assess the appropriateness of revenue recognition and (2) test an aspect of the control over the accuracy of the report used in the operation of the control. (AS 2201.42 and .44))

The issuer used multiple information-technology (IT) systems to initiate process and/or record transactions related to revenue and the related accounts receivable investment securities and cash. With respect to change management: · For certain IT systems the firm selected for testing controls that included the issuer's review of changes to these IT systems. For certain of these IT systems the firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. Further the firm did not determine whether the control owners possessed the necessary competence to perform these controls. (AS 2201.42 and .44)

The firm selected for testing a control over management's review of the allowance for doubtful accounts calculation. The firm did not evaluate the review procedures that the control owner performed to assess the reasonableness of the assumptions used to determine the allowance including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control over the issuer's review of the allowance for doubtful accounts. The following deficiencies were identified: · The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer initiated and processed transactions related to revenue accounts receivable and inventory at several business units. The firm selected for testing an entity-level control that consisted of the issuer's review of quarterly financial information including revenue accounts receivable and inventory. The firm did not evaluate the specific review procedures that the control owner performed to determine whether items identified for follow up were appropriately resolved. (AS 2201.42 and .44)

With respect to the issuer's allowance for doubtful accounts the following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the allowance for doubtful accounts at one of the issuer's business units. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The following additional deficiency was identified: • The firm selected for testing controls that consisted of the issuer's reviews of the sales return reserve and the allowance for doubtful accounts. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm selected for testing a control over the review of delinquent accounts receivable for a third business entity but did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the reserve for the recorded accounts receivable. (AS 2201.42 and .44)

The firm selected for testing various controls that consisted of monthly comparisons of this revenue by customer product geographic region and/or business unit to revenue recorded in the prior month. The firm did not evaluate the review procedures that the control owners performed including whether items identified for follow up were appropriately resolved. (AS 2201.42 and .44)

The issuer used an information-technology (IT) system to process transactions related to revenue that automatically assigned predefined codes to each transaction. These codes were used by the issuer's system to determine revenue and certain related adjustments. The following deficiencies were identified: · The firm did not evaluate the specific review procedures that the control owners performed to determine whether the amount to be recorded as revenue was appropriate. (AS 2201.42 and .44)

The firm selected for testing controls that consisted of the issuer's review of revenue transactions and accounts receivable and the related reserve. The firm did not evaluate the review procedures that the control owners performed including the criteria that the control owners used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing controls that consisted of the issuer's reviews of the allowance for doubtful accounts. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer used an information technology (IT) system to process and record transactions related to revenue accounts receivable and inventory. In its testing of controls over these accounts the firm tested certain IT-dependent manual controls that used data and reports generated or maintained by this IT system. The following ITGC deficiencies were identified: · The firm selected for testing a control over the issuer's review of user access to this IT system but did not evaluate the specific review procedures that the control owner performed to determine whether to approve user access that had been requested or whether user access that had been previously approved continued to be appropriate. (AS 2201.42 and .44)

The principal auditor instructed the firm to test certain controls over revenue and accounts receivable that consisted of management's review of (1) changes to customer data (2) the accounts receivable and allowance for doubtful accounts (3) credit memos (4) sales reversal entries (5) the rebate reserves and underlying assumptions and (6) the allocation of the total transaction price to the separate performance obligations based on their relative standalone selling prices. The following deficiency was identified: • The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of management's review of the accounts receivable aging report to determine whether the allowance for doubtful accounts was appropriate. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

For revenue accounts receivable and unbilled receivables the following additional deficiency was identified: · The firm selected for testing certain controls that consisted of the issuer's review of certain aspects of revenue accounts receivable and unbilled receivables. The firm did not perform procedures to evaluate the review procedures the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)