Explorer

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 following additional deficiency was identified: • The firm's approach to substantively test the allowance for doubtful accounts was to test the issuer's process. The firm did not perform procedures beyond reading an issuer-prepared memorandum to evaluate the reasonableness of the significant assumptions the issuer used to develop this allowance. (AS 2501.16)

To test accounts receivable the firm obtained evidence of subsequent cash receipts. The firm did not request the confirmation of accounts receivable or document how it overcame the presumption to perform confirmation procedures. (AS 2310.34 and .35)

To test accounts receivable the firm obtained evidence of subsequent cash receipts. The firm did not evaluate the reliability of the evidence of subsequent cash receipts. (AS 1105.04 and .06)

The issuer did not record an allowance for doubtful accounts based on an assumption. The firm's approach for evaluating the reasonableness of this assumption was to develop an independent expectation of the issuer's assumption. The following deficiencies were identified: - The firm did not demonstrate that it had a reasonable basis for an assumption it used to develop its independent expectation. (AS 2501.16)

With respect to Accounts Receivable the issuer did not record an allowance for doubtful accounts based on an assumption. The firm's approach for evaluating the reasonableness of this assumption was to develop an independent expectation of the issuer's assumption. The following deficiencies were identified: - The firm did not perform any procedures to test or in the alternative identify and test any controls over the accuracy and completeness of issuer data that the firm used to develop its independent expectation. (AS 1105.10)

The issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm did not identify and test any controls over accounts receivable for one of the issuer's business entities. (AS 2201.39)

The issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm selected for testing a control over the review of outstanding accounts receivable for another business entity but did not perform any procedures to test the design and operating effectiveness of the control. (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 issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm did not test or test controls over the accuracy and completeness of system-generated reports used in its substantive testing. (AS 1105.10)

The issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm selected for testing a sample of accounts receivable for certain business entities and unbilled receivables for certain other business entities. The following deficiencies were identified: · The firm did not perform any procedures over accounts receivable selected for testing that were not collected or were only partially collected in subsequent periods. (AS 2301.08)

The issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm selected for testing a sample of accounts receivable for certain business entities and unbilled receivables for certain other business entities. The following deficiencies were identified: · The firm did not perform any procedures to test whether services had been rendered prior to the issuer's recording of certain unbilled receivables. (AS 2301.08)

The issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm selected for testing a sample of accounts receivable for certain business entities and unbilled receivables for certain other business entities. The following deficiencies were identified: · The sample sizes the firm used in its substantive procedures were too small to provide sufficient appropriate audit evidence because the firm did not take into account the relevant factors in determining its sample size including tolerable misstatement for the populations the allowable risk of incorrect acceptance and the characteristics of the populations. (AS 2315.16 .19 .23 and .23A)

The issuer reported accounts receivables including unbilled receivables for multiple business entities. The firm did not perform sufficient procedures to test the valuation of accounts receivable and unbilled receivables because its procedures to test the allowance for doubtful accounts were limited to inquiry of management. (AS 2301.08)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. The firm did not perform sufficient alternative procedures to determine that the recorded amounts of the accounts receivable existed as of the year end because the procedures were limited to tracing to internal documents indicating the date of product delivery. (AS 2310.31)

The firm sent positive confirmation requests to the issuer's customers for a sample of billed accounts receivable. For positive confirmations that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts of the receivables were accurate as of the confirmation date. (AS 2310.31)

The firm selected certain other billed account receivables and agreed the customer balances to issuer-generated invoices. The firm did not perform any procedures to evaluate the relevance and/or reliability of the invoices it used to test such receivables. (AS 1105.04 and .06)

The firm did not sufficiently test unbilled receivables because the firm did not perform procedures to test such receivables beyond comparing certain unbilled balances as of an interim date to the respective balances at year end. (AS 2301.08)

The firm did not perform procedures to substantively test certain accounts receivable beyond examining the related customer invoice prepared by the issuer. (AS 2301.08)

The firm did not request the confirmation of accounts receivable or document how it overcame the presumption to perform confirmation procedures. (AS 2310.34 and .35)

The firm did not sufficiently test certain receivables because the firm did not perform procedures to test the collectability of such receivables beyond inquiries of management and reviewing an aging schedule. (AS 2301.08)

The firm did not evaluate the appropriateness of the issuer's classification of these receivables as current assets in conformity with FASB ASC Topic 210 Balance Sheet. (AS 2810.30 and .31)

The firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. For certain items in its sample the responses were returned by email. The firm did not consider performing procedures to verify the source of these responses. (AS 2310.29)

The firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. For positive confirmations that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts of the receivables were accurate as of the confirmation date. (AS 2310.31)

For certain revenue the firm did not identify and test any controls over the issuer's determination of whether the GAAP requirements that (1) persuasive evidence of an arrangement existed and (2) collectability was reasonably assured were met for transactions recorded as revenue. (AS 2201.39)

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)

For certain of this revenue the firm selected for testing controls that consisted of a monthly comparison of a sample of invoices to the related prior-month invoice and the investigation of differences. In testing these controls the firm did not inspect the invoices the control owners used in this comparison to determine whether all differences were identified for investigation. (AS 2201.44)

The sample sizes the firm used in certain of its substantive procedures to test revenue and accounts receivable were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm selected for testing a control over manually recorded period-end adjustments to reverse certain revenue for shipped products that had not been delivered to the issuer's customers by the end of the period. The firm did not identify and test any controls over the accuracy and completeness of the shipping terms entered into the revenue system that were used to determine whether adjustments were necessary. (AS 2201.39)

The firm did not identify and test any controls that addressed whether all manual sales orders were entered into the revenue system. (AS 2201.39)

The issuer entered into revenue arrangements with multiple elements and allocated consideration to the deliverables using vendor-specific objective evidence ('VSOE') of fair value or its BESP. The following deficiencies were identified: · The firm identified errors in the issuer's VSOE and BESP analyses and concluded that the issuer's control over the preparation and review of these analyses was not operating effectively as of year end. In determining whether the deficiency represented a material weakness the firm did not sufficiently evaluate the magnitude of the potential misstatements because it limited its procedures to evaluating the known misstatements. (AS 2201.62 and .63)

The issuer entered into revenue arrangements with multiple elements and allocated consideration to the deliverables using vendor-specific objective evidence ('VSOE') of fair value or its BESP. The following deficiencies were identified: · The firm's approach to substantively test the VSOE and BESP analyses was to review and test management's process. The firm did not test the accuracy and completeness of the stand-alone sales transactions the issuer used in these analyses or in the alternative test any controls over the accuracy and completeness of these transactions. (AS 2501.11)

The issuer entered into revenue arrangements with multiple elements and allocated consideration to the deliverables using vendor-specific objective evidence ('VSOE') of fair value or its BESP. The following deficiencies were identified: · In addition the issuer used certain sales order data that it obtained from the revenue system and manually entered into the analyses. The firm did not test or (as discussed above) sufficiently test controls over the completeness of the manually entered sales order data used in the analyses. (AS 2501.11)

The sample sizes the firm used in certain of its substantive procedures to test revenue deferred revenue and accounts receivable were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm selected for testing a control over certain revenue and the related accounts receivable that consisted of the review of sales orders the issuer entered into its revenue system. The firm did not identify and test any controls that addressed whether all sales orders were subject to this review. (AS 2201.39)

The firm did not identify and test any controls that addressed whether all approved requests for changes in billing rates were processed in the revenue system. (AS 2201.39)

The firm selected for testing controls over adjustments to one type of revenue and related accounts receivable and the gain on the sale of certain real estate assets. The issuer used system-generated reports in the performance of these controls. To test controls over the accuracy and completeness of these reports the firm either relied on testing performed in a prior year or tested one instance of the reports as of an interim date. The firm did not identify and evaluate the nature of the changes that were made to the configuration of these reports after the testing dates to update its conclusion to the date of management's assessment. (AS 2201.55 and .56)

The sample size the firm used in its substantive procedures to test adjustments to one type of revenue and related accounts receivable was too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiency in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm did not identify and test any controls that addressed the accuracy of the prices and quantities that were used to record revenue at two of the issuer's business units. (AS 2201.39)

The sample sizes the firm used in certain of its substantive procedures to test revenue and accounts receivable at these business units were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiency in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The issuer used an IT system to process and record transactions including those related to product revenue accounts receivable and certain expenses and related accruals. This system allowed the issuer to create security profiles for users that the issuer used to assign various levels of access privileges to these users including administrative access that allowed users to make changes to this system. The following deficiencies were identified: · The firm selected for testing two ITGCs over administrative access to this system but as part of that testing it did not perform any procedures to assess the control owners' (1) evaluation of certain security profiles and (2) determination of whether the access privileges assigned to those profiles were appropriate. (AS 2201.42 and .44)

The issuer used an IT system to process and record transactions including those related to product revenue accounts receivable and certain expenses and related accruals. This system allowed the issuer to create security profiles for users that the issuer used to assign various levels of access privileges to these users including administrative access that allowed users to make changes to this system. The following deficiencies were identified: · The firm selected for testing certain automated and IT-dependent manual controls over transactions related to these accounts. The firm's approach to testing these controls depended on effective ITGCs. Due to the deficiency in the firm's testing of ITGCs discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The sample sizes the firm used in certain of its substantive procedures to test product revenue accounts receivable and certain expenses and related accruals were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the system applied the appropriate service codes based on the inputs into the system. (AS 2201.39)

The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The firm used these service codes in its substantive testing of this revenue and accounts receivable but did not perform any substantive procedures to test or in the alternative identify and test any controls over the appropriateness of the service codes. (AS1105.10)

The issuer used an IT system to record revenue and accounts receivable transactions related to certain services that the issuer provided to its customers. This system recorded revenue transactions using service codes that the system selected based on various inputs into the system. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this revenue and accounts receivable were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiency in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The issuer recognized various types of revenue from one of its segments. The following deficiencies were identified: · For one type of revenue the firm did not identify and test any controls that addressed whether the performance obligation was satisfied before revenue was recognized. (AS 2201.39)

The issuer recognized various types of revenue from one of its segments. The following deficiencies were identified: · The firm selected for testing a control over the annual adjustments to the contract prices that the issuer entered into its revenue system and used to calculate and recognize revenue. The firm did not identify and test any controls over the completeness of certain data that were used in the performance of this control. (AS 2201.39)

The issuer recognized various types of revenue from one of its segments. The following deficiencies were identified: · The firm selected for testing a control over the annual adjustments to the contract prices that the issuer entered into its revenue system and used to calculate and recognize revenue. One aspect of this control consisted of the control owner's review of a sample of these pricing adjustments. The firm did not evaluate whether the control was designed to satisfy the issuer's control objective given the high rate of discrepancies the control owner identified in the sample reviewed. (AS 2201.42)

The issuer recognized various types of revenue from one of its segments. The following deficiencies were identified: · The firm selected for testing an automated control over the calculation of revenue for this segment by the issuer's billing system. The firm did not test the operating effectiveness of this control for three of the issuer's types of revenue related to this segment. (AS 2201.44)