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The issuer recognized various types of revenue from one of its segments. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test revenue and accounts receivable for this segment 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 recognized various types of revenue from one of its segments. The following deficiencies were identified: · For the type of revenue subject to the first deficiency discussed above the firm's substantive procedures to test revenue and related accounts receivable consisted of performing tests of details. The firm used certain system-generated data to provide evidence related to revenue recognition in its substantive testing. The firm did not perform substantive procedures to test or in the alternative identify and test any controls over the accuracy of the system-generated data that the firm used in its substantive testing. (AS 1105.10)

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 identify and test any controls that addressed whether certain of these codes were appropriately assigned by the IT system. (AS 2201.39)

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 selected for testing a control that included the issuer's review of revenue transactions that exceeded a monetary threshold but did not evaluate whether this threshold was sufficiently precise to detect misstatements that could be material. (AS 2201.42)

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 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 did not identify and test any controls over the accounts receivable allowance and bad debt expense. (AS 2201.39)

The firm did not perform any substantive procedures to test the accounts receivable allowance and bad debt expense. (AS 2301.08)

To test accounts receivable the firm sent confirmation requests to a sample of customers. For confirmation requests that were not returned the firm performed alternative procedures by testing subsequent cash receipts. The firm did not (1) perform any alternative procedures to test the accounts receivable balances with no subsequent cash receipts and (2) evaluate the combined evidence provided by the confirmation responses and the alternative procedures to determine whether these procedures provided sufficient appropriate evidence about the existence of accounts receivable. (AS 2310.31 and .33)

The firm did not perform any substantive procedures to test the allowance for doubtful accounts. (AS 2501.07)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of the significant assumption used by the issuer related to default rates beyond comparing the rates to data from the external source that the issuer used to develop the rates. (AS 2501.16)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to evaluate the relevance of the credit rating categories from the external source that the issuer used in determining the default rates. (AS 1105.04 and .06)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to test or test any controls over the accuracy of certain information used by the issuer in calculating a component of its allowance for expected credit losses. (AS 1105.10)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer recorded an allowance for expected credit losses related to accounts receivable which was based in part on significant assumptions regarding default rates. The issuer assigned credit rating categories to each receivable based on whether or not the customer had made payments and assigned a default rate to each customer's receivable based on that assigned category which was based on information from an external source. The firm's approach to test the allowance for expected credit losses was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures beyond comparison to an issuer-prepared schedule to test the issuer's presentation of certain items related to accounts receivable and the allowance for expected credit losses in the statement of cash flows. (AS 2301.08)

The firm selected for testing certain controls over the issuer's review of accounts receivables and the allowance for credit losses. The firm did not identify and test any controls over the accuracy of reports used in the operation of these controls. (AS 2201.39)

To test accounts receivable the firm sent positive confirmation requests to a sample of customer accounts. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29)

To test accounts receivable at one of the issuer's components the firm performed confirmation procedures for a sample of balances at an interim date. The firm obtained a rollforward of accounts receivable from the interim date to year end and selected transactions that exceeded a monetary threshold to test. The firm did not perform procedures to test the remaining population of transactions. (AS 1105.27; AS 2301.08)

To test accounts receivable at one of the issuer's components the firm performed confirmation procedures for a sample of balances at an interim date. The firm obtained a rollforward of accounts receivable from the interim date to year end and selected transactions that exceeded a monetary threshold to test. To test the related allowance for doubtful accounts the firm developed an independent expectation of the estimate. The firm did not perform procedures to test or in the alternative test any controls over the accuracy and completeness of certain data it used to develop its independent expectation. (AS 1105.10)

To test accounts receivable at a second component and certain accounts receivable at a third component the firm selected balances for testing that exceeded a monetary threshold. The firm did not perform procedures to test the remaining population of accounts receivable. (AS 1105.27; AS 2301.08)

To test certain other accounts receivable at the third component the firm selected balances for testing at an interim date that exceeded a monetary threshold. The firm did not perform procedures to test the remaining population of accounts receivable. Further the firm did not perform procedures to extend its conclusion from the interim date to year end. (AS 1105.27; AS 2301.08 and .45)

The firm did not perform procedures to test or test any controls over the accuracy of certain data that it used to test the allowance for doubtful accounts at the second and third components. (AS 1105.10)

The firm did not perform sufficient procedures to obtain the necessary understanding of the flow of transactions within the revenue and accounts receivable transaction cycles including the effect of the issuer's information technology (“IT”) systems to identify the likely sources of potential misstatements. (AS 2201.34 and .36)

The firm selected for testing multiple controls over user access to various applications. The firm did not evaluate the procedures that the control owners performed including the criteria that the control owners used to create edit and maintain the security roles within these applications. (AS 2201.42 and .44)

The firm selected for testing a number of automated application controls related to processing revenue transactions and performing database reconciliations. For certain of these controls the firm did not sufficiently test the design effectiveness of the controls because it did not determine whether items that met the issuer's established criteria would be properly investigated and resolved. (AS 2201.42)

For the other controls the firm did not perform any procedures to test the design effectiveness of the controls. (AS 2201.42)

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 identified a control deficiency for a control related to the approval of new customers. The firm did not sufficiently evaluate the severity of the control deficiency because it did not identify that the compensating controls it selected for testing did not address the risk of material misstatement related to customers who were not approved. (AS 2201.68)

The firm selected for testing controls that consisted of the issuer's reviews of the allowance for doubtful accounts. The firm did not identify and test any controls over the accuracy and completeness of certain data used in the performance of these controls. (AS 2201.39)

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 firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. The following deficiencies were identified: · For one confirmation that was returned with exceptions the firm did not evaluate the nature of those exceptions. (AS 2310.33)

The firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. The following deficiencies were identified: · For certain confirmations that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that these balances represented valid receivables as of the confirmation date. (AS 2310.31)

The firm's approach to testing accounts receivable included sending a positive confirmation request to the issuer's largest customer. The firm sent the confirmation request to a respondent who was an employee of the issuer who also performed contract work for the customer without considering the respondent's objectivity and freedom from bias and whether the response that was received by the firm provided meaningful and appropriate evidence. (AS 2310.26 and .27)

The firm also traced one invoice due from another customer to subsequent cash receipts. The firm did not perform any procedures to test the remaining accounts receivable balance. (AS 2301.08 and .13)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The firm did not perform any procedures to test the remaining population of accounts receivable. (AS 1105.27; AS 2301.08)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · The issuer sent the confirmation requests on behalf of the firm. The firm did not maintain control of the confirmation requests through direct communication with the intended recipients of the confirmation requests. (AS 2310.28)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · The firm received electronic responses to confirmation requests. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · For the confirmation requests that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts of the accounts receivable were accurate as of the confirmation date. (AS 2310.31)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · The firm did not perform procedures beyond inquiry of management to extend its conclusions regarding the existence of accounts receivable from the interim date in which the audit procedures were performed to year end. (AS 2301.45)

The issuer used two information-technology (IT) systems to process and record transactions related to revenue accounts receivable and inventory for this business unit. The following deficiencies were identified: • With respect to the first system the issuer maintained separate instances of this system at each of its locations; each instance represented a separate occurrence of the system that could be configured differently. The firm selected for testing certain automated controls over this system. The firm's approach to testing only one instance of the operation of these automated controls was inappropriate because it was based on an unsupported assumption that all instances of this system were configured the same way and that the automated controls for each instance were designed and operated the same way. (AS 2201.46)

The issuer used two information-technology (IT) systems to process and record transactions related to revenue accounts receivable and inventory for this business unit. The following deficiencies were identified: • The firm identified control deficiencies related to certain controls over access to the second system. The firm did not sufficiently evaluate the severity of these control deficiencies because its procedures were limited to evaluating whether the changes made to the system in the current year were appropriate without evaluating the magnitude of the potential misstatement that could have resulted from inappropriate access to this system. (AS 2201.62)

The issuer used two information-technology (IT) systems to process and record transactions related to revenue accounts receivable and inventory for this business unit. The following deficiencies were identified: • The firm selected for testing certain automated and IT-dependent manual controls that used information generated or maintained by the second system. The accuracy and completeness of this information depended on effective IT general controls (ITGCs). Due to the deficiency in the firm's evaluation of the ITGC control deficiencies discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The firm sent positive confirmation requests to the issuer's customers for a sample of accounts receivable. For the confirmation requests that were not returned or that were returned without a response the firm did not perform alternative procedures. (AS 2310.31)

The firm did not perform procedures to examine material adjustments made to accounts receivable during the course of preparing the financial statements. (AS 2301.41)

The firm did not perform any procedures to test the allowance for doubtful accounts. (AS 2501.07)

The firm tested information technology general controls for an application used to process revenue and accounts receivable transactions and identified control deficiencies related to access and change management. The firm selected for testing controls over certain revenue that consisted of the automated generation of a customer invoice and recognition of related revenue and accounts receivable upon shipment of goods. The firm did not sufficiently test these controls because it tested only one instance which was not appropriate due to the identified control deficiencies. (AS 2201.46)

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

The firm did not perform substantive procedures to test or in the alternative identify and test controls over the accuracy and completeness of certain data and reports used in its substantive procedures to test revenue deferred revenue and accounts receivable. (AS 1105.10)

The firm selected for confirmation a customer's accounts receivable balance and received an electronic response to its confirmation request. The firm did not consider performing procedures to address the risk associated with electronic responses. (AS 2310.29)

To test certain accounts receivable the firm performed confirmation procedures for all invoices that exceeded a monetary threshold. For the items for which the requested confirmations were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that these invoices represented valid receivables at year end. (AS 2310.31)

For these accounts receivable that were not subject to confirmation procedures the firm performed substantive procedures for a nonstatistical sample of invoices. For certain items in its sample the firm did not perform procedures that provided sufficient appropriate audit evidence that these invoices represented valid receivables at year end. (AS 2301.08)