Explorer

During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of an acquired intangible asset and the consideration transferred using various significant assumptions. The firm's approach for substantively testing the fair values of the acquired intangible asset and the consideration transferred was to test the issuer's process. The following deficiencies were identified: · With respect to the intangible asset the firm used an auditor-employed specialist to evaluate a significant assumption developed by the issuer. The firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of another significant assumption developed by the issuer. (AS 2501.16)

The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm used an auditor-employed specialist to evaluate certain significant assumptions developed by the company's specialist and used in the measurement or assessment of these acquired intangible assets. The firm did not identify that the auditor-employed specialist did not perform any procedures beyond inquiring of management to evaluate these assumptions. (AS 1105.A8b; AS 1201.C6 and .C7)

The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions developed by the issuer and used in the measurement or assessment of these acquired intangible assets because the firm did not evaluate the relevance and reliability of external information it used. (AS 1105.04 and .06)

The issuer acquired multiple businesses which included acquiring intangible assets. In addition during the year events or changes in circumstances existed indicating that the carrying value of these acquired intangible assets may not be recoverable. The issuer engaged a specialist to assist it in (1) determining the initial fair values of these acquired intangible assets and the provision for contingent consideration to be paid to the sellers and (2) performing an assessment of these acquired intangible assets for impairment. The following deficiencies were identified as of the acquisition date and/or at year end: · The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions developed by the issuer and used in the measurement or assessment of these acquired intangible assets because it did not (1) evaluate a significant difference between one of these assumptions and the issuer's experience or (2) take into account the issuer's intent and ability to carry out certain of these assumptions. (AS 2501.16 and .17)

During the year the issuer acquired a business and determined the fair value of a liability assumed in connection with the acquisition using various significant assumptions. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of a significant assumption because it did not (1) take into account the issuer's intent and ability to carry out this assumption and (2) evaluate a significant difference between this assumption and the issuer's recent experience. (AS 2501.16 and .17)

During the year the issuer acquired a business and determined the fair value of a liability assumed in connection with the acquisition using various significant assumptions. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the reasonableness of another significant assumption. (AS 2501.16)

During the year the issuer acquired a business and engaged specialists to determine the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm's approach for substantively testing the fair value of an acquired intangible asset was to test the issuer's process and the firm used an auditor-employed specialist to evaluate a significant assumption developed by one of the company's specialists. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because the auditor-employed specialist did not evaluate the relevance and reliability of external information it used in evaluating the reasonableness of this assumption. (AS 1105.04 and .06; AS 1201.C6 and .C7)

The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not perform procedures beyond inquiry to evaluate the reasonableness of a significant assumption developed by the issuer. (AS 2501.16)

The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of another significant assumption developed by the issuer because it did not evaluate significant differences between this assumption and the issuer's historical and recent experience. (AS 2501.16)

The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm did not evaluate the relevance and reliability of external information it used in its substantive testing of certain significant assumptions. (AS 1105.04 and .06)

The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. During the year the issuer acquired a business and engaged a specialist to assist it in determining the fair values of certain acquired assets using various significant assumptions. The following deficiencies were identified: · The firm used an auditor-employed specialist to evaluate a significant assumption developed by the company's specialist. The firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because the auditor-employed specialist did not evaluate the relevance and reliability of external information the company's specialist used. (AS 1105.A8a; AS 1201.C6 and .C7)

During the year the issuer entered into a merger agreement which included provisions for contingent payments to the sellers upon the satisfaction of certain criteria. The following deficiencies were identified: · The firm's approach to substantively test the fair value of one of these provisions consisted of developing an independent expectation using an auditor-employed specialist. The firm did not identify that the auditor-employed specialist did not perform procedures to demonstrate it had a reasonable basis for a significant assumption it developed. (AS 1201.C6 and .C7; AS 2501.22)

During the year the issuer acquired multiple businesses and engaged specialists to determine the fair values of certain acquired assets using various assumptions. For these business combinations the firm's approach to substantively test the fair values of certain of these acquired assets consisted of (1) testing the issuer's process and (2) developing independent expectations of the fair values as a range and the firm used an auditor-employed specialist in each approach. The following deficiencies were identified: · In testing the issuer's process the firm did not identify that the auditor-employed specialist did not perform procedures to evaluate the reasonableness of certain significant assumptions developed by the company's specialists. (AS 1105.A8b; AS 1201.C6 and .C7)

For one of these business combinations the firm's approach to substantively test the fair values of certain other acquired intangible assets consisted of testing the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions that the company's specialists used. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not sufficiently evaluate the reasonableness of a significant assumption developed by the company's specialist because the auditor-employed specialist did not perform any procedures to evaluate the reasonableness of a component of this assumption. (AS 1105.A8b; AS 1201.C6 and .C7)

For one of these business combinations the firm's approach to substantively test the fair values of certain other acquired intangible assets consisted of testing the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions that the company's specialists used. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not evaluate the relevance and reliability of (1) external data that the company's specialist used to develop a significant assumption and (2) other external data that the auditor-employed specialist used to evaluate the reasonableness of other significant assumptions. (AS 1105.04 .06 and .A8a; AS 1201.C6 and .C7)

For one of these business combinations the firm's approach to substantively test the fair values of certain other acquired intangible assets consisted of testing the issuer's process and the firm used an auditor-employed specialist to evaluate certain significant assumptions that the company's specialists used. The following deficiencies were identified: · The firm did not evaluate the reliability of certain other information that the firm used to evaluate the reasonableness of certain significant assumptions developed by the issuer. (AS 1105.04 and .06)

The firm's approach for testing the fair value of acquired intangible assets was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions and issuer-developed projected revenue provided to the external specialist and used in the valuation of the acquired intangible assets because its procedures were limited to inquiry of management reading the issuer-prepared acquisition accounting memoranda and comparing projected revenue to current year results without performing procedures to evaluate whether the issuer's current year results would be representative of the issuer's projected revenue. (AS 1210.12; AS 2502.26 .28 and .31)

During the year the issuer acquired a business and engaged an external specialist to assist in determining the fair values of the acquired assets including certain intangible assets. The following deficiency was identified. • The firm did not perform procedures to evaluate the reasonableness of an assumption considered significant by the firm developed by the company's specialist and used by the specialist to determine the fair values of the intangible assets beyond determining that the selected value of the assumption was the midpoint in a range of potential assumptions from an external source used by the issuer. (AS 1105.A8b)

The external specialist used information from various other sources to develop assumptions to determine the fair value of those assets. The firm did not evaluate the relevance and reliability of information the external specialist used. (AS 2502.31)

The external specialist used information from various other sources to develop assumptions to determine the fair value of those assets. The firm did not sufficiently evaluate the reasonableness of the assumptions developed by the external valuation specialist because it limited its procedures to inquiry of management. (AS 2502.26 and .28)

During the year the issuer acquired a business entity. The firm did not perform any substantive procedures beyond inquiry to evaluate the reasonableness of certain assumptions used to determine the fair value of an acquired intangible asset. (AS 2502.26 and .28)

The firm did not evaluate the reasonableness of certain assumptions developed by the specialist. (AS 2502.26 and .28)

The issuer used projected sales of three acquired products adjusted by probability assumptions to determine the fair value of certain contingent consideration arrangements related to the acquisition. The firm did not sufficiently evaluate the probability assumptions for all three products and the reasonableness of the projected sales for two of these products because its procedures were limited to inquiring of management and reading general market information. (AS 2502.26 and .28)

The firm's approach for substantively testing the reserve estimates was to test the issuer's process. The firm did not perform sufficient procedures to test the reserve estimates because the firm did not: · Evaluate the reasonableness of the assumptions developed by the company's specialist and used to develop the reserve estimates; (AS 1105.A8b)

During the year the issuer acquired a business. The acquired assets primarily consisted of oil and gas properties that had oil and gas reserves assigned (“proved properties”) and properties that had no oil and gas reserves assigned (“unproved properties”). The issuer determined the fair value of the acquired oil and gas properties based on discounted cash flows it developed using various assumptions including future production volumes and certain adjustment factors. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of the adjustment factor assumptions used but did not evaluate whether the thresholds the control owner used to identify items for investigation were sufficiently precise to detect material misstatements. (AS 2201.42)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. During the year the issuer acquired a business. The acquired assets primarily consisted of oil and gas properties that had oil and gas reserves assigned. The issuer used company-employed specialists to estimate the issuer's oil and gas reserves that were used in the (1) valuation of the acquired oil and gas properties and (2) calculation of depletion expense for these acquired oil and gas properties. The issuer determined the fair value of the acquired oil and gas properties based on discounted cash flows it developed using various assumptions including future production volumes. The company's specialists used financial and non-financial data produced by the issuer and assumptions developed by the issuer or the company's specialists to estimate the oil and gas reserves underlying the future production volumes. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the significant future production volume assumptions beyond comparing these assumptions to historical production volume information from the acquired business. (AS 1105.A8b)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. During the year the issuer acquired a business. The acquired assets primarily consisted of oil and gas properties that had oil and gas reserves assigned. The issuer used company-employed specialists to estimate the issuer's oil and gas reserves that were used in the (1) valuation of the acquired oil and gas properties and (2) calculation of depletion expense for these acquired oil and gas properties. The issuer determined the fair value of the acquired oil and gas properties based on discounted cash flows it developed using various assumptions including future production volumes. The company's specialists used financial and non-financial data produced by the issuer and assumptions developed by the issuer or the company's specialists to estimate the oil and gas reserves underlying the future production volumes. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the significant non-financial assumptions that were developed by the company's specialists or the issuer and used by the company's specialists to develop the future production volumes. (AS 1105.A8b; AS 2501.16)

The firm's internal inspection program had inspected this audit and reviewed these areas but did not identify the deficiencies below. During the year the issuer acquired a business. The acquired assets primarily consisted of oil and gas properties that had oil and gas reserves assigned. The issuer used company-employed specialists to estimate the issuer's oil and gas reserves that were used in the (1) valuation of the acquired oil and gas properties and (2) calculation of depletion expense for these acquired oil and gas properties. The issuer determined the fair value of the acquired oil and gas properties based on discounted cash flows it developed using various assumptions including future production volumes. The company's specialists used financial and non-financial data produced by the issuer and assumptions developed by the issuer or the company's specialists to estimate the oil and gas reserves underlying the future production volumes. The following deficiencies were identified: · The firm did not perform any procedures beyond inquiry to evaluate whether the methods used by the company's specialists were appropriate under the circumstances. (AS 1105.A8c)

During the year the issuer completed a business combination and used various significant assumptions including reserves and resources estimates from a report (“technical report”) prepared by external specialists engaged by the acquired company to estimate and record the fair value of an acquired asset and assumed liability. The issuer utilized internal specialists (the “company's employed specialists”) to assess the reasonableness of the reserves and resources estimates reflected in the technical report by remodeling the estimates and comparing the results to the estimates reflected in the technical report. The firm selected for testing a control that consisted of the issuer's review of the financial and non-financial assumptions including the reserves and resources estimates reflected in the technical report that were used by the issuer to estimate the fair value of the acquired asset and assumed liability. This control used the remodeled reserves and resources estimates developed by the company's employed specialists. The following deficiency was identified: • The firm did not identify that the control owners did not (1) evaluate the reasonableness of the financial and non-financial assumptions developed by the issuer and/or the company's employed specialists and used by the company's employed specialists to remodel the reserves and resources estimates and (2) evaluate the appropriateness of the methods used by company's employed specialists to remodel the reserves and resources estimates. (AS 2201.42 and .44)

During the year the issuer completed a business combination and used various significant assumptions including reserves and resources estimates from a report (“technical report”) prepared by external specialists engaged by the acquired company to estimate and record the fair value of an acquired asset and assumed liability. The issuer utilized internal specialists (the “company's employed specialists”) to assess the reasonableness of the reserves and resources estimates reflected in the technical report by remodeling the estimates and comparing the results to the estimates reflected in the technical report. The firm's approach for substantively testing the fair value of the acquired asset and assumed liability from the business combination was to test the issuer's process. The following deficiency was identified: • The firm did not sufficiently evaluate the reasonableness of certain other significant assumptions used by the issuer to estimate the fair value of the acquired asset because it limited its procedures to comparing the assumptions to those of similar companies or external vendor quotes. (AS 2501.16)

For another business combination the issuer used an external specialist to estimate the fair value of certain of the acquired assets. For certain assets the fair values were determined using forecasted cash flows. The following deficiencies were identified: - For certain assets the firm did not perform procedures beyond inquiry of management to evaluate the reasonableness of certain significant assumptions underlying the cash-flow forecasts. (AS 2502.26 and .28)

During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair values of the acquired intangible assets. The issuer provided the specialist with financial projections and other data that were used in the valuations. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of the royalty rate that the specialist used to value the trade name intangible assets because its procedures were limited to comparing the assumptions to industry information obtained by the specialist without evaluating the relevance and reliability of the source of that information. (AS 2502.26 .28 and .31)

During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair values of the acquired intangible assets. The issuer provided the specialist with financial projections and other data that were used in the valuations. The following deficiencies were identified: · The firm did not evaluate the reasonableness of certain assumptions that the issuer provided to the specialist that the specialist used to estimate the fair value of other acquired intangible assets. (AS 1210.12)

During the year the issuer acquired a business and determined the fair value of an acquired intangible asset using forecasted cash flows that assumed significant revenue growth and improved gross margins. The following deficiencies were identified: · With respect to both the revenue growth rate and gross margin assumptions the firm did not sufficiently evaluate whether these assumptions were consistent with certain information including certain industry factors or the issuer's historical and recent experience because it did not evaluate the significant differences between these assumptions and that information. Further the firm did not take into account the issuer's ability to achieve the forecasted revenue growth and gross margins. (AS 2501.16 and .17)

During the year the issuer acquired a business and determined the fair value of an acquired intangible asset using forecasted cash flows that assumed significant revenue growth and improved gross margins. The following deficiencies were identified: · With respect to the revenue growth rate assumptions the firm used information produced by the issuer and information from external sources including industry data and growth rates for comparable companies to evaluate the reasonableness of these assumptions. The firm did not evaluate the relevance and reliability of certain industry data and the relevance of the growth rates for the comparable companies. (AS 1105.04 and .06)

During the year the issuer acquired multiple businesses and engaged a specialist to assist in the determination of the fair values of certain assets acquired using forecasted cash flows and other assumptions. The following deficiencies were identified: · The firm's approach for substantively testing the fair values of certain acquired assets was to test the issuer's process. The firm used an auditor-employed specialist to evaluate the significant assumptions the company's specialist used. For certain of these assets the firm did not sufficiently evaluate the reasonableness of these significant assumptions because it did not identify that the auditor-employed specialist did not perform any procedures beyond reading the valuation report that was prepared by the company's specialist to evaluate certain significant assumptions developed by the issuer. (AS 1201. C6 and .C7; AS 2501.16)

The firm's approach for testing the fair value of these assets was to develop an independent fair value estimate using certain of the issuer's assumptions. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the issuer's assumptions that the firm used in developing an independent fair value estimate. (AS 2502.40)

The firm's approach for testing the fair value of these assets was to develop an independent fair value estimate using certain of the issuer's assumptions. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the issuer's assumptions that the firm used in developing an independent fair value estimate. (AS 2502.40)

During the year the issuer completed a business combination and engaged multiple specialists to determine the fair value of certain acquired assets including acquired intangible assets and certain assumed liabilities. The following deficiency was identified: • The firm did not perform any procedures to evaluate the reasonableness of certain significant assumptions used by the company's specialists in the valuation of certain acquired assets and assumed liabilities. (AS 1105.A8b)

During the year the issuer completed a business combination and engaged multiple specialists to determine the fair value of certain acquired assets including acquired intangible assets and certain assumed liabilities. The following deficiency was identified: • The firm did not perform any procedures to evaluate the relevance and reliability of certain data the firm used to evaluate the reasonableness of certain components of another significant assumption developed by the company's specialist in its valuation of certain acquired assets. (AS 1105.04 and .06)

The issuer used an external valuation specialist to determine the fair value of the acquired entity. The firm's approach for substantively testing the fair value of the acquired entity was to review and test management's process. The firm did not evaluate the reasonableness of the assumptions developed by the external valuation specialist. (AS 2502.26 and .28)

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not perform any procedures to test the fair value the issuer assigned to the acquired intangible assets. (AS 2501.07)

During the year the issuer acquired a business. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of the useful life the issuer assigned to these intangible assets because its procedures were limited to comparing this useful life to the useful life the issuer had assigned in a prior year to another type of intangible assets without evaluating the reasonableness of the difference between these two useful lives. (AS 2501.16)

During the year the issuer acquired a business. The following deficiencies were identified: · The firm's approach for substantively testing the fair value of certain consideration the issuer transferred to the sellers was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of a significant assumption that the issuer used to determine the fair value of this consideration. (AS 2501.16)

During the year the issuer acquired multiple other businesses. The issuer engaged specialists to determine the fair values of the acquired intangible assets using forecasted cash flows provided by the issuer and related assumptions developed by the specialists. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions that the company's specialists used. The following deficiency was identified: · The firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of certain significant assumptions developed by the issuer for periods beyond the first year of the forecasted cash flows. (AS 2501.16)

During the year the issuer acquired multiple other businesses. The issuer engaged specialists to determine the fair values of the acquired intangible assets using forecasted cash flows provided by the issuer and related assumptions developed by the specialists. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and certain significant assumptions that the company's specialists used. The following deficiency was identified: · The firm did not identify that the auditor-employed specialist did not sufficiently evaluate the reasonableness of certain significant assumptions developed by the company's specialists because its procedures were limited to inquiring of management and reading an issuer-prepared memorandum and the valuation reports that were prepared by the company's specialists. (AS 1105.A8b; AS 1201.C6 and .C7)

The firm's internal inspection program inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. During the year the issuer acquired multiple businesses and engaged a specialist to determine the fair value of the acquired intangible assets for each acquisition. The firm's approach for substantively testing the fair value of the acquired intangible assets was to test the issuer's process and the firm used an auditor-employed specialist to evaluate the methods and significant assumptions that the company's specialist used including the forecasted cash flows developed by the issuer. The firm did not identify that the auditor-employed specialist did not perform any procedures to evaluate the reasonableness of the forecasted cash flows. (AS 1201.C6 and .C7; AS 2501.16)

The firm's internal inspection program inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. For two of the acquired businesses the firm did not perform any procedures to test the remaining assets acquired and liabilities assumed. (AS 2301.08; AS 2501.07)

During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to three of the acquired businesses the following deficiency identified: · The firm's procedures to evaluate the reasonableness of the forecasted revenue growth rates for the first two years of the forecast period consisted of comparing these rates to forecasted industry data and historical financial information of the acquired businesses. For one of the acquired businesses the firm did not evaluate a significant difference between the industry data and the issuer's forecasted revenue growth rate for the second year of the forecast period. (AS 2501.16).

During the year the issuer acquired multiple businesses and determined the fair values of certain acquired intangible assets using forecasted cash flows and related assumptions. The firm's approach for substantively testing the fair values of the acquired intangible assets was to test the issuer's process. With respect to three of the acquired businesses the following deficiency identified: · For all three acquired businesses the firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the revenue growth rates for the remaining years of the forecasted period and another significant assumption. (AS 2501.16)