Explorer

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 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 did not perform any other procedures to evaluate the issuer's accounting for and presentation and disclosure of this provision. (AS 2301.08 and .11)

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: · For another provision the firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 718 Compensation—Stock Compensation related to the nature and terms of the provision and the potential effects of the provision on shareholders. (AS 2810.30 and .31)

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)

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 perform procedures to test the accuracy of certain issuer-produced data that the company's specialists used to develop the fair values of these assets. (AS 1105.A8a)

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 developing its independent expectations the firm did not identify that the work of the auditor-employed specialist did not provide sufficient appropriate audit evidence because it did not evaluate whether the independent expectations of the fair values as a range encompassed only reasonable outcomes and were supported by sufficient appropriate audit evidence. (AS 1201.C6 and .C7; AS 2501.25)

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 developing its independent expectations the firm did not identify that the auditor-employed specialist did not evaluate the relevance and reliability of certain external data that it used to develop its independent expectations. (AS 1105.04 and .06; 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 did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 820 Fair Value Measurement related to certain acquired assets. (AS 2810.30 and .31)

During the year the issuer acquired certain businesses and used an external specialist to determine the fair value of acquired intangible assets. The firm selected for testing three controls that consisted of reviews over (1) management's assumptions used by the external specialist (2) the valuation reports prepared by the external specialist and (3) acquisition accounting memoranda. 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 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 used an external specialist to determine the fair value of acquired intangible assets. The firm's approach for testing the fair values was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the issuer-developed projected revenue provided to the external specialist and used in the valuation of the acquired intangible assets because it limited its procedures to comparing the projected revenue to (1) the issuer's sales for two products and (2) revenue growth for a competitor without performing procedures to evaluate whether these results would be representative of the issuer's projected revenue. (AS 1210.12)

During the year the issuer acquired a business. The firm did not sufficiently test the fair value of certain consideration transferred by the issuer because its procedures were limited to recalculating this consideration based on the terms of the purchase agreement without evaluating certain relevant available market information. (AS 2502.26 .28 .31 and .36)

During the year the issuer acquired a business. The firm did not identify and evaluate the issuer's omission of certain required disclosures under FASB ASC Topic 805 Business Combinations related to the amounts of revenue and earnings of the acquired business since the acquisition date. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its disclosures related to this business combination and determined that certain disclosures were omitted. The issuer did not file an amended Form 10-K or Form 8-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected these omissions in a subsequent filing.

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 (1) evaluate the relevance and reliability of certain external data that the company's specialist used to develop assumptions considered significant by the firm and (2) test the accuracy and completeness of certain issuer-produced data that the company's specialist used to develop other assumptions also considered significant by the firm all of which were used by the company's specialist to determine the fair values of these intangible assets. (AS 1105.A8a)

During the year the issuer acquired a business and engaged an external specialist to assist in determining the purchase price allocation and fair values of the acquired assets including certain goodwill and other intangible assets. The following deficiency was identified. • The firm did not perform procedures to evaluate the work of the company's specialist. (AS 1105.A6 - .A10)

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)

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 relevance and reliability of certain industry and other external information provided by the issuer that was used by the firm to evaluate the reasonableness of the issuer's revenue forecast. (AS 1105.04 and .06)

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 sufficient procedures to evaluate the reasonableness of the issuer's revenue forecasts used by the company's specialist to determine the fair values of the intangible assets because it did not (1) perform procedures to evaluate whether the issuer had a reasonable basis for these significant assumptions and (2) take into account the issuer's intent and ability to meet the revenue predictions including whether the issuer has the financial resources and/or other means to meet the projections. (AS 2501.16 and .17)

During the year the issuer acquired a business and engaged an external specialist to assist in determining the purchase price allocation and fair values of the acquired assets including certain goodwill and other intangible assets. The following deficiency was identified. • The firm did not perform procedures to test the purchase price allocation and fair value of the goodwill and other intangible assets acquired in the business combination beyond obtaining and reading the valuation reports prepared by the company's specialist and agreeing amounts from those reports to the general ledger. (AS 2501.07)

During the year the issuer acquired a business entity and used an external specialist to determine the fair value of the acquired intangible assets. The firm's approach for testing the fair value was to review and test management's process. The firm did not sufficiently (1) evaluate the reasonableness of forecasts and (2) test the accuracy and completeness of data that the issuer provided to the external specialist because it limited its procedures to inquiry of management. (AS 1210.12)

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 selected for testing a control over the review of valuation of the assets acquired and liabilities assumed in the business combination. 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)

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)

During the year the issuer acquired a business entity. The firm did not perform sufficient procedures to evaluate the useful life of this intangible asset because it limited its procedures to inquiry and tracing the useful life to the issuer's amortization policy. (AS 2501.09 .10 and .11) [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements for fiscal years ending on or after December 15 2020.]

The firm did not evaluate the relevance and reliability of information used by an external specialist engaged by the issuer to determine the fair value of certain acquired assets. (AS 2502.31)

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

During the year the issuer acquired a business and determined the fair value of the acquired intangible assets using forecasted sales and cash flows and other assumptions including customer attrition rates. The following deficiencies were identified: · The firm selected for testing a control that included reviews of the reasonableness of the (1) revenue-growth assumptions underlying the forecast for the acquired business and (2) attrition-rate assumptions. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the revenue-growth assumptions. (AS 2201.42 and .44)

During the year the issuer acquired a business and determined the fair value of the acquired intangible assets using forecasted sales and cash flows and other assumptions including customer attrition rates. The following deficiencies were identified: · In addition the firm did not perform any procedures beyond inquiring of management to test the aspect of this control related to the issuer's evaluation of the accuracy and completeness of the historical revenue data used to determine the attrition rates. (AS 2201.42 and .44)

During the year the issuer acquired a business and determined the fair value of the acquired intangible assets using forecasted sales and cash flows and other assumptions including customer attrition rates. The following deficiencies were identified: · The forecast the issuer used to determine the fair value of acquired intangible assets assumed significant revenue growth and the firm documented that the issuer planned to implement various strategies to increase the revenue of the acquired business. The firm concluded that the forecasted revenue growth rates were reasonable without performing any procedures beyond inquiring of management to evaluate the issuer's ability to carry out its planned strategies to achieve these forecasts. (AS 2502.26 .28 .31 and .36)

During the year the issuer acquired a business and determined the fair value of the acquired intangible assets using forecasted sales and cash flows and other assumptions including customer attrition rates. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the accuracy of the historical revenue data of the acquired business that the issuer used to determine the attrition rates. (AS 2502.39)

During the year the issuer acquired a business and determined the fair value of the acquired intangible assets using forecasted cash flows. The following deficiencies were identified: · The firm selected for testing a control that included the review of the reasonableness of the forecasted cash flows for the acquired business including an assessment of the reasonableness of the revenue-growth assumptions underlying these cash flows. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the revenue-growth assumptions. (AS 2201.42 and .44)

During the year the issuer acquired a business. The firm did not perform procedures to evaluate whether all identifiable assets acquired were recognized in conformity with FASB ASC Topic 805 Business Combinations beyond reading the merger agreement and purchase-price allocation that the issuer prepared and inquiring of management. (AS 2810.30)

During the year the issuer acquired a business and determined the fair value of the acquired intangible assets using forecasted cash flows. The following deficiencies were identified: · The issuer's forecasted cash flows were based on historical results. The firm concluded that the forecasted revenue growth rates underlying these cash flows were reasonable without performing procedures to evaluate whether the historical revenue growth rates of the acquired business and the historical industry results would be representative of future revenue growth rates of the acquired business beyond inquiring of management and comparing the forecasted revenue growth rates to either the historical revenue growth rates of the acquired business or to historical industry results. (AS 2502.26 .28 .31 and .36)

The issuer used historical cost data as an input to determine the fair value of certain acquired intangible assets. The firm did not sufficiently test the accuracy and completeness of these cost data because its procedures were limited to inquiring of management comparing the cost data to unaudited information and determining that certain costs were appropriately excluded. (AS 2502.39)

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)

In addition the firm did not perform any procedures to evaluate the reasonableness of the projected sales for the third product. (AS 2502.26 and .28)

During the year the issuer acquired a business and determined the fair value of an acquired intangible asset based on a valuation model that used forecasted revenue and gross margin assumptions as inputs. The firm selected for testing a control that included the review of the reasonableness of these assumptions. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the forecasted revenue and gross margin assumptions. (AS 2201.42 and .44)

During the year the issuer acquired a business. The firm did not identify and appropriately address that the issuer's inclusion of certain equity awards as part of the accounting for this business combination was not in conformity with FASB ASC Topic 718 Stock Compensation and FASB ASC Topic 805 Business Combinations. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for this business combination and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the accounting for this business combination and concluded that a material weakness existed that had not been previously identified. The issuer subsequently reflected this material weakness in a revision to its report on ICFR and the firm revised and reissued its report to include an additional material weakness.

The issuer engaged an independent qualified reserve engineer ('company's specialist') to estimate its oil and gas reserves ('reserve estimates') which were then used in the (1) calculation of depreciation depletion and amortization; (2) impairment analysis of long-lived assets; and (3) valuation of a business combination. The reserve estimates were also used in the operation of certain controls over the above activities that the firm selected for testing. The firm did not identify and test any controls over the (1) accuracy and completeness of information prepared by the issuer (2) relevance and reliability of data from external sources and (3) methods and assumptions; all of which were used by the company's specialist to develop the reserve estimates. (AS 2201.39)

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: · Test the accuracy and completeness of information prepared by the issuer and used by the company's specialist to develop the reserve estimates; (AS 1105.A8a)

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 relevance and reliability of external data used by the company's specialist to develop the reserve estimates; (AS 1105.A8a)

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)

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 whether the methods used by the company's specialist to develop the reserve estimates were appropriate under the circumstances taking into account the requirements of the applicable financial reporting framework beyond inquiry of the methods used with the company's specialist. (AS 1105.A8c)

During the year the issuer acquired a business and engaged a specialist to determine the fair value of the acquired loans. The company's specialist determined this fair value based on discounted cash flows it developed using various inputs and assumptions including expected credit losses loan risk ratings certain loan attributes and whether certain loans should be designated as purchased with credit deterioration. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's review of the expected credit loss assumptions used to value the acquired loans but did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions. (AS 2201.42 and .44)

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)

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 did not evaluate whether the issuer had a reasonable basis for certain of the significant adjustment factor assumptions it used. (AS 2501.16)