Explorer

The firm identified a deficiency in ITGCs for certain of the issuer's systems related to individuals having inappropriate administrative rights to these systems. The firm identified a compensating control related to the issuer's monthly reviews of financial information. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. Further the firm did not identify that the control owners used data in the performance of this control that were produced by the systems that were subject to the inappropriate access deficiency. (AS 2201.68)

The issuer used an IT system to process and record transactions related to inventory and debt. The firm selected for testing a control that consisted of the issuer's reviews of instances where administrative access was granted that allowed the issuer's IT personnel to make changes to this system. The firm did not evaluate the specific review procedures that the control owners performed to assess whether (1) users performed appropriate actions when granted this access and (2) this access was appropriately granted for certain instances selected for testing. (AS 2201.42 and .44)

The issuer engaged an external specialist to assist in determining the fair value of certain of the issuer's debt. The company's specialist prepared a valuation model using inputs determined by the specialist and the issuer used the information provided by the specialist to estimate the changes to the fair value of the debt. The firm selected for testing a control that consisted of management's review of the inputs used by the company's specialist in the valuation model for reasonableness. The following deficiency was identified: · The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain other inputs used in the valuation model. (AS 2201.42 and .44)

The issuer engaged an external specialist to assist in determining the fair value of certain of the issuer's debt. The company's specialist prepared a valuation model using inputs determined by the specialist and the issuer used the information provided by the specialist to estimate the changes to the fair value of the debt. The firm selected for testing a control that consisted of management's review of the inputs used by the company's specialist in the valuation model for reasonableness. The following deficiency was identified: · For one of the quarters tested the firm did not (1) agree the inputs used in the valuation model to the inputs provided by the company's specialist and (2) evaluate the specific review procedures that the control owner performed to assess the reasonableness of one such input. (AS 2201.42 and .44)

The firm selected for testing certain controls over the issuer's review and approval of adjustments to debt. The firm did not evaluate the review procedures that the control owners performed including procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its accounting for certain debt 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 issued an audit report on the issuer's restated financial statements. Our procedures did not include review of any additional audit work related to the restatement. The issuer also reevaluated its controls over debt 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 its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion. Our procedures did not include review of any additional audit work related to this material weakness.

The firm identified for testing four review controls over the issuance and repurchase of debt instruments. The firm did not evaluate the review procedures the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)