Explorer

In its annual goodwill impairment test the issuer compared the fair value of a reporting unit to the recorded amount of goodwill. The firm did not identify and evaluate the significance to the issuer's financial statements of a departure from GAAP related to the issuer's failure to compare the fair value of the reporting unit to its carrying amount including goodwill in conformity with FASB ASC Topic 350 Intangibles — Goodwill and Other. (AS 2810.30)

The issuer performed a qualitative assessment of goodwill impairment and used a recent fair value calculation prepared by an external specialist in concluding to not perform a quantitative goodwill impairment test. The firm did not sufficiently evaluate whether the issuer considered certain relevant events or changes in circumstances in conformity with FASB ASC Subtopic 350-20 Intangibles — Goodwill and Other— Goodwill including the issuer's operating losses negative working capital and substantial doubt about the issuer's ability to continue as a going concern. (AS 2810.03 and .30)

The firm's approach for testing the issuer's annual goodwill impairment analysis was to review and test management's process. The firm did not perform any procedures beyond inquiring of management to test the forecasted cash flows after the first forecasted year that were provided to the external specialist to determine the fair value of the reporting units. (AS 1210.12)

The firm's approach for testing the issuer's annual goodwill impairment analysis was to review and test management's process. The firm did not test the carrying value of one of the issuer's reporting units. (AS 1210.12)

The issuer performed its annual goodwill impairment assessment as of an interim date. The following deficiencies were identified: · The firm selected for testing controls that included the issuer's assessment of triggering events between its annual assessment date and year end. The firm did not evaluate whether the controls were designed to address whether certain adverse market conditions and deteriorating financial results that arose before year end would have required an impairment test as of year end. (AS 2201.42)

The firm selected for testing a control over the valuation of goodwill. The firm did not identify and test controls over the accuracy of data used in the operation of this control. (AS 2201.39)

The issuer performed a quantitative assessment using a discounted cash flow analysis to assess goodwill for impairment. The firm did not perform procedures to test the issuer's quantitative assessment beyond comparing the analysis with prior year analyses testing the mathematical accuracy of the analysis and researching general industry economic conditions. (AS 2501.07)

The firm did not identify and/or test controls related to the issuer's (1) determination of the reporting units it used in its goodwill impairment analysis and (2) assignment of assets and liabilities to its reporting units in conformity with FASB ASC Topic 350 Intangibles - Goodwill and Other. (AS 2201.39) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The firm did not perform substantive procedures to evaluate the appropriateness of the issuer's reporting units and the issuer's assignment of assets and liabilities to its reporting units. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The forecast the issuer used in its analysis to assess the possible impairment of goodwill for one of the issuer's reporting units assumed significant revenue growth in the early years of the forecast. The firm concluded that the forecasted revenue growth rates were reasonable without performing any substantive procedures beyond inquiring of management to evaluate the issuer's ability to carry out its planned strategies to achieve the forecast. (AS 2502.26 .28 .31 and .36) Unrelated to our review the issuer reevaluated its accounting related to the identification of reporting units and evaluation of the possible impairment of goodwill and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements to correct this and other material misstatements and the firm revised and reissued its report on the financial statements. In conjunction with its reevaluation of controls over long-lived assets discussed below the issuer also reevaluated its controls over the identification of reporting units and evaluation of the possible impairment of goodwill. The issuer concluded that a material weakness related to goodwill and long-lived assets existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The firm did not identify and test any controls over the issuer's determination of the reporting units that it used in its annual goodwill impairment analysis. (AS 2201.39)

The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's determination of the reporting units used in its goodwill impairment analysis. (AS 2301.08)

The firm did not perform any procedures to test (1) the appropriateness of the issuer's determination that it operated as a single reporting unit for purposes of its impairment analysis in accordance with FASB ASC Topic 350 Intangibles – Goodwill and Other and (2) whether the issuer's conclusion that the customer relationship intangible asset had an indefinite life was in accordance with FASB ASC Topic 350. (AS 2301.08 and .11)

The issuer estimated the value-in-use (VIU) of its cash-generating units ('CGUs') to evaluate goodwill for impairment. For two of the issuer's CGUs the firm did not evaluate the significance to the financial statements of the issuer's use of estimated post-tax future cash flows and a post-tax discount rate to estimate the VIU of the CGUs rather than using estimated pre-tax future cash flows and a pre-tax discount rate in the VIU calculations in conformity with IAS 36 Impairment of Assets ('IAS 36'). (AS 2810.30)

The firm's post-issuance monitoring program had inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer engaged a valuation specialist to perform its annual goodwill impairment analysis. The following deficiency was identified: · The firm did not perform any procedures to evaluate the relevance and reliability of certain data from external sources used by the company's specialist to develop a significant assumption. (AS 1105.A8a)

The issuer used the fair value of the acquired business at the acquisition date to record a goodwill impairment at year end. The following deficiencies were identified: - The firm did not perform procedures to determine whether the fair value of the acquired business at the acquisition date was an appropriate or relevant measurement for use in the goodwill impairment analysis as of year end. (AS 2301.08)

The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the goodwill associated with any of the prior-year reporting units may have been impaired at the time of the issuer's change in the number of reporting units. (AS 2301.08)

The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not identify and evaluate the significance to the financial statements of the issuer's omission of a required disclosure under FASB ASC Topic 250 related to its change in the number of reporting units. (AS 2810.30 and .31)

The firm did not identify and test any controls over the issuer's review of its goodwill impairment analysis. (AS 2201.39)

The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the issuer's change in the number of reporting units was in conformity with FASB ASC Topic 350 Intangibles – Goodwill and Other and was preferable under FASB ASC Topic 250 Accounting Changes and Error Corrections. (AS 2810.30)

The issuer engaged an external specialist to determine its enterprise value and used that valuation in its impairment analysis for goodwill. The external specialist used a combination of the income approach and the market approach. The following deficiencies were identified: • The firm did not perform procedures to evaluate the reasonableness of the projected cash flows provided by the issuer used in the income approach beyond obtaining a listing of the issuer's contracts and reviewing a selection of those contracts. (AS 1210.12) [This citation refers to AS 1210 Using the Work of a Specialist which was in effect for this audit. This standard was replaced by AS 1210 Using the Work of an Auditor-Engaged Specialist. In addition AS 1105 Audit Evidence and AS 1201 Supervision of the Audit Engagement which were in effect for this audit were revised to include appendices for auditor's use of the work of a company's specialist and auditor's supervision of the work of an auditor-employed specialist respectively. This replacement and these revisions are effective for audits of financial statements for fiscal years ending on or after December 15 2020.]

The issuer engaged an external specialist to determine its enterprise value and used that valuation in its impairment analysis for goodwill. The external specialist used a combination of the income approach and the market approach. The following deficiencies were identified: • The firm did not perform procedures to evaluate the relevance and reliability of certain information used in the market approach. (AS 2502.31)

The issuer engaged an external specialist to determine its enterprise value and used that valuation in its impairment analysis for goodwill. The external specialist used a combination of the income approach and the market approach. The following deficiencies were identified: • The firm did not perform procedures to evaluate the reasonableness of the discount rate used in the impairment analysis. (AS 2502.26 and .28)

The issuer engaged an external specialist (“company's specialist”) to assist in determining a significant assumption used by the issuer in performing its annual impairment analysis for certain goodwill using a Value in Use (VIU) approach. The issuer used various inputs and assumptions some of which the engagement team considered to be significant to prepare the VIU model used in the impairment analysis. The firm selected for testing a control over the valuation of this goodwill that consisted of the performance of an annual impairment analysis and management's review and approval of (1) certain projections and base data produced by the issuer and used by the company's specialist to determine the significant assumption and (2) the impairment analysis performed including the VIU model and carrying amount of the goodwill. The following deficiency was identified: • The firm did not identify and test any controls over the completeness of certain data produced by the issuer that was provided to the company's specialist and used in the operation of this control. (AS 2201.39)