Explorer

The firm selected for testing change management controls over an information technology ('IT') application the issuer used to process and record revenue and related accounts ('revenue transactions') and goodwill. The firm did not perform procedures to test the completeness of all types of changes in the population of changes from which it made its selections. (AS 1105.10)

The firm selected for testing automated and IT-dependent manual controls over revenue transactions and goodwill that used data and reports generated by the issuer's IT application. The firm's approach to test the accuracy and completeness of the data and reports depended on effective information technology general controls ('ITGCs') including those pertaining to change management. As a result of the deficiency in the firm's testing of change management controls discussed above the firm's testing of the automated and IT-dependent manual controls over revenue transactions and goodwill was not sufficient. (AS 2201.46)

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 did not perform substantive procedures to test or (as a result of the ITGC deficiencies discussed above) sufficiently test controls over the accuracy and completeness of certain system-generated data it used to test the issuer's goodwill impairment analysis. (AS 2502.39) 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.