Explorer

The issuer determined that no deferred tax asset valuation allowance was necessary for the current year. The firm did not evaluate the appropriateness of the assumptions the issuer used in its determination. (AS 2501.11)

The firm's internal inspection program inspected this audit and reviewed the revenue area but did not identify the deficiency below. The firm's approach for substantively testing the valuation allowance that the issuer recorded against its deferred tax assets was to test the issuer's process. The firm did not perform any procedures to evaluate the reasonableness of the significant assumptions the issuer used to determine the valuation allowance beyond inquiring of management. (AS 2501.16)

The firm did not perform procedures beyond obtaining and reading the issuer's analysis to evaluate the issuer's conclusion that a deferred tax asset valuation allowance was not required including consideration of contradictory evidence. (AS 2501.07; AS 2810.03) Unrelated to our review the issuer reevaluated its accounting for the gross deferred tax asset and the related valuation allowance and concluded that material misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included significant assumptions developed by the issuer that were also used in the issuer's intangible asset impairment assessment discussed above. The firm did not sufficiently evaluate the reasonableness of these significant assumptions including taking into account the issuer's intent and ability to carry out these assumptions because its procedures were limited to inquiring of management and comparing these assumptions to historical financial information and written plans. Further the firm did not evaluate certain significant differences between the issuer's historical experience and these assumptions. (AS 2501.16 and .17)

For one of its foreign subsidiaries the issuer reported a full valuation allowance related to certain deferred tax assets. The firm concluded that the valuation allowance was appropriate without evaluating certain evidence that suggested that a valuation allowance may not be necessary. (AS 2501.11; AS 2810.03)

With respect to the issuer's uncertain tax positions the firm did not identify and test any controls over the issuer's evaluation of (1) the unit of account that it used to determine individual tax positions and (2) the assumptions used to evaluate whether its uncertain tax positions met the recognition threshold. (AS 2201.39)

The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included various significant assumptions. The following deficiencies were identified: · For the first year of the forecast period the firm did not sufficiently evaluate the reasonableness of a significant assumption because its procedures were limited to comparing the assumption to the issuer's recent experience. (AS 2501.16)

The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included various significant assumptions. The following deficiencies were identified: · For the remaining years of the forecast period the firm did not perform any procedures to evaluate the reasonableness of the significant assumptions. (AS 2501.16)

The issuer recorded a partial valuation allowance against its recorded deferred tax assets based on forecasted taxable income which included various significant assumptions. The following deficiencies were identified: · The firm did not identify and evaluate a misstatement in a required disclosure under FASB ASC Topic 740 Income Taxes. (AS 2810.30 and .31)