Explorer

The issuer performed cycle counts of certain inventory held at one of its warehouses. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether all of this inventory was assigned a frequency to be counted. (AS 2201.39)

The issuer performed cycle counts of certain inventory held at one of its warehouses. The following deficiencies were identified: · The firm selected for testing a control that included the issuer's review and approval of count frequencies that had been assigned to this inventory. The firm did not identify and test any controls that addressed whether these approved count frequencies were entered into the system accurately and completely. (AS 2201.39)

The issuer performed cycle counts of certain inventory held at one of its warehouses. The following deficiencies were identified: · The firm selected for testing an automated control over the selection of items for cycle counting this inventory. The firm did not test whether the system was appropriately configured to achieve the frequency schedule established by management. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of capitalized cost variances for certain inventory. The firm did not identify and test any controls over the accuracy of certain data that the control owners used in the operation of this control. (AS 2201.39)

The firm selected for testing controls over managing changes to the issuer's production environment. The following deficiencies were identified: · The firm did not identify and test any controls over the completeness of certain data that the control owners used in the operation of these controls. (AS 2201.39)

The issuer recorded the cost of certain manufactured inventory based on the weight of the raw materials included in the inventory items. The firm did not identify and test any controls over the accuracy of these weights. (AS 2201.39)

The issuer performed cycle counts of inventory held at one of its locations. The issuer used a service organization to host and maintain an IT system that was used in its cycle-count procedures. The firm did not obtain an understanding of and test any relevant controls at this service organization. (AS 2201.39 and .B19)

The issuer recorded transactions related to revenue and inventory at numerous business units. To address the risks of material misstatement related to revenue and inventory for certain of these business units the firm selected entity-level controls for testing including two controls that consisted of the issuer's reviews of financial information. The following deficiencies were identified: · For the second control the firm did not test the aspects of this control that addressed the accuracy or completeness of certain other reports used in the operation of the control. (AS 2201.44)

The issuer performed cycle counts of inventory at a location. The following deficiency was identified: · The firm did not identify and test any controls over the issuer's review of cycle count results including any related inventory adjustments. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses 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 and reissued its report.

The issuer performed cycle counts of inventory at other locations. The firm identified deficiencies in the design and operating effectiveness of these controls at year end. The following deficiency was identified: · For two of these locations the firm did not perform any substantive procedures to test the existence of inventory at year end. (AS 2301.08 and .11)

The firm did not identify and test any controls for certain locations where the issuer performed full physical inventory observations. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses 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 and reissued its report.

The issuer performed cycle counts of inventory at a location. The following deficiency was identified: · The firm did not identify and test any controls that addressed whether all of the inventory items were assigned a frequency to be counted and the appropriateness of the assignment. (AS 2201.39) Unrelated to our review the issuer reevaluated its controls over inventory and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently reflected these material weaknesses 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 and reissued its report.

The firm's internal inspection program had inspected this audit and reviewed this area but did not identify the deficiency below. The issuer reported different types of inventory. The following deficiency was identified: • The firm selected for testing a control over the review of certain inventory but did not perform procedures to test the design and operating effectiveness of this control. (AS 2201.42 and .44)

The majority of the issuer's inventory was subject to daily cycle counts and the issuer used its inventory system to determine the frequency of cycle counts. The firm selected for testing a control that consisted of the review of an analysis to monitor the frequency and accuracy of the counts. The firm did not evaluate whether items the control owners identified for follow up were appropriately resolved. (AS 2201.42 and .44)

In addition the firm did not test whether the system was properly configured to calculate inventory turnover which was used to determine the frequency of cycle counts. (AS 2201.39)

The firm selected for testing a control that consisted of the issuer's review of the reserve for excess and obsolete inventory. The firm did not identify and test any controls that addressed the reasonableness of the sales forecast the issuer used to develop the reserve for excess and obsolete inventory. (AS 2201.39)

The firm did not identify and test any controls that addressed whether inventory items held at certain warehouses owned by external parties were counted with sufficient frequency. (AS 2201.39)

The issuer intended to use a significant portion of its inventory on hand at year end to manufacture a product type it had sold at a significant loss during the year. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether this inventory was recorded at the lower of cost or net realizable value. (AS 2201.39)

The firm identified significant deficiencies related to certain IT systems that the issuer used to record revenue and inventory transactions for two of the issuer's business units that were subject to more extensive audit procedures. The firm identified the budget controls as compensating controls that it believed would mitigate these deficiencies identified but did not sufficiently test these controls. (AS 2201.68)

With respect to Revenue and Inventory at one of the issuer's business units: The firm identified a significant deficiency related to an information-technology (IT) system that the issuer used to record this revenue and inventory. The firm identified the entity-level controls discussed above as compensating controls that it believed would mitigate this significant deficiency but did not sufficiently test those controls. (AS 2201.68)

Certain of the issuer's inventory was subject to cycle counts and the issuer's cycle-count program required this inventory to be counted at specific frequencies during the year. The firm did not identify and test any controls that addressed whether each inventory item was counted with sufficient frequency in accordance with the issuer's cycle-count program. (AS 2201.39)

With respect to Inventory at one of the issuer's business units: The firm selected for testing a control that included the issuer's annual physical inventory count of this inventory. The following deficiencies were identified: · The firm did not test the aspects of this control that addressed whether an accurate and complete count had occurred. (AS 2201.42 and .44)

With respect to Inventory at one of the issuer's business units: The firm selected for testing a control that included the issuer's annual physical inventory count of this inventory. The following deficiencies were identified: · The firm did not evaluate whether the issuer had appropriately investigated and resolved differences between the physical counts and the quantities recorded in the issuer's inventory system. (AS 2201.42 and .44)

With respect to Inventory at another of the issuer's business units: The issuer performed cycle counts of this inventory and the issuer's cycle-count policy required this inventory to be counted at specific frequencies during the year. The firm selected for testing a control that consisted of the issuer's cycle-count procedures including the issuer's reviews of cycle-count results. The firm did not test the aspects of this control that addressed whether inventory counts were performed in accordance with the issuer's designated count frequency in its cycle-count policy. (AS 2201.42 and .44)

The firm selected for testing two controls that consisted of the issuer's review of the reserve for excess and obsolete inventory at certain business units. For the second control the firm did not identify and test any controls over the accuracy of certain data that the control owners used in the operation of the control. (AS 2201.39)

The firm's approach for substantively testing the reserve for excess and obsolete inventory at these business units was to test the issuer's process. The following deficiencies were identified: · The firm used certain issuer-produced data in its testing of this reserve but did not test or test any controls over the accuracy of these data. (AS 1105.10)

Certain of the issuer's inventory was subject to cycle counts and the issuer's cycle-count policy required this inventory to be counted at specific frequencies during the year. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether each inventory item was counted with sufficient frequency in accordance with the issuer's cycle-count policy. (AS 2201.39)

With respect to the issuer's work-in-process inventory at certain business units that the firm subjected to more extensive audit procedures the following deficiencies were identified: · The firm did not identify and test any controls over the existence of this work-in-process inventory. (AS 2201.39)

Certain inventory at one of the issuer's segments was subject to cycle counts and the issuer's cycle-count policy required this inventory to be counted at specific frequencies during the year. The firm did not identify and test any controls that addressed (1) whether each inventory item was counted with sufficient frequency in accordance with the issuer's cycle count policy and (2) the issuer's monitoring of the accuracy of the cycle-count results. (AS 2201.39)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer held inventory at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to more extensive audit procedures. The following deficiencies were identified: · Inventory at one of these business units was subject to cycle counts and the issuer used its IT system to determine the frequency with which the items should be counted during the year by assigning a count designation to each inventory item. The firm did not identify and test any controls that addressed whether (1) the issuer's IT system was configured to assign an appropriate count designation to each inventory item and (2) each inventory item was counted with sufficient frequency in accordance with the designated count frequency. (AS 2201.39)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer held inventory at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to more extensive audit procedures. The following deficiencies were identified: · For a second of these business units the firm identified control deficiencies related to the issuer's cycle counts performed at certain locations including the lack of monitoring of whether the cycle-count results were sufficiently accurate. The firm identified and tested compensating controls that it believed mitigated these deficiencies but did not identify that these compensating controls did not address the accuracy of the cycle-counts results. (AS 2201.68)

Deficiencies testing inventory reconciliation controls and an undersized inventory observation sample.

The firm did not identify and test any controls over the calculation of inventory cost. (AS 2201.39)

To test the existence of certain inventory the firm virtually observed the inventory at selected locations through video calls as of an interim date confirming only that inventory was present and performed certain roll forward procedures from the interim date to year-end. The following deficiency was identified: • The firm did not identify and test any controls over the existence of this inventory. (AS 2201.39)

As instructed by the principal auditor the firm selected for testing controls that consisted of the performance of physical inventory counts a reconciliation of those counts to the inventory records and the adjustment of those records as appropriate. The firm did not perform sufficient procedures to test the operating effectiveness of these controls because the firm did not test the aspect of the control involving the performance of the physical inventory counts performed during the operation of these controls. (AS 2201.44)

The firm selected for testing a control over program changes that consisted of the approval testing and monitoring of changes made during the year to the issuer's inventory system. The firm did not identify and test any controls over the completeness of the report that was generated by the inventory system affected by the significant deficiency discussed above and that the firm used to select program changes for testing. (AS 2201.39)

The firm selected for testing a control over the existence of certain inventory that included reviews of the issuer's cycle-count results to assess the reliability of the cycle-count process. The issuer used cycle-count data from its inventory systems to manually prepare the cycle-count analyses that were used in the operation of this control. The firm did not identify and test any controls that addressed whether these analyses were accurate and complete. (AS 2201.39)

The firm selected for testing certain controls over the existence of this inventory. The firm identified exceptions in the operation of these controls and concluded without evaluating the effect of these exceptions on the operating effectiveness of the controls that these exceptions did not result in a control deficiency. (AS 2201.48)

The issuer designed its cycle-count procedures at one of its locations to exclude a portion of the inventory from the cycle counts. In evaluating the design of this control the firm did not assess the effect of the issuer excluding this portion of inventory on the control's ability to effectively prevent or detect a material misstatement. (AS 2201.42) In connection with our review the issuer reevaluated its control over this inventory and concluded that a material weakness existed that had not been previously identified. The issuer disclosed the material weakness in a subsequent filing and noted that the material weakness existed as of the date covered by the firm's audit that was subject to our review.

The issuer accounted for certain of its inventory under the first-in first-out (FIFO) method of accounting. The firm selected for testing an automated control over the issuer's inventory management system. The firm did not evaluate and test whether this automated control addressed the risk that the inventory management system was appropriately configured to apply the FIFO method of accounting to the inventory. (AS 2201.42 and .44)

The issuer performed cycle counts of certain inventory. The firm selected for testing a control that consisted of the issuer's review of the cycle-count results. The firm did not evaluate whether this control was designed to address whether this inventory was counted with sufficient frequency in accordance with the issuer's cycle-count policy. (AS 2201.42)

The firm did not identify and test any controls over in-transit inventory for one of the issuer's business units. (AS 2201.39)

The firm did not identify and test any controls over the issuer's allocation of labor and overhead costs to inventory. (AS 2201.39)

The firm identified various control deficiencies related to inventory. The firm identified and tested compensating controls that it believed would mitigate certain of these deficiencies but did not identify that these controls were dependent on the operating effectiveness of the deficient controls. (AS 2201.68)

The issuer valued inventory for one of its segments using the last-in first-out (LIFO) method and determined its quarterly LIFO adjustments based on the LIFO inventory balances for each of its inventory categories. The following deficiencies were identified: · The firm identified a control deficiency related to the issuer's quarterly review of the LIFO adjustment for each inventory category. The firm identified and tested a compensating control that it believed mitigated this deficiency but did not identify that this compensating control did not operate at the inventory-category level and involved the review of gross margins before they were adjusted for LIFO. (AS 2201.68)

The firm selected for testing controls that consisted of the issuer's review of inventory. The firm did not identify and test any controls to address whether inventory was recorded at the lower of cost or net realizable value. (AS 2201.39)

The firm did not determine the likely sources of potential misstatements associated with certain inventory to identify and test controls that addressed the risks of misstatement for the relevant assertions for this inventory. (AS 2201.30 and .39)

The firm did not identify and test any controls that addressed the issuer's determination of the cost of its inventory and whether the amounts relieved from inventory and recorded to cost of goods sold were accurate. (AS 2201.39)

The firm selected for testing the issuer's daily cycle-count control over the existence of this inventory. The small number of cycle-counts that the firm selected for testing did not provide sufficient appropriate audit evidence in light of the frequency of the operation of the control. (AS 2201.46)

The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. These service organizations used sub-service organizations for certain functions. The following deficiencies were identified: · The firm did not perform procedures beyond inquiry to evaluate whether the issuer had implemented certain other complementary user controls. (AS 2201.39 and .B22)