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The issuer recorded an inventory reserve and the firm's approach for substantively testing the inventory reserve was to test the issuer's process. The following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of the significant assumptions. (AS 2501.16)

The issuer determined a reserve for inventory was not necessary. The firm did not perform any procedures to test the issuer's determination. (AS 2501.07)

The firm's approach for substantively testing one component of the issuer's reserve for excess and obsolete inventory was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of a significant assumption the issuer used because the firm did not (1) take into account the issuer's ability to carry out this assumption (2) take into account changes in conditions and events affecting the issuer and (3) evaluate significant differences between this assumption and the issuer's historical experience. (AS 2501.16 and .17)

With respect to Inventory the firm's approach for substantively testing the reserve was to test the issuer's process. The firm did not perform any procedures to evaluate whether the method used to develop the reserve was appropriate. (AS 2501.10) In connection with our review the issuer reevaluated its accounting for the reserve for inventory 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 revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the reserve for inventory 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 and reissued its report.

With respect to Inventory the firm's approach for substantively testing the reserve was to test the issuer's process. The firm did not perform procedures to evaluate the reasonableness of certain significant assumptions beyond inquiry and performing a retrospective analysis. (AS 2501.16) In connection with our review the issuer reevaluated its accounting for the reserve for inventory 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 revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the reserve for inventory 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 and reissued its report.

For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete (E&O) inventory was to test the issuer's process. The firm did not evaluate the reasonableness of certain significant assumptions the issuer used to develop the E&O reserve. (AS 2501.16)

For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete (E&O) inventory was to test the issuer's process. For certain other inventory the firm did not perform any procedures to test the E&O reserve. (AS 2501.07)

The firm's substantive procedures to test the reserve for excess and obsolete (E&O) inventory included selecting a sample of inventory items for testing. The following deficiencies were identified: · For certain of its selections the firm did not perform any procedures to test the sales forecast that the issuer used to develop the E&O reserve. (AS 2501.07)

The firm's substantive procedures to test the reserve for excess and obsolete (E&O) inventory included selecting a sample of inventory items for testing. The following deficiencies were identified: · For certain other selections the firm did not perform procedures beyond inquiring of management to test the issuer's conclusion that an E&O reserve was not necessary. (AS 2501.07)

The firm's approach for substantively testing the reserve for excess and obsolete (E&O) inventory was to test the issuer's process. The firm did not perform procedures to evaluate the reasonableness of a significant assumption the issuer used to develop the E&O reserve beyond reading an issuer-prepared memorandum. (AS 2501.16) Unrelated to our review the issuer reevaluated its accounting for its inventory and concluded that material misstatements existed that had not been previously identified. The issuer corrected these misstatements in a restatement of its financial statements in a subsequent filing.

The firm's approach for substantively testing the E&O reserve was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions the issuer used to develop the E&O reserve because the firm did not perform procedures beyond inquiring of management to evaluate certain significant differences between these assumptions and the issuer's recent experience. (AS 2501.16)

The firm's approach for substantively testing the issuer's inventory reserve was to test the issuer's process. The firm did not perform any procedures beyond reading an issuer-prepared memorandum and inquiring of management to evaluate the reasonableness of the significant assumptions the issuer used to determine this reserve. (AS 2501.16)

For certain excess inventory that the issuer determined did not require a reserve the firm did not perform any procedures beyond inquiring of management to evaluate the reasonableness of the issuer's forecasted usage of this inventory. (AS 2501.24)

The firm's approach to substantively test the excess and obsolete inventory reserve was to develop an independent expectation. The firm did not perform any procedures to demonstrate that it had a reasonable basis for the assumptions used in its expectation. (AS 2501.22)

Due to the deficiencies discussed above the firm did not obtain sufficient appropriate audit evidence that the cycle-count procedures the issuer used for this inventory were sufficiently reliable to produce results substantially the same as those that would have been obtained by a count of all items each year. (AS 2510.11)

The firm's substantive procedures at year end to test certain inventory included performing physical inventory count procedures using a report obtained from the issuer. The firm did not perform procedures beyond inquiry and observation of the physical condition of inventory to test the price of this inventory and the related reserve. (AS 2301.08; AS 2501.07)

The firm's approach for substantively testing the excess or obsolete inventory reserve was to develop an independent expectation. The following deficiencies were identified: · The firm did not perform procedures to demonstrate it had a reasonable basis for certain assumptions it independently derived. (AS 2501.22)

The firm's approach for substantively testing inventory reserves was to test the issuer's process used to develop the reserve. The firm did not perform procedures beyond inquiry to evaluate the reasonableness of significant assumptions used to determine the inventory reserve. (AS 2501.16)

At another location the issuer calculated a reserve for excess and obsolete inventory by applying established percentages to each inventory aging category. The firm did not (1) test the accuracy of the inventory aging and (2) evaluate the reasonableness of the established percentages applied to each of the inventory aging categories. (AS 2501.11)

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 did not perform procedures to evaluate the reasonableness of the significant assumptions that the issuer used to develop this reserve beyond reading an issuer-prepared memorandum. (AS 2501.16)

The issuer classified inventory as current or noncurrent based on its estimate of when it expected to sell the inventory. The firm's approach for substantively testing this estimate was to test the issuer's process. The firm did not perform procedures to evaluate the reasonableness of the significant assumptions that the issuer used to develop this estimate. (AS 2501.16)

The firm's approach for substantively testing the inventory reserve was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the inventory reserve because the firm did not perform procedures to test the reasonableness of certain assumptions used by the issuer to determine the inventory reserve. (AS 2501.09 .10 and .11)

The firm's approach for substantively testing the reserve for excess and slow moving inventory included developing an independent expectation of the issuer's net inventory including finished goods inventory and work-in-process inventory. The firm developed its expectation using gross revenue data for the last three months of the year the period of which was consistent with the return period for finished goods inventory. The firm did not perform procedures to support the appropriateness of using three months of gross revenue as the basis for developing its expectation of net inventory. (AS 2501.09 .10 and .12) [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements ending on or after December 15 2020.]

The firm did not evaluate whether inventory was recorded at the lower of cost or market. (AS 2501.07)

The firm did not evaluate the assumptions used by the issuer to estimate the reserve for obsolescence. (AS 2501.07)

The issuer recognized an allowance for slow-moving and obsolete inventories that included a general reserve. The firm did not evaluate the reasonableness of the significant assumptions the issuer used to develop the general reserve. (AS 2501.16)

The issuer's products had expiration dates and the issuer determined that a reserve for excess or obsolete inventory was not necessary. In its testing of the process including assumptions used by management to evaluate the need for an inventory reserve the firm did not evaluate whether the issuer's products could be sold at or above cost prior to their expiration dates. (AS 2501.11)

The issuer's products consisted of various categories and each category included numerous individual parts. The issuer determined that a reserve for excess or obsolete inventory was not necessary. In its testing of the process including assumptions used by management to evaluate the need for a reserve for excess and obsolete inventory the firm only performed procedures at the product level and did not consider individual parts for excess quantities or obsolescence. (AS 2501.11)

The issuer engaged an external specialist to estimate the quantity of certain inventory. The firm did not obtain an understanding of the methods and assumptions used by the external specialist to develop the estimate. (AS 1210.12)

The issuer held inventory at multiple locations. Inventory counts were performed subsequent to year end for each location. The firm obtained an issuer-prepared inventory roll-back analysis to perform tests of intervening transactions. The following deficiency was identified: · The firm did not perform any procedures to test the completeness of intervening transactions related to sales of that inventory. (AS 2501.12)

For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate whether the method used by the issuer to develop the reserve was appropriate because it did not evaluate whether the issuer's reserve took into account the issuer's forecasted sales. (AS 2501.10)

For certain inventory the firm's approach for substantively testing the reserve for excess and obsolete inventory was to test the issuer's process. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of certain significant assumptions used by the issuer to estimate the reserve for excess and obsolete inventory because its procedures were limited to inquiry of management and performing a sensitivity analysis that indicated that if certain alternative assumptions were used the reserve would change by a significant amount. (AS 2501.16)

The firm's internal inspection program inspected this audit and reviewed the Inventory and Journal Entries areas but did not identify the deficiencies below. The firm's approach to substantively test certain of the issuer's reserve for excess and obsolete inventory was to develop an independent expectation of the estimate. The firm did not perform procedures to demonstrate it had a reasonable basis for an assumption and the method used to develop its independent expectation. (AS 2501.22)

The firm's substantive procedures to test the unit cost of inventory consisted of (1) selecting a sample of raw materials for testing and (2) testing the issuer's process for allocating labor and overhead costs to inventory. The following deficiencies were identified: · The firm did not perform procedures beyond inquiring of management to evaluate the reasonableness of certain significant assumptions used by the issuer to allocate overhead costs. (AS 2501.16)

The issuer estimated the cost of certain inventory using various significant assumptions. The firm's approach for substantively testing the valuation of this inventory was to test the issuer's process. The following deficiencies were identified: · The firm's approach for evaluating the reasonableness of certain significant assumptions was to develop expectations of these assumptions. The firm did not perform sufficient procedures to demonstrate it had a reasonable basis for its expectations because it limited the development of these expectations to the results of its tests of certain varieties of inventory items. (AS 2501.16)

The issuer recorded a reserve for excess and obsolete inventory. The firm did not evaluate the reasonableness of the reserve percentages and product lives used in the issuer's determination of the portion of the reserve for excess inventory. Further the firm did not evaluate the appropriateness of fully reserving for certain items at the end of their assumed product lives when those items continued to be sold during the year. (AS 2501.11; AS 2810.03)

With respect to the portion of the reserve for obsolete inventory the firm did not evaluate the reasonableness of the issuer's policy to fully reserve for items with no sales in the past 24 months. Further the firm did not evaluate the effect of fully reserved items that were sold during the year on that policy. (AS 2501.11; AS 2810.03)

The firm's approach for substantively testing the excess and obsolete inventory reserve for certain inventory was to test the issuer's process used to develop the reserve. The firm did not evaluate whether the issuer had a reasonable basis for significant assumptions used to develop the reserve for excess inventory and whether those assumptions were consistent with historical or recent experience taking into account changes if any in conditions affecting the issuer. (AS 2501.16)

The firm's approach for substantively testing the issuer's reserve for excess and obsolete (E&O) inventory was to develop an independent expectation of the estimate. The firm did not sufficiently evaluate the reasonableness of the estimate because the firm's independent expectation was limited to inventory items with no changes in quantities on hand during the year and did not consider whether there were other inventory items that required an E&O reserve. Further the firm's procedures to evaluate differences it identified from its independent expectation were limited to inquiry of management. (AS 2501.09 .10 and .12)

The issuer reported a reserve for excess and obsolete inventory. The firm did not perform procedures to test this reserve beyond performing recalculations of certain amounts. (AS 2501.07)

The firm did not evaluate whether inventory was recorded at the lower of cost or market. (AS 2501.07)

The firm did not perform procedures to test the inventory reserves beyond obtaining and reading a listing of obsolete items and the approval for the write off of certain inventory. (AS 2501.07)

The firm's approach for substantively testing the reserve for excess and obsolete inventory was to develop an independent expectation as a range. The following deficiencies were identified: · The firm did not perform procedures beyond inquiry to evaluate the difference between its independent expectation as a range and the issuer's recorded reserve. (AS 2501.26; AS 2810.13)

The issuer concluded that an excess and obsolete reserve for one of the issuer's products was not necessary based on potential sales opportunities with certain customers despite a significant decline in sales in the year under audit and a forecasted further decline in sales for the following year. The firm did not evaluate the reasonableness of the issuer's assumption that it would achieve these potential sales opportunities beyond inquiring of management and reading certain issuer-prepared marketing and sales information. (AS 2501.11)

The firm's approach for substantively testing the E&O reserve was to review and test management's process. The firm did not perform any procedures to evaluate the reasonableness of the forecasted product demand assumptions that were used to calculate the E&O reserve. (AS 2501.11)

The issuer reported a reserve for excess and obsolete inventory. The firm did not perform procedures to test this reserve beyond reading issuer-prepared memos vouching certain historical sales amounts used in the determination of the reserve and performing recalculations of certain amounts. (AS 2501.07)

The issuer recorded an excess and obsolete (E&O) inventory reserve for certain inventory based on the inventory on hand compared to the sales forecast for this inventory. The firm did not perform any procedures to evaluate the reasonableness of the sales forecast that the issuer used to develop this E&O inventory reserve. (AS 2501.16)

The firm's approach for substantively testing the reserve for excess and obsolete inventory was to develop an independent expectation. The firm did not perform any procedures to demonstrate it had a reasonable basis for certain assumptions it developed. (AS 2501.22)

The firm did not perform any procedures to test certain significant assumptions used by the issuer to determine the cost of certain inventory. (AS 2501.16)

The firm's approach for substantively testing the amount of labor and overhead costs capitalized into inventory and the slow-moving and obsolete inventory reserve was to review and test management's processes. The firm did not evaluate the reasonableness of the capitalized labor and overhead costs and the slow-moving and obsolete inventory reserve because the firm did not perform procedures to test certain methods and assumptions the issuer used to capitalize such costs and determine the reserve. (AS 2501.09 .10 and .11)