Explorer

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 did not identify and test any controls over the existence of inventory at certain of the issuer's locations. (AS 2201.39)

With respect to work-in-process inventory at one of the issuer's business units which the firm designated as subject to more extensive audit procedures the following deficiencies were identified: • The firm did not identify and test any controls over this inventory. (AS 2201.39)

With respect to work-in-process inventory at one of the issuer's business units which the firm designated as subject to more extensive audit procedures the following deficiencies were identified: • The firm did not perform any substantive procedures to test this inventory. (AS 2301.08)

The firm designated certain of the issuer's other business units as subject to less extensive audit procedures. With respect to these business units the firm selected for testing a control that included quarterly reviews of financial information including inventory. The firm did not evaluate the specific review procedures that the control owners performed to determine whether items identified for follow up were appropriately resolved. (AS 2201.42 and .44)

The issuer performed cycle counts of certain inventory held at various locations. The firm selected for testing a control that consisted of the issuer's reviews of the cycle-count results. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer performed cycle counts of certain inventory held at various locations. The firm selected for testing a control that consisted of the issuer's reviews of the cycle-count results. The firm did not identify and test any controls over the accuracy and completeness of the reports that the control owners used in the operation of this control. (AS 2201.39)

The issuer performed cycle counts of certain inventory held at various locations. The firm selected for testing a control that included the issuer's reviews of the cycle-count results. The firm did not identify and test any controls over the accuracy and completeness of certain reports that the control owners used in the operation of this control. (AS 2201.39)

Due to the deficiency 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 issuer performed cycle counts of certain inventory. The firm selected for testing controls that included the issuer's reviews of the cycle count results. When testing the operating effectiveness of these controls the firm did not evaluate the specific review procedures that the control owners performed to investigate and resolve differences between the cycle counts and the quantities recorded in the issuer's inventory system. (AS 2201.44)

The issuer valued certain inventory using the last-in first-out (LIFO) method. The following deficiencies were identified: · The firm did not identify and test any controls over the LIFO inventory reserve. (AS 2201.39)

The issuer valued certain inventory using the last-in first-out (LIFO) method. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the LIFO inventory reserve. (AS 2301.08)

The issuer used multiple IT systems to initiate process and report transactions related to certain revenue and related accounts and inventory. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by certain of these IT systems. As a result of the following deficiencies in the firm's testing of IT general controls (ITGCs) the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

With respect to change management: • The firm selected for testing change management controls that consisted of management's review and approval of requests for access including privileged-level access to application data files and databases. The firm did not however identify and test any controls over the appropriateness of changes made directly to the financial data within such application data files and databases. (AS 2201.39)

With respect to change management: • The firm selected for testing another change management control that consisted of the testing and approval of changes made to the structure of databases and relationships between data prior to their migration into the production environment. The firm did not perform procedures to test or test any controls over the completeness of the population of changes from which it made its selections to test this control. (AS 1105.10)

As a result of the firm's ITGC testing deficiencies discussed above the firm did not perform sufficient substantive procedures as follows: • The sample sizes the firm used in certain of its substantive procedures to test revenue and related accounts were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

As a result of the firm's ITGC testing deficiencies discussed above the firm did not perform sufficient substantive procedures as follows: • The firm used certain system-generated data to substantively test revenue and related accounts and inventory but did not test or (as discussed above) sufficiently test controls over the accuracy and completeness of this data. (AS 1105.10)

As a result of the firm's ITGC testing deficiencies discussed above the firm did not perform sufficient substantive procedures as follows: • The firm performed substantive analytical procedures as part of its testing of certain revenue. The firm used certain system-generated data to develop its expectations but did not test or (as discussed above) sufficiently test controls over the accuracy and completeness of this data. (AS 2305.16)

The issuer used an IT system to initiate process and record certain inventory and inventory-related transactions and deployed a separate instance of the system at a majority of its warehouses. Changes to this system were first deployed to some warehouses for purposes of pilot testing after which the changes were deployed to the remaining warehouses. The following deficiency was identified: • The firm selected for testing controls over inventory that consisted of the configuration of the IT system to automatically (1) calculate daily inventory cycle count tasks and (2) verify inventory receipts and shipments. The firm did not test the design and operating effectiveness of these controls in instances of the legacy (or unmodified) version of the IT system or perform procedures beyond inquiry to evaluate whether the tested configurations were consistently designed and applied in all instances across the system. (AS 2201.42 and .44)

The issuer used an IT system to initiate process and record certain inventory and inventory-related transactions and deployed a separate instance of the system at a majority of its warehouses. Changes to this system were first deployed to some warehouses for purposes of pilot testing after which the changes were deployed to the remaining warehouses. The following deficiency was identified: • The firm selected for testing an IT-dependent manual control over inventory that consisted of the performance of periodic cycle counts which used information generated by one of the automated controls discussed above. The accuracy and completeness of this information depended on the effective operation of this automated control. As a result of the deficiency in the firm's testing of this automated control as discussed above the firm's testing of this IT- dependent manual control was not sufficient. (AS 2201.46)

The issuer used an IT system to initiate process and record certain inventory and inventory-related transactions and deployed a separate instance of the system at a majority of its warehouses. Changes to this system were first deployed to some warehouses for purposes of pilot testing after which the changes were deployed to the remaining warehouses. The following deficiency was identified: • The firm did not obtain sufficient appropriate audit evidence with regard to the issuer's inventory cycle-count procedures over certain inventory. Specifically as a result of the deficiencies in the firm's testing of the automated and IT-dependent manual controls as 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 during the 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 any procedures to test the completeness of the report. (AS 1105.10)

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 issuer wrote off certain other inventory at year end. The firm did not perform any procedures to evaluate this write-off. (AS 2301.08)

The firm did not identify and evaluate a departure from GAAP related to the issuer's omission of a disclosure required by FASB ASC Topic 330 Inventory. (AS 2810.30 and .31) In connection with our review the issuer reevaluated its disclosures for inventory and determined that a disclosure was omitted. The issuer did not file an amended Form 10-K or a Form 8-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected this omission in a subsequent filing.

The firm selected for testing controls over inventory including two automated controls related to (1) the recording of inventory at standard cost when warehouse staff marked inventory as received in the system and (2) the application of standard labor and overhead to materials inventory. The firm's approach to testing these controls was to test a single transaction. The firm did not evaluate whether each automated control was configurable and if so whether each control was configured appropriately within the system and as a result the firm's testing of these automated controls using a sample of only one instance was not sufficient. Further the firm did not perform any procedures to test the manual aspect of an automated control over inventory related to the manual confirmation of inventory received. (AS 2201.42 and .44)

The firm's procedures to test the valuation of certain inventory included selecting a sample of inventory items for testing using a sampling approach that was based on obtaining a certain level of audit evidence from its other substantive procedures. The sample size the firm used was too small to provide sufficient appropriate audit evidence over this inventory because the firm's other substantive procedures did not provide the level of substantive evidence needed to support its sampling approach. (AS 2315.16 .19 .23 and .23A)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm selected for testing controls over certain inventory that consisted of the issuer's review of the monthly weighted average cost per unit as computed by the issuer's IT system through an automated control that was used to record the value of inventory. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the weighted average cost per unit. Further the firm did not test the configuration or programming of the automated control or perform other procedures that would have provided sufficient appropriate audit evidence that the control was designed and operating effectively. (AS 2201.42 and .44)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm selected for testing a control over the determination and recording of a slow-moving inventory provision for certain inventory which included an automated control that calculated the provision. The firm did not test the configuration or programming of the automated control or perform other procedures that would have provided sufficient appropriate audit evidence that the control was designed and operating effectively. (AS 2201.42 and .44)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm selected for testing a control over the determination and recording of a slow-moving inventory provision for certain inventory which included an automated control that calculated the provision. The firm did not identify and test any controls over the accuracy and completeness of a system-generated report that was used in the operation of this control. (AS 2201.39)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm selected for testing a control over the determination and recording of a slow-moving inventory provision for certain inventory which included an automated control that calculated the provision. The firm did not perform any substantive procedures to test or in the alternative test controls over the accuracy of the system-generated report which it used to evaluate the reasonableness of the slow-moving inventory provision. (AS 1105.10)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm did not perform any substantive procedures to test the cost of certain inventory including the allocation of direct labor and overhead costs beyond comparing the cost of the inventory at year end to cost of the inventory at the end of the prior year. (AS 2301.08)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm did not perform any substantive procedures to test or with respect to change management to sufficiently test controls over the accuracy and completeness of information generated from the issuer's IT system that was used to substantively test the cost of certain inventory. (AS 1105.10)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm selected for testing a control over the determination and recording of an obsolescence provision for certain inventory that consisted of the issuer's review of a system-generated provision report and approval of related adjustments to inventory. The firm did not identify and test any controls over the (1) data input into the issuer's IT system and used to calculate the provision and (2) accuracy and completeness of the system-generated report that was used in the operation of the control. (AS 2201.39)

For inventory which was affected by the audit deficiencies related to change management the following additional deficiencies were identified: - The firm selected for testing a control over inventory that consisted of the performance of physical inventory counts at certain locations by a third-party stock counter. The issuer designed the control to exclude a portion of inventory from those counts. In evaluating the design of the control the firm did not evaluate the effect of the issuer's exclusion of a portion of inventory from the physical counts on the control's ability to effectively prevent or detect a material misstatement. (AS 2201.42)

The firm selected for testing as instructed by the principal auditor a control that consisted of the performance of periodic cycle counts and the review and approval of related adjustments. The firm did not evaluate whether the documentation it inspected for unobserved inventory cycle counts provided evidence that all steps related to those counts were performed as designed. (AS 2201.44)

The firm did not obtain sufficient appropriate audit evidence that the issuer's inventory cycle count procedures were sufficiently reliable to produce results substantially the same as those that would have been obtained by a count of all items during the year due to the deficiencies in the firm's control testing discussed above. (AS 2510.11)

The firm did not identify and test any controls over the existence of inventory held at customers' warehouses. (AS 2201.39)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the following deficiencies in the firm's testing of IT general controls (ITGCs) over certain of these IT systems the firm's testing of these automated and IT-dependent controls was not sufficient. (AS 2201.46)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: The firm selected for testing change management controls over an IT system that consisted of the documentation review testing and approval of changes in the testing/QA environment prior to their migration into production. The firm selected for testing change management controls over another IT system that consisted of the (1) approval of changes after deployment in the production environment by the business users to confirm that they were satisfied with the changes and had tested them (2) periodic review of a list of all manual changes made to the accounting database tables by users with direct database access to verify that all changes agreed to an approved change request and (3) review and approval of all direct changes made to published data. The following deficiency was identified: · For the first control the firm did not perform procedures to test or test any controls over the completeness of the population of changes from which it made its selections for testing. (AS 1105.10)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: The firm selected for testing change management controls over an IT system that consisted of the documentation review testing and approval of changes in the testing/QA environment prior to their migration into production. The firm selected for testing change management controls over another IT system that consisted of the (1) approval of changes after deployment in the production environment by the business users to confirm that they were satisfied with the changes and had tested them (2) periodic review of a list of all manual changes made to the accounting database tables by users with direct database access to verify that all changes agreed to an approved change request and (3) review and approval of all direct changes made to published data. The following deficiency was identified: · For the first control the firm did not evaluate the specific review procedures that the control owner or business users performed to validate and approve the appropriateness of the migrated changes to the production environment. (AS 2201.42 and .44)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: The firm selected for testing change management controls over an IT system that consisted of the documentation review testing and approval of changes in the testing/QA environment prior to their migration into production. The firm selected for testing change management controls over another IT system that consisted of the (1) approval of changes after deployment in the production environment by the business users to confirm that they were satisfied with the changes and had tested them (2) periodic review of a list of all manual changes made to the accounting database tables by users with direct database access to verify that all changes agreed to an approved change request and (3) review and approval of all direct changes made to published data. The following deficiency was identified: · For the second control the firm did not evaluate the effect of the control owner excluding certain information when performing the control on the control's ability to effectively prevent or detect a material misstatement. (AS 2201.42)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: The firm selected for testing change management controls over an IT system that consisted of the documentation review testing and approval of changes in the testing/QA environment prior to their migration into production. The firm selected for testing change management controls over another IT system that consisted of the (1) approval of changes after deployment in the production environment by the business users to confirm that they were satisfied with the changes and had tested them (2) periodic review of a list of all manual changes made to the accounting database tables by users with direct database access to verify that all changes agreed to an approved change request and (3) review and approval of all direct changes made to published data. The following deficiency was identified: · For the second and third controls the firm did not evaluate the specific review procedures that the control owners performed to validate the appropriateness of direct data changes to the system database. (AS 2201.42 and .44)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: The firm selected for testing change management controls over an IT system that consisted of the documentation review testing and approval of changes in the testing/QA environment prior to their migration into production. The firm selected for testing change management controls over another IT system that consisted of the (1) approval of changes after deployment in the production environment by the business users to confirm that they were satisfied with the changes and had tested them (2) periodic review of a list of all manual changes made to the accounting database tables by users with direct database access to verify that all changes agreed to an approved change request and (3) review and approval of all direct changes made to published data. The following deficiency was identified: · For the third control the firm did not identify and test any controls over the completeness of direct data changes to the system database. (AS 2201.39)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to other tests of controls and substantive procedures related to inventory certain of which were affected by the audit deficiencies discussed above related to user access and change management the following additional deficiency was identified: · The firm selected for testing controls that consisted of the configuration of an IT system used to test inventory ('inventory testing system') to automatically calculate the assay results of each sample based on a pre-established formula and the issuer's periodic validation of those calculations. The firm used a 'test of one' approach to test these controls but did not evaluate whether the tested configurations were applied to all relevant metals and locations across the inventory testing system and an inventory subledger system to support the use of such an approach. (AS 2201.46)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to other tests of controls and substantive procedures related to inventory certain of which were affected by the audit deficiencies discussed above related to user access and change management the following additional deficiency was identified: · The firm selected for testing a control that consisted of the configuration of the inventory subledger system to automatically calculate the metal content of each data entry based on the weight and assay results. The firm did not test all significant processing alternatives of this control for each relevant metal content type used for calculating the value of inventory. (AS 2201.42 and .44)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to other tests of controls and substantive procedures related to inventory certain of which were affected by the audit deficiencies discussed above related to user access and change management the following additional deficiency was identified: · The firm selected for testing controls that consisted of management's review and approval of the assay results in the inventory testing system. For one of these controls the firm did not evaluate the specific review procedures that the control owner performed to assess the accuracy of the assay results. (AS 2201.42 and .44)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to other tests of controls and substantive procedures related to inventory certain of which were affected by the audit deficiencies discussed above related to user access and change management the following additional deficiency was identified: · The firm selected for testing controls that consisted of management's review and approval of the assay results in the inventory testing system. For the other control the firm did not test an aspect of the control related to the control owner's assessment of the reasonableness of the assay results for more than half of the assay results selected for testing. (AS 2201.44)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to other tests of controls and substantive procedures related to inventory certain of which were affected by the audit deficiencies discussed above related to user access and change management the following additional deficiency was identified: · The firm selected for testing a control that consisted of management's verification and approval of the recorded weight of certain inventory. The firm did not evaluate the effect of certain exceptions identified during its substantive audit procedures related to inventory on its conclusions regarding the operating effectiveness of this control. (AS 2201.B8)

The issuer used multiple information-technology (IT) systems to initiate process and record inventory and inventory-related transactions. In its testing of controls over inventory the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to user access: The issuer's IT systems had development testing/quality assurance (QA) and production environments. Changes to the IT systems were typically tested in the testing environment prior to their migration to the production environment. Changes could however be made directly in the production environment in certain situations on an emergency basis. The firm performed a review of the security settings in place over certain of the issuer's accounting systems using an unapproved custom software audit tool that included tests of privileged access password settings and client production settings. The firm also selected for testing a control over user access to the production environment of these IT systems that consisted of (1) a security setting in these systems that would not allow any direct changes to be made in the production environment by any user and (2) management's review and approval of a system-generated report that listed any changes made to the system security settings. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reliability of the information produced from the custom software audit tool that was used to test the security settings of these IT systems. (AS 1105.04 and .06)