Explorer

The issuer held certain non-marketable equity investments that were recorded at adjusted cost. For one of these investments the firm did not perform sufficient procedures to evaluate the issuer's conclusion that the investment was not impaired because the firm did not (1) test the issuer's qualitative assessment and (2) test the fair value of the issuer's sale of this investment through a non-monetary transaction subsequent to year end which the issuer used to support its conclusion that the investment was not impaired at year end. (AS 2501.07)

For another of these investments the issuer concluded that the investment was not impaired based in part on a private placement transaction earlier in the year. The firm did not perform sufficient procedures to evaluate the issuer's conclusions that the investment was not impaired because the firm did not (1) test the issuer's qualitative assessment; (2) evaluate whether impairment indicators existed because the investee company reported a net loss for the year and its total liabilities exceeded its total assets; and (3) evaluate the value of the investee's shares at year end relative to the private placement transaction earlier in the year. (AS 2301.08)

The issuer reported an equity-method investment in an investee whose fiscal year end was six months earlier than the issuer's. The firm did not test the percentage of ownership in the investee at year end. (AS 2301.08)

The firm did not perform any substantive procedures to test an investment. (AS 2301.08)

The firm did not perform any procedures to test certain investments. (AS 2301.08)

The issuer held investments without readily determinable fair values that were recorded at cost less impairments. The following deficiencies were identified: · For one of these investments selected for testing the firm did not perform sufficient procedures to evaluate whether management considered certain relevant information in determining whether factors may have existed that indicated an impairment loss was present because the firm's procedures were limited to reading certain meeting minutes and related documents which did not address the relevant information. (AS 2503.48)

The firm did not perform sufficient procedures to evaluate the issuer's conclusion that no impairment or credit loss existed for certain investments because it did not take into account certain relevant requirements of FASB ASC Topic 326. (AS 2301.08)

The firm did not perform sufficient procedures to test investments because it selected for testing underlying investments from the issuer's two largest funds which was not representative of the population of investments. (AS 2315.24)

The firm did not perform any substantive procedures to evaluate the appropriateness of the issuer's categorization of these securities within the fair value hierarchy. (AS 2502.43)

The firm did not perform procedures to evaluate the issuer's qualitative assessments to evaluate whether certain of its investments were impaired. (AS 2301.08 and .11)

To evaluate an investment for potential impairment the firm used information related to transactions involving the investee's stock. The firm did not perform any procedures beyond inquiring of management of the investee to test whether this information was reliable and accurate. Further when determining whether the issuer's conclusion that the investment was not impaired was reasonable the firm did not evaluate potential impairment indicators including (1) the investee's negative operating results unsuccessful attempt to raise capital and workforce reduction shortly after year end and (2) a significant decline in the value of certain assets that were important to the issuer's and the investee's operations. (AS 2301.08; AS 2810.03)

During the year the issuer invested in an entity. The following deficiency was identified: · The firm did not evaluate whether the issuer's accounting for this investment was in conformity with certain requirements of GAAP. (AS 2301.08) Unrelated to our review the issuer reevaluated its accounting for this investment and concluded that a material misstatement existed that had not been previously identified. The issuer corrected this misstatement in a subsequent filing.

The firm's internal inspection program inspected this audit and reviewed the investments area but did not identify the deficiencies below. For certain investments the following additional deficiencies were identified: · For certain other investments the issuer used the investees' unaudited financial results in estimating the fair values. The firm did not sufficiently evaluate the investees' financial results it used as audit evidence because it did not apply or request that another auditor apply appropriate auditing procedures to the unaudited financial statements. (AS 1105.B3)

The firm did not perform substantive procedures to test the fair value of certain investments beyond (1) comparing the recorded fair value to record keeper's reports and (2) comparing the total balance and percentage of total investments for the type of investment to the prior year. (AS 2501.07)

The issuer performed a qualitative assessment of impairment of an investment and concluded that it was not impaired. The firm did not perform procedures beyond inquiry to test the accuracy of certain issuer-produced information included in the assessment to support the issuer's conclusion. (AS 1105.10)

The issuer held certain investments that were categorized as level 3 within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm's approach for substantively testing the fair value of these investments was to develop an independent expectation using certain interim financial results and other data about the underlying investments. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate the reliability of certain interim financial results it used to estimate the fair value of these investments because it did not perform procedures beyond (1) comparing the interim financial results to year-end financial results and (2) confirming for certain underlying investments operating results with related parties. Further for one of these investments the firm did not evaluate certain evidence that indicated lower revenue than it used to develop its independent expectation. (AS 1105.04 and .06; AS 2810.03) In connection with our review the issuer reevaluated this disclosure and concluded that misstatements existed that had not been previously identified. The issuer subsequently restated its financial statements to correct these misstatements and the firm revised and reissued its report on the financial statements.

The issuer held certain investments that were categorized as level 3 within the fair value hierarchy as set forth in FASB ASC Topic 820 Fair Value Measurement. The firm's approach for substantively testing the fair value of these investments was to develop an independent expectation using certain interim financial results and other data about the underlying investments. The following deficiencies were identified: · For one of these investments the firm did not perform sufficient procedures to evaluate the reliability of other data it used to estimate the fair value of the investment because its procedures were limited to recalculation. Further the firm did not evaluate certain evidence that indicated a higher amount than the data it used to develop its independent expectation. (AS 1105.04 and .06; AS 2810.03) In connection with our review the issuer reevaluated this disclosure and concluded that misstatements existed that had not been previously identified. The issuer subsequently restated its financial statements to correct these misstatements and the firm revised and reissued its report on the financial statements.

The firm did not sufficiently evaluate whether the issuer's accounting for this investment was appropriate because the firm did not determine how the issuer evaluated all relevant factors including certain contrary evidence related to one of the factors. (AS 2301.08; AS 2810.03)