Explorer

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 firm selected for testing a control that included the issuer's review of the fair values of certain investments. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain assumptions the issuer used to determine the fair values of these investments. (AS 2201.42 and .44)

The firm did not identify and test controls over the existence of investments. (AS 2201.39)

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 a majority ownership in a limited partnership and reported the valuation of this investment based on investee financial results including audited financial statements that were prepared using different accounting principles. The following deficiencies were identified: · The firm did not evaluate whether the issuer's accounting for this investment was appropriate. (AS 2301.08 and .11)

The issuer held a majority ownership in a limited partnership and reported the valuation of this investment based on investee financial results including audited financial statements that were prepared using different accounting principles. The following deficiencies were identified: · The firm did not obtain sufficient appropriate audit evidence for the investee's financial statements prepared using different accounting principles because it did not perform procedures to obtain evidence related to significant differences in accounting principles. (AS 1105.B1 and .B2)

The issuer held a majority ownership in a limited partnership and reported the valuation of this investment based on investee financial results including audited financial statements that were prepared using different accounting principles. The following deficiencies were identified: · The firm did not identify and evaluate departures from GAAP related to this investment. (AS 2810.30 and .31)

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 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 identify and evaluate a misstatement in a required disclosure under FASB ASC Topic 235 Notes to Financial Statements related to another investment. (AS 2810.30 and .31) 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 perform sufficient procedures to evaluate the issuer's qualitative assessment of potential impairment indicators to test the valuation of an investment because the firm did not address certain inconsistencies in the issuer's assessment. (AS 2301.08)

In addition the firm did not evaluate whether the business purpose (or lack thereof) of the investment transaction indicated that it may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets. (AS 2401.67)

The issuer recorded an investment at fair value that was determined in part based on assumptions that were developed by the company's specialists. The firm's approach for testing the fair value of the investment was to develop an independent expectation of the estimate using certain significant assumptions that were developed by the company's specialists. The following deficiency was identified: • The firm did not perform procedures to evaluate the reasonableness of certain of these significant assumptions developed by one of the company's specialists beyond reading the company's specialist's valuation reports inspecting certain contracts and inquiring of management. Further the firm did not perform any procedures beyond inquiring of management with respect to its use of this company's specialist's work as audit evidence. (AS 1105.A1 - .A10; AS 2501.16)

The issuer recorded an investment at fair value that was determined in part based on assumptions that were developed by the company's specialists. The firm's approach for testing the fair value of the investment was to develop an independent expectation of the estimate using certain significant assumptions that were developed by the company's specialists. The following deficiency was identified: • The firm did not perform procedures to evaluate the reasonableness of certain other significant assumptions developed by two of the company's specialists beyond reading and comparing the two company's specialists' valuation reports inspecting certain contracts and inquiring of management. Further the firm did not perform procedures to evaluate the work of the company's specialists beyond inquiries of the company's specialists and certain comparisons to issuer documentation. (AS 1105.A6 - .A10; AS 2501.16)

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)