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The issuer reported right-of-use assets and lease liabilities. The issuer performed a recoverability test to determine whether these assets were impaired that included cash flows for years beyond the terms of the leases. The firm's approach for substantively testing the recoverability test was to test the issuer's process. The firm did not perform any substantive procedures to evaluate the reasonableness of the discount rate the issuer used to develop the estimate of lease liabilities. (AS 2501.16)

The issuer reported right-of-use assets and lease liabilities. The issuer performed a recoverability test to determine whether these assets were impaired that included cash flows for years beyond the terms of the leases. The firm's approach for substantively testing the recoverability test was to test the issuer's process. The firm did not perform any substantive procedures to determine whether the issuer developed the discount rate in conformity with FASB ASC Topic 842. (AS 2301.08)

The issuer used a specialist to estimate the issuer's oil and gas reserves that were used in the valuation of properties for which oil and gas reserves had been assigned. The issuer produced certain information that was (1) used in the firm's testing of revenue and lease operating expenses and (2) provided to the company's specialist. The firm did not perform any procedures to test or test controls over the accuracy and/or completeness of this information. (AS 1105.10 and .A8a)

In the current year the issuer identified events indicating that its operating lease right-of-use assets may not be recoverable and performed an impairment analysis. The issuer determined that for certain of these assets (the 'valued assets') the fair value of the individual assets would not be impaired by more than a pre-determined percentage of the asset's recorded value (a 'maximum impairment percentage'). The following deficiencies were identified: · The firm's substantive procedures to evaluate the reasonableness of the maximum impairment percentage consisted of reading the issuer's external valuation report for certain other operating lease right-of-use assets and an external industry report. The firm did not perform procedures to evaluate whether the information in these reports was (1) relevant to the valued assets and (2) precise enough to enable the firm to identify potential material misstatements. Further the firm did not perform any procedures to evaluate whether the issuer's use of the same maximum impairment percentage for all of the valued assets was appropriate. (AS 2502.26 .28 and .31)

The firm did not identify and test any controls that addressed the valuation of certain right-of-use assets. (AS 2201.39)

The firm did not perform any substantive procedures to test the valuation of these right-of-use assets. (AS 2301.08)

The firm's approach for substantively testing the present value of operating lease right-of-use assets and operating lease liabilities was to review and test management's process. The firm did not perform any procedures to evaluate the reasonableness of the discount rate used to determine the present value. (AS 2501.09 .10 and .11) [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.]