Explorer

The issuer recognized certain revenue based on product volumes delivered to its customers and accounted for certain of these arrangements as operating leases. The following deficiencies were identified: · The firm identified a control deficiency related to the issuer's lack of controls over the accuracy of the volume data. The firm used these volume data in its substantive testing of this revenue but did not perform any procedures to test the accuracy and completeness of these data. (AS 1105.10)

The issuer engaged specialists to determine the fair value of certain leased assets using various data and assumptions. The following deficiencies were identified: · The firm did not perform procedures to (1) test the accuracy and completeness of issuer-produced data used by the company's specialists and (2) evaluate the relevance and reliability of external information used by one of the company's specialists. (AS 1105.A8a)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The issuer used store-level operating results to evaluate whether any impairment indicators existed for its operating lease right-of-use assets and to perform an impairment analysis. The following deficiency was identified: · The firm selected for testing a control that included the issuer's reviews of the accuracy and completeness of these operating results and this impairment analysis. When evaluating the design of this control the firm did not evaluate the number of items the control owner reviewed to assess whether it was sufficient to address the risks of material misstatement. Further the firm did not identify that the control owner did not assess whether these operating results were accurately entered into this impairment analysis. (AS 2201.42)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The issuer used store-level operating results to evaluate whether any impairment indicators existed for its operating lease right-of-use assets and to perform an impairment analysis. The following deficiency was identified: · The firm used these operating results in its substantive testing of the potential impairment of these lease right-of-use assets but did not perform any procedures to test or sufficiently test controls over the accuracy and completeness of these operating results. (AS 1105.10)

The firm selected for testing a control that consisted of the issuer's review of the accounting for certain lease transactions. The firm did not identify and test any controls over the accuracy and completeness of a report used in the operation of this control. (AS 2201.39)

The firm selected for testing controls that included the issuer's reviews of new and amended lease agreements and the reconciliation of the lease asset balance from the lease sub-ledger to the general ledger. The firm did not identify and test any controls over the accuracy and completeness of the lease information that was used in the operation of these controls. (AS 2201.39)

A service organization provided lease administration and accounting software services to the issuer using a lease application. An unrelated party entered all of the issuer's lease data and assumptions into the lease application and the issuer was responsible for the accuracy and completeness of such information. The firm selected for testing certain controls that consisted of the issuer's review of journal entries used to record lease activity and account reconciliations related to leases. The firm did not identify and test any controls over the accuracy and completeness of the lease information used in the operation of these controls. (AS 2201.39)

The firm used issuer-prepared schedules in its substantive testing of certain of the issuer's lease disclosures but did not perform any procedures to test or test any controls over the accuracy and completeness of these schedules. (AS 1105.10)

The firm did not perform procedures to test the accuracy and completeness of certain disclosures related to operating leases. (AS 2301.08)