Explorer

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 sufficient procedures to test whether the issuer had identified all of the lease arrangements because it did not perform any procedures to test the completeness of the issuer's list of leases. (AS 1105.10)

The firm used certain information produced by a related party in its testing of revenue and lease operating expenses but did not perform any procedures to evaluate the reliability of this information. (AS 1105.04 and .06)

The issuer used (1) store-level operating results to evaluate whether any impairment indicators existed for its long-lived assets including lease right-of-use assets and (2) store-level cash-flow forecasts to evaluate the recoverability of certain of these assets. The issuer excluded certain costs from these analyses. The following deficiencies were identified: · The firm used these operating results in its substantive procedures to evaluate whether any impairment indicators existed for these assets. The firm did not evaluate whether these excluded costs were directly associated with the identified asset groups. (AS 2301.08)

The firm did not perform any substantive procedures to test the issuer's long-lived assets and operating lease right-of-use assets for possible impairment at year end beyond reading an issuer-prepared checklist and inquiring of management. (AS 2301.08)

The issuer disclosed that it had certain leases that had been executed by year end but had not yet commenced. The firm did not perform any procedures to evaluate whether any of these leases should have been recorded as right-of-use assets and lease liabilities at year end. (AS 2301.08)

To evaluate the issuer's classification of leases as operating or financing the firm tested a sample of current-year lease additions but did not perform any procedures to test the fair values of the underlying assets that the issuer used in determining the leases' classification. (AS 2301.08)

During the year the issuer acquired several properties. The firm did not evaluate whether the existing leases on these acquired properties were properly classified. (AS 2301.08)