Explorer

The issuer used cash-flow forecasts to evaluate whether any impairment indicators existed for certain long-lived assets. The firm selected for testing two controls that consisted of the issuer's reviews of (1) the methodology it used to prepare these cash-flow forecasts and (2) certain of these cash-flow forecasts. When evaluating the design of the second 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. (AS 2201.42)

For certain other long-lived assets the following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test these long-lived assets were too small to provide sufficient appropriate audit evidence because in determining the sample sizes the firm did not take into account tolerable misstatement the allowable risk of incorrect acceptance and the characteristics of the population. (AS 2315.16 .23 and .23A)

The sample sizes the firm used in certain of its substantive procedures to test long-lived assets were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The sample sizes the firm used in certain of its substantive procedures to test additions to and write-offs of PP&E were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The principal auditor instructed the firm to test certain controls over long-lived assets that consisted of the issuer's monthly reconciliation of certain accounts and monthly and quarterly reviews of accrued capital expenditures. The number of items selected for testing did not provide sufficient appropriate audit evidence that the controls were operating effectively because the firm did not test the number of items that it determined necessary. (AS 2201.46)