Explorer

The issuer recorded multiple types of revenue. For premium revenue the firm's primary substantive procedure consisted of analytical procedures. The following deficiency was identified: · The firm used certain system-generated data in its substantive testing of this revenue but did not test or in the alternative test any controls over the accuracy of these data. (AS 2305.16)

The firm did not perform any substantive procedures to test or in the alternative test any controls over the accuracy and completeness of certain information the firm obtained from the issuer and used to test certain revenue. (AS 1105.10)

The firm did not perform any substantive procedures to test or in the alternative test any controls over the accuracy and completeness of certain information the firm obtained from the issuer and used to test revenue. (AS 1105.10)

In addition the firm did not identify and test any controls over the accuracy and completeness of data used in the operation of the above two controls and another control over the review of the reconciliation of revenue. (AS 2201.39)

The issuer recognized revenue based on the relationship between actual costs incurred and total estimated contract costs which were accumulated within an issuer-prepared schedule (the 'Schedule'). The firm did not perform sufficient procedures to test or in the alternative test any controls over the accuracy and completeness of the actual costs incurred included in the Schedule because its procedures were limited to comparing the results of its testing of inventory and payroll to the Schedule. (AS 1105.10)

The firm used data from one of the issuer's systems to test certain revenue but did not test or in the alternative identify and test controls over the accuracy and completeness of this data. (AS 1105.10)

The firm's approach for substantively testing certain revenue included performing a software-assisted analysis to test the relationships among revenue accounts receivable deferred revenue and cash receipts. The reliability of the audit evidence obtained from this analysis was dependent upon the firm's testing of cash receipts data underlying the analysis. The firm also performed tests of details and substantive analytical procedures over the revenue using data from system-generated reports provided by the issuer. The following deficiency was identified: • With respect to the tests of details and substantive analytical procedures the firm did not perform any procedures to test or test any controls over the accuracy and completeness of the data or system-generated reports it used to perform the procedures. (AS 1105.10; AS 2305.16)

The issuer recognized revenue from multiple revenue sources. The following deficiencies were identified with respect to the firm's ICFR audit: • The firm selected for testing various controls that consisted of the issuer's review and/or reconciliation of certain system-generated data and reports used to recognize revenue and the issuer's follow-up on missing or duplicate data files. The firm did not identify and test any controls over the accuracy and completeness of the system-generated information used in the operation of these controls. (AS 2201.39) In connection with our review the issuer reevaluated its controls over revenue including IT controls and concluded that additional material weaknesses existed that had not been previously identified. The issuer subsequently reflected these additional material weaknesses in a revision to its report on ICFR and the firm revised and reissued its report on ICFR to include these additional material weaknesses.

The firm's approach for substantively testing certain revenue included performing a software-assisted analysis to test the relationships among revenue accounts receivable deferred revenue and cash receipts. The reliability of the audit evidence obtained from this analysis was dependent upon the firm's testing of cash receipts data underlying the analysis. The firm also performed tests of details and substantive analytical procedures over the revenue using data from system-generated reports provided by the issuer. The following deficiency was identified: • With respect to the software-assisted analysis the firm did not perform procedures to test the cash receipts data underlying the analysis. (AS 1105.10)

The firm selected for testing controls that consisted of the issuer's review of revenue recognized over time. The firm did not identify and test any controls over the accuracy and completeness of the reports that the control owners used in the operation of these controls. (AS 2201.39)

The firm selected for testing a control that consisted of management's review of a reconciliation related to revenue. The firm did not identify and test any controls over the accuracy and completeness of the data used in the operation of the control. (AS 2201.39)

The firm did not perform any procedures to test or in the alternative test any controls over the accuracy and completeness of system-generated reports used in its substantive testing of certain revenue transactions. (AS 1105.10)

The firm selected for testing another control that consisted of the issuer's review of a monthly report and the resulting journal entries that were recorded to adjust revenue. The firm did not identify and test any controls over the accuracy and completeness of the report used in the operation of this control. (AS 2201.39)

The issuer entered into contracts with certain customers that required revenue to be recognized over time based on costs incurred to date relative to total estimated costs to complete these contracts. To substantively test revenue the firm selected a sample of invoices and performed procedures. The following deficiencies were identified: - With respect to invoices related to contracts that were open at year end the firm did not test the accuracy and completeness of certain aspects of schedules used by the issuer to determine the estimated cost for the project or the completeness of reports used to track total cost incurred for the project. (AS 1105.10)

The firm's internal inspection program had inspected this audit and reviewed this area but did not identify the deficiencies below. The firm did not perform procedures to test the issuer's segment reporting disclosures related to revenue beyond obtaining an issuer-prepared schedule. (AS 2301.08)

The firm did not test or test any controls over the accuracy of certain system-generated reports used to substantively test revenue. (AS 1105.10)

For one type of revenue the issuer's system generated customer invoices and recorded revenue once the issuer processed invoices from the manufacturer of its products indicating that customer orders had been completed and shipped. The following deficiencies were identified: · The firm selected for testing a control over manually recorded period-end adjustments to reverse revenue for shipped products that had not been delivered to the issuer's customers by the end of the period. The firm did not identify and test any controls over the accuracy and completeness of the delivery dates obtained from the manufacturer that the control owners used to determine whether adjustments were necessary. (AS 2201.39)

The firm used the sales reported by the external parties in its substantive testing of this revenue but did not perform any procedures to test or (as discussed above) sufficiently test controls over the accuracy and completeness of this information. (AS 1105.10)

The firm did not identify and test any controls over the accuracy and completeness of the shipment information from the system that the issuer used to record revenue. (AS 2201.39)

The issuer recognized certain other revenue based on user activity in an electronic environment that was tracked and provided by two external parties. The firm obtained this information from the issuer and used it in its substantive testing of this revenue. The following deficiencies were identified: · With respect to the user activity information provided by one external party the firm did not sufficiently test the accuracy and completeness of the information because it did not test the parameters that the issuer input into the IT system that the external party used to track the activity. (AS 1105.10)

The issuer recognized revenue from certain other arrangements based on information provided by external parties. The firm obtained this information from the issuer and used it in its substantive testing of this revenue. The following deficiencies were identified: · The firm did not perform any procedures to test or in the alternative test any controls over the accuracy and completeness of this information. (AS 1105.10)

The firm selected for testing a control that consisted of the issuer's review of the calculation of the rebate accrual. The firm did not identify and test any controls over the accuracy and completeness of the system-generated reports used in the operation of this control. (AS 2201.39)

The issuer recognized certain revenue from contracts over time using an input method based on costs incurred. The following deficiencies were identified: · The firm used certain labor information in its substantive testing of the costs incurred to date that the issuer used to recognize this revenue but did not test or in the alternative test any controls over the accuracy and completeness of this information. (AS 1105.10)

The issuer recognized certain revenue based on electronic activity that was processed by a third-party service provider and the firm used certain reports produced by the third-party service provider in its substantive testing. The firm did not sufficiently test the accuracy and completeness of the data included in such reports because its procedures were limited to testing only a small number of revenue types and for those revenue types selected for testing it tested only one of multiple types of transactions. (AS 2301.08)

The issuer recognized a certain type of revenue based on the volume of product it delivered to its customers. The firm used volume data in its substantive testing of this revenue but did not perform any procedures to test or in the alternative identify and test any controls that addressed the accuracy and completeness of the volume data. (AS 1105.10)

The issuer used information-technology (IT) systems to initiate process and record transactions related to certain revenue. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of the shipment information that was entered into one of the IT systems and that the issuer used to record this revenue. (AS 2201.39)

For one of these types of revenue and another type the issuer recognized revenue based on electronic activity. The firm used activity information produced by certain of the issuer's service organizations in its substantive testing of this revenue but did not perform any procedures to test the accuracy and completeness of this information. (AS 2301.08 and .13)

For another type of revenue the firm selected for testing an automated control over the initiation processing and recording of revenue transactions in order to rely on the accuracy and completeness of certain issuer-produced information that the firm used in its substantive testing. The firm did not sufficiently test the configuration of this control as it limited its testing to only certain scenarios without addressing the risks of material misstatement associated with the untested scenarios. (AS 2301.19 and .21)

The issuer recognized certain revenue based on electronic activity. The firm used activity information produced by certain of the issuer's service organizations in its substantive testing of this revenue but did not perform any procedures to test the accuracy and completeness of this information. (AS 2301.08 and .13)

The issuer recorded certain revenue based on data in an electronic environment that were tracked and provided by two service organizations. The firm used information produced by these service organizations in its substantive testing of this revenue but did not test or test any controls over the accuracy and completeness of this information. (AS 2301.08 and .13)

The issuer used multiple service organizations to host and/or maintain IT systems that the issuer used to initiate process and/or record transactions related to various types of revenue at five other business units. The firm obtained the service auditor's reports for these service organizations and identified certain complementary user controls that the service auditor's reports described as necessary. The following deficiencies were identified: · The firm did not perform sufficient procedures to test the accuracy and completeness of certain reports produced by the service organizations that the firm used in its substantive testing. (AS 2301.08)

For three types of revenue the firm selected a sample of revenue transactions for testing. The following deficiencies were identified: · For two of these types of revenue the firm did not perform any procedures to test or test controls over the accuracy and completeness of issuer-prepared reports that the firm used in its substantive testing. (AS 1105.10)

The firm used an issuer-prepared schedule in its substantive testing of a revenue disclosure. The firm did not perform any procedures to test or test controls over the accuracy and completeness of this schedule. (AS 1105.10)

The firm subjected certain other of the issuer's business units to less extensive audit procedures. The following deficiencies were identified: · For certain of these business units the firm did not perform any procedures to test or test controls over the accuracy and completeness of certain issuer-produced information the firm used in its substantive testing including substantive analytical procedures. (AS 1105.10; AS 2305.16)

The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · For a second type of revenue the firm did not identify and test any controls over the accuracy and completeness of certain information the issuer used to record revenue. (AS 2201.39)

The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For revenue at this business unit which was affected by the audit deficiencies discussed above the following additional deficiencies related to the firm's testing of controls were identified: · For the second type of revenue the firm selected for testing a control consisting of the issuer's review of recorded revenue. The firm did not identify and test any controls over the accuracy and completeness of certain information used in the operation of this control. (AS 2201.39)

The firm's internal inspection program inspected this audit and reviewed the Revenue and Business Combination areas but did not identify the deficiencies below. For two types of revenue at two business units one of which was affected by certain of the audit deficiencies discussed above the firm used certain issuer-produced information in its substantive testing of this revenue. The firm did not perform any procedures to test or test any controls over the accuracy and completeness of this information. (AS 1105.10)

The issuer used several information-technology (IT) systems to process and record certain revenue at one business unit. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's review of price list changes processed through certain of the issuer's IT systems. The firm did not identify and test any controls over the accuracy and completeness of certain information used in the operation of these controls. (AS 2201.39)

The issuer recorded certain revenue based on data in an electronic environment that were tracked and provided by a service organization. The firm used certain information produced by this service organization in its substantive testing of this revenue but did not test or test any controls over the accuracy and completeness of this information. (AS 2301.08 and .13)

The firm did not perform procedures to test or test controls over the accuracy and completeness of certain issuer-produced information that the firm used in its substantive testing. (AS 1105.10)

The firm did not perform procedures to test or test controls over the accuracy and completeness of certain issuer-produced information that it used in its testing of (1) certain revenue and (2) the issuer's disclosure related to the remaining performance obligations. (AS 1105.10)

The issuer recognized revenue from contracts with customers that included an estimate of variable consideration in the transaction price; the issuer estimated this variable consideration using a portfolio of contracts approach. The following deficiencies were identified: · The firm used an issuer-prepared schedule of cash receipts by invoice in its substantive testing of the variable consideration estimate. The firm did not sufficiently test or test controls over the accuracy of this schedule because it did not perform procedures to evaluate whether the cash receipts throughout the period related to the associated invoices. (AS 1105.10)

The firm did not test the accuracy and completeness of data included in certain reports used by the firm in its substantive procedures. (AS 1105.10)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer recognized revenue from certain contracts as either single performance obligations or multiple performance obligations satisfied at a point in time. The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiency was identified: • The firm did not perform any procedures to test whether performance obligations had been satisfied before revenue was recognized for all but four transactions selected for testing. (AS 2301.08 and .13) For two of these transactions the firm did not test or test any controls over the completeness and accuracy of issuer-produced information used in its substantive testing. (AS 1105.10)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer recognized revenue from certain contracts as either single performance obligations or multiple performance obligations satisfied at a point in time. The firm's substantive procedures to test revenue consisted of selecting a sample of transactions for testing. The following deficiency was identified: • The firm did not perform any procedures to test whether performance obligations had been satisfied before revenue was recognized for all but four transactions selected for testing. (AS 2301.08 and .13) For two of these transactions the firm did not test or test any controls over the completeness and accuracy of issuer-produced information used in its substantive testing. (AS 1105.10)

The issuer records multiple types of revenue. For another type of revenue the firm did not perform any procedures to test the revenue beyond agreeing revenue from three selected locations to an issuer-prepared schedule. (AS 2301.08 and .11)

The firm did not evaluate the accuracy and completeness of the issuer-produced sales registry from which the firm made its selections for its substantive testing of revenue as the sales registry did not agree to the general ledger. (AS 2301.08)

The firm's substantive procedures to test revenue included analytical procedures. The firm used the information generated from this revenue application to develop its expectations but did not test or (as discussed above) sufficiently test controls over the accuracy and completeness of this information. (AS 2305.16)

The firm selected for testing a control that consisted of the issuer's review of invoices to determine whether revenue was appropriately recorded. The firm did not identify and test any controls that addressed the accuracy and completeness of the price and quantity data that the issuer used in the operation of this control. (AS 2201.39)

For three types of revenue the firm used certain system-generated information in its substantive testing of revenue but did not perform any procedures to test or test any controls over the accuracy and completeness of this information. (AS 1105.10)