Explorer

The issuer uses applications to process and record revenue transactions. The firm selected for testing controls over user access to these applications. The firm did not evaluate the specific review procedures that the control owners performed to verify the appropriateness of user access to certain of these applications. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of month-to-month revenue variances. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of a review of customer contracts for proper revenue recognition including the identification and evaluation of terms and conditions in such contracts that affect the recognition of certain revenue. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and 44)

The firm selected for testing a control that consisted of the issuer's review of customer contracts for proper revenue recognition and identified a significant deficiency related to this control. The firm identified and tested a compensating control that it believed would mitigate the deficiency which consisted of another review control over customer contracts. The firm did not evaluate the review procedures that the control owner performed to be able to conclude that the compensating control mitigated the identified significant deficiency. (AS 2201.68)

For revenue at a foreign location the firm selected for testing two entity-level controls. The following deficiencies were identified: · One of these controls consisted of the quarterly review of the financial reporting information for the issuer's segment that included this location. The firm did not evaluate the review procedures the control owner performed including the criteria that the control owner used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

For a third type of revenue consisting of three categories the following deficiencies were identified: · For the third category of this revenue the firm selected for testing a control that consisted of the issuer's monthly review of pricing. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44) Unrelated to our review the issuer reevaluated its controls over revenue and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness and the other material weaknesses discussed herein and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The firm selected for testing a control that consisted of the issuer's review of new or amended customer contracts for terms and conditions that may affect revenue recognition. The firm did not evaluate the specific review procedures that the control owner performed to identify and evaluate all relevant terms and conditions. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of certain sales incentive reserves. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain assumptions the issuer used to determine these reserves. (AS 2201.42 and .44)

The issuer recognized certain revenue based on customer contracts that included financing arrangements with the customer. The firm selected for testing a control over this revenue that consisted of the issuer's review of these customer contracts including the review of the credit application supporting the customer's ability and intent to pay. The firm did not evaluate the specific review procedures that the control owners performed to evaluate whether these customer contracts met the collectability criteria required to recognize revenue. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of the calculation of the sales returns reserve. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the adjustments that the issuer made to this reserve. (AS 2201.42 and .44)

With respect to revenue for certain other business units that the firm subjected to less extensive audit procedures the following deficiencies were identified: · For the remainder of these business units the firm selected for testing a control that consisted of the issuer's reconciliation of revenue recorded to cash receipts. The firm did not evaluate the specific review procedures that the control owners performed to evaluate exceptions identified during the operation of the control. (AS 2201.42 and .44)

The issuer recognized certain of its revenue from customer contracts based on costs incurred to date relative to total estimated costs to complete these contracts. The issuer used certain significant assumptions to estimate the costs to complete these contracts. The following deficiencies were identified: · The firm selected for testing certain controls that included reviews of the total estimated costs to complete these contracts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the significant assumptions used to estimate the total costs to complete the contracts. (AS 2201.42 and .44)

With respect to the issuer's disclosures related to revenue the following deficiencies were identified: · The firm selected for testing certain controls that included a review of the issuer's revenue disclosures. The firm did not evaluate the specific review procedures that the control owner performed to evaluate whether these disclosures were presented in conformity with GAAP. (AS 2201.42 and .44)

Certain of the issuer's revenue arrangements included multiple performance obligations. The issuer allocated the total transaction price for each of these arrangements to the separate performance obligations based on the issuer's estimate of the relative standalone selling prices. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's reviews of the estimated standalone selling prices. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of certain significant assumptions used to develop the standalone selling prices. (AS 2201.42 and .44)

The issuer recognized certain revenue based on customer contracts that included financing arrangements with the customer. The firm selected for testing a control over this revenue that consisted of the issuer's review and approval of the credit application supporting the customer's ability and intent to pay. The firm did not evaluate the specific review procedures that the control owners performed to assess whether the customer contracts had met the collectability criteria before revenue was recognized. (AS 2201.42 and .44)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer recorded transactions related to revenue at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to less extensive audit procedures. To address the risks of material misstatement related to revenue for these business units the firm selected for testing various entity-level controls. The following deficiencies were identified: · For one segment the firm selected for testing controls that consisted of the issuer's reviews of the forecasts that were used in its entity-level controls over this segment including the assumptions used in these forecasts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of these assumptions. (AS 2201.42 and .44)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer recorded transactions related to revenue at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to less extensive audit procedures. To address the risks of material misstatement related to revenue for these business units the firm selected for testing various entity-level controls. The following deficiencies were identified: · For a second segment the firm selected for testing a control that consisted of the issuer's monthly comparisons of prior-period results to current-period results. The firm did not evaluate the specific review procedures that the control owners performed to determine whether items identified for follow up had been appropriately resolved. (AS 2201.42 and .44)

The firm's internal inspection program had inspected this audit reviewed these areas and also identified the deficiencies below. The issuer recorded transactions related to revenue at numerous business units. The firm subjected certain of the issuer's business units that were included within three of the issuer's segments to less extensive audit procedures. To address the risks of material misstatement related to revenue for these business units the firm selected for testing various entity-level controls. The following deficiencies were identified: · For a third segment the firm selected for testing a control that consisted of the issuer's quarterly comparisons of prior-period results to current-period results. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing controls related to management's reviews of monthly and quarterly revenue and accounts receivable balances. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control over the review of a revenue variance analysis but did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of management's monthly review of the journal entry recorded to adjust revenue for undelivered shipments. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer recognized certain revenue upon delivery of the sold product to the customer. Pursuant to the customer contracts the quantity of products sold and delivered was measured using measuring equipment at the issuer's locations. The following deficiency was identified: · The firm selected for testing a control that consisted of the issuer's evaluation of the equipment used to measure inventory quantity on hand and inventory quantity delivered to each customer to determine whether it was appropriately maintained and operating correctly. The firm did not evaluate the specific review procedures that the control owners performed to determine whether the equipment was accurately measuring the quantity of products delivered to each customer. (AS 2201.42 and .44)

The issuer recognized revenue from certain contracts that provided for the reimbursement of (1) employee-related costs which the issuer calculated using the time incurred by its employees to perform certain services under these contracts and (2) other expenses incurred by the issuer. The following deficiencies were identified: · The firm selected for testing a control that included a review of the employee-related costs and other expenses. The firm did not evaluate the specific review procedures the control owners performed to assess (1) the appropriateness of the time used to calculate the employee-related costs and (2) whether the other expenses were reimbursable under these contracts. (AS 2201.42 and .44)

The issuer entered into contracts with customers at certain of its locations that required revenue to be recognized over time based on costs incurred to date relative to total estimated costs to complete these contracts. For two locations the firm selected for testing controls that included the review of the estimated costs to complete. The firm did not evaluate the specific review procedures the control owners performed to assess the reasonableness of the estimated costs to complete. (AS 2201.42 and .44)

For certain of the issuer's operations the firm selected for testing a control that consisted of the review of monthly comparisons of actual revenue by distribution channel and by product category to budgeted amounts. In testing the operating effectiveness of this control the firm did not evaluate the specific review procedures that the control owner performed to investigate identified variances and determine whether items identified for follow up had been appropriately resolved. (AS 2201.44)

The issuer recognized certain revenue from contracts using the percentage-of-completion method. The following deficiencies were identified: · The firm selected for testing a control over this revenue that consisted of the review of an analysis of estimated gross margin by contract. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer entered into arrangements with multiple elements that consisted of software and professional services. The issuer determined that professional services represented separate performance obligations and recognized revenue related to these services separately from the software revenue. The firm selected for testing controls that consisted of the issuer's reviews of contracts for appropriate revenue recognition. The firm did not evaluate the specific review procedures that the control owners performed to determine that professional services represented separate performance obligations. (AS 2201.42 and .44)

The issuer entered into certain revenue arrangements with multiple performance obligations and allocated the total consideration from these arrangements between goods and services. The firm selected for testing a control that consisted of management's review of new contracts for appropriate revenue recognition. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

For one business unit the firm selected for testing a control that consisted of management's review of a monthly revenue variance analysis. The firm did not evaluate the review procedures that the control owner performed including for certain customers the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

For another business unit the firm selected for testing a control that consisted of management's review of a monthly revenue variance analysis. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control over the review of the entry to record certain revenue and the calculation of that revenue. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of certain assumptions used in the calculation. (AS 2201.42 and .44)

The firm selected for testing a control over the review of certain current-period revenue compared to the prior period. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer generally recognized revenue for two categories of revenue. The firm selected for testing controls over one category of revenue that consisted of a monthly review of revenue recognition and a quarterly review over financial statement line items. For the quarterly review control the firm did not evaluate the review procedures that the control owner performed including the criteria that the control owner used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of management's review of a reconciliation related to revenue. The firm did not (1) evaluate the specific review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

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 evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

For another category of revenue the firm selected for testing two controls that consisted of the issuer's reviews of the source documents and transaction reports that were used to record revenue. The firm did not evaluate the specific review procedures that the control owners performed to determine whether the amount to be recorded as revenue was appropriate. (AS 2201.42 and .44)

In addition the firm selected for testing a control that consisted of management's review of revenue including deferred revenue and the related journal entries. The firm did not evaluate the review procedures that the control owner performed including the criteria that the control owner used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

For two other types of revenue the issuer recognized revenue monthly based on sales reported by external parties. The firm selected for testing controls that consisted of the issuer's reviews of the reasonableness of the sales reported by these external parties. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing controls that consisted of the issuer's review of sales orders. The firm used the results of its substantive testing of this revenue as evidence that these controls were operating effectively. The firm's procedures did not provide sufficient appropriate audit evidence because the firm did not directly test the review procedures that the control owners performed. (AS 2201.42 .44 and .B9)

The firm subjected certain other of the issuer's business units to less extensive audit procedures. The following deficiencies were identified: · To address the risks of material misstatement related to revenue for these business units the firm selected for testing controls that included the issuer's comparisons and reviews of the (1) budget to actual results and (2) prior-period actual results to current-period actual results. The firm did not evaluate the specific review procedures that the control owners performed to investigate identified variances and determine whether items identified for follow up had been appropriately resolved. (AS 2201.42 and .44)

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 evaluate the specific review procedures that the control owner performed to assess the allocation of revenue. (AS 2201.42 and .44)

The firm's internal inspection program inspected this audit and reviewed this area but did not identify the deficiency below. The firm selected for testing a control over revenue that consisted of the issuer's review of the financial statements of certain subsidiaries. The firm did not evaluate the specific review procedures that the control owner performed to evaluate whether the amounts recognized as revenue at these subsidiaries were appropriate. (AS 2201.42 and .44)

For revenue from engineering and construction contracts at two of the issuer's subsidiaries the firm selected for testing multiple management review controls over revenue. The firm did not evaluate the review procedures that the control owners performed including the criteria that the control owners used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing certain controls over the review of revenue but did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow-up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control over the issuer's review of certain contracts for appropriate revenue recognition. The firm did not evaluate the specific review procedures that the control owners performed to assess whether the allocation of revenue to separate performance obligations was based on standalone selling prices. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of new or amended customer contracts for appropriate revenue recognition. The firm did not evaluate the specific review procedures that the control owner performed to identify and evaluate all relevant terms and conditions. (AS 2201.42 and .44)

For certain contracts the issuer recognized revenue over time based on costs incurred to date relative to total estimated costs to complete. This revenue included an estimate of variable consideration in the transaction price. The firm selected for testing controls that consisted of the issuer's review of revenue recognition for these contracts. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the significant assumptions used to estimate the total costs to complete the contracts and the variable consideration included in the transaction prices. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of management's review of the recognition of certain revenue. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing controls over reviews of revenue reconciliations. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control over the review of revenue. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)