Explorer

The firm identified and tested a compensating control to address deficiencies the issuer identified in controls over revenue recognition. This compensating control involved the issuer's review of a small sample of contracts for appropriate revenue recognition. The firm did not evaluate whether the small sample of revenue contracts subject to the issuer's review was sufficient to address the risk of material misstatement. (AS 2201.68)

The firm identified a control deficiency related to the issuer's review of changes to prices maintained in the issuer's general ledger. The firm identified and tested various controls that it believed would mitigate this deficiency. The firm did not identify that these compensating controls did not address the risk of material misstatement related to inaccurate price changes. (AS 2201.68)

The issuer records revenue based on contractual terms with customers. The firm did not perform audit procedures that addressed an assessed risk of material misstatement associated with the recognition of revenue because the firm did not evaluate certain terms used to recognize revenue against the underlying customer contracts or other supporting documentation. (AS 2301.08)

For the first business unit the firm identified control deficiencies related to the issuer's review of sales prices that were applied to certain customer orders and used to recognize revenue. The firm identified and tested various compensating controls that it believed would mitigate these deficiencies. The firm did not identify that these compensating controls did not address the risk of material misstatement related to the accuracy of these sales prices. (AS 2201.68)

The issuer recorded a sales returns reserve based in part on customer data that the issuer obtained from a service organization. Certain relevant controls at this service organization were not operating effectively. The firm identified and tested a control that consisted of the issuer's review of customer data for certain customers that the firm believed would compensate for these ineffective controls. The firm did not evaluate whether the issuer's review was sufficient to address the risk of material misstatement given not all customers were covered by this control. (AS 2201.68)

The issuer recognized revenue from certain contracts over time using an input method based on labor hours incurred. The following deficiencies were identified: · The firm identified a misstatement in its testing of this revenue and the issuer concluded that this misstatement represented a control deficiency. The firm did not evaluate the severity of the deficiency and the effect on its control risk assessment. (AS 2301.34)

The issuer recognized several types of revenue. The following deficiency was identified: · The firm selected key item transactions to test these two types of revenue. The firm did not perform procedures beyond performing cut-off procedures to test the remaining population of revenue transactions to address the assessed risk of material misstatement. (AS 1105.27; AS 2301.08 and .13)

The issuer entered into sales contracts with third-party customers which outlined the specific terms and conditions with the customers. For certain revenue transactions sales orders were generated (and revenue was recognized) based on the quantities of goods sold to the customers that were manually entered into the issuer's accounting system. The following deficiencies were identified: • The firm identified a process risk point over the recognition of this revenue that did not have an associated control and concluded that a design effectiveness deficiency existed. The firm identified and tested compensating controls that it believed would mitigate the deficiency. The firm did not identify that these compensating controls did not address the risk of material misstatement related to the entry of incorrect quantities of goods sold into the issuer's accounting system. (AS 2201.68)

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 did not identify and test any controls that addressed a risk of material misstatement related to the occurrence of revenue. (AS 2201.39)

The issuer initiated and processed sales transactions at numerous business units. The firm designated certain business units as subject to more extensive audit procedures and used an other accounting firm to test one of these business units. The following deficiencies were identified: · The firm identified a risk of material misstatement that applied to all of these business units and tested a control that addressed this risk at the business units it tested but it did not instruct the other accounting firm to test this control at the business unit that firm tested. (AS 2101.11 and .12; AS 2201.B10)

The firm identified a control deficiency related to the issuer's control over the occurrence and cut-off of certain revenue. The firm identified and tested various controls that it believed would mitigate this deficiency but did not identify that these compensating controls either did not address the risk of material misstatement related to whether revenue occurred and was recorded in the appropriate period or did not operate at a level of precision that would prevent or detect a misstatement that could be material. (AS 2201.68)