Explorer

The firm did not identify and test any controls over the issuer's evaluation of whether there were any terms and conditions outside of the sales orders that created enforceable rights and obligations which could affect the recognition of revenue pursuant to the FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2201.39)

The firm did not perform sufficient procedures to evaluate whether the issuer recognized revenue in conformity with FASB ASC Topic 606 because it did not evaluate whether there were any terms and conditions outside of the sales orders that created enforceable rights and obligations which could affect the recognition of revenue. (AS 2301.08 and .13)

The firm did not test or test any controls over the accuracy and completeness of certain data from a report used to substantively test revenue. (AS 1105.10)

The firm did not test or test any controls over the accuracy and completeness of certain data used to substantively test revenue beyond obtaining evidence of payment for selected transactions. (AS 1105.10)

The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). As a result of the deficiencies in the firm's testing of ITGCs the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to change management: The firm selected for testing a change management control over certain IT systems that consisted of the recording of non-emergency changes in the issuer's ticketing system and the review and approval of such changes. The firm did not perform procedures to test or test any controls over the completeness of the population of changes from which it made its selections for testing. (AS 1105.10)

The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to developer access: The firm did not identify and test any controls over the ability of developers to develop and migrate changes to the production environment for certain IT systems. (AS 2201.39)

The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to the firm's testing of other controls including automated and IT-dependent manual controls over the recognition of certain revenue which were affected by the audit deficiencies related to change management and developer access the following additional deficiencies were identified: · For certain controls the firm did not identify and test any controls over the accuracy and completeness of data and reports generated by various IT systems that the control owners used in the operation of the controls. (AS 2201.39)

The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to the firm's testing of other controls including automated and IT-dependent manual controls over the recognition of certain revenue which were affected by the audit deficiencies related to change management and developer access the following additional deficiencies were identified: · For certain controls the firm did not perform procedures to test or test any controls over the completeness of the populations from which it made its selections for testing. (AS 1105.10)

The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The issuer used multiple information-technology (IT) systems to initiate process and record transactions related to revenue. In its testing of controls over revenue the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by the IT systems that depended on effective IT general controls (ITGCs). With respect to the firm's testing of other controls including automated and IT-dependent manual controls over the recognition of certain revenue which were affected by the audit deficiencies related to change management and developer access the following additional deficiencies were identified: · For certain controls the firm did not test controls over the completeness of data and reports generated by various IT systems that were used in the operation of the controls beyond comparing information from these reports to data from the same reports and/or reviewing emails retained by the control owners. (AS 2201.42 and .44)

The firm's internal inspection program inspected this audit and reviewed these areas but did not identify the deficiencies below. The firm used system-generated data to substantively test certain revenue but did not test or sufficiently test controls over the accuracy and completeness of this data. (AS 1105.10)

The issuer recognized revenue for each of its three segments based on the terms underlying its contracts with customers. The firm did not identify and test any controls over the identification and consideration of contract terms that would affect revenue recognition. (AS 2201.39)

The firm tested certain automated and information technology (“IT”) dependent manual controls over revenue that used data and reports generated or maintained by the issuer's revenue systems. The firm tested IT general controls (“ITGCs”) over these systems and identified multiple control deficiencies at two of the issuer's segments. In performing its testing of identified compensating controls for those segments the firm did not identify that the control owners used information in the performance of two of these compensating controls that was produced by the systems that were subject to the ITGC deficiencies. (AS 2201.68)

The sample sizes the firm used in certain of its substantive procedures to test revenue 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 deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

In the firm's tests of details of revenue for one of the issuer's segments which recorded revenue at the date of shipment the firm did not identify and evaluate for multiple transactions selected for testing the significant differences between the date of shipment and the date revenue was recognized. (AS 2301.08)

In performing its cut-off testing the firm did not test or in the alternative test any controls over the accuracy and completeness of the system-generated reports from which it made its selections for testing. (AS 1105.10)

The firm did not identify and test any controls over the review of contracts that provided preferred pricing to certain customers or controls to determine that the prices charged to customers were consistent with the contracts. (AS 2201.39)

The firm did not perform any substantive procedures to test revenue from contracts that provided preferred pricing to certain customers including procedures to (1) identify and evaluate any contract terms that would affect revenue recognition and (2) evaluate whether the prices charged were consistent with the customer contracts. (AS 2301.08)

The firm did not identify and test any controls over the review of contracts that provided preferred pricing to certain customers or controls to determine that the prices charged to customers were consistent with the contracts. (AS 2201.39)

The firm did not perform any substantive procedures to test revenue from contracts that provided preferred pricing to certain customers including procedures to (1) identify and evaluate any contract terms that would affect revenue recognition and (2) evaluate whether the prices charged were consistent with the customer contracts. (AS 2301.08)

The firm selected for testing controls over revenue consisting of reviews of (1) monthly reports used to record sales and (2) quarterly sales adjustments. The firm did not evaluate the review procedures that the control owners performed including the criteria the control owners used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

The sample size the firm used in certain of its substantive procedures to test revenue was 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 deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The issuer used two service organizations to process certain revenue. For one service organization the firm did not perform any procedures to obtain evidence regarding the service organization's controls for the year under audit. For the other service organization the firm did not perform any procedures to ascertain whether there were any changes in the service organization's controls from the date of the service auditor's report which was 11 months before year end. In addition the firm selected for testing certain IT-dependent manual controls over this revenue that used data and reports from the two service organizations. The firm's testing of these controls was insufficient due to the deficiencies discussed above. (AS 2201.39 .B19 .B24 and .B25)

The firm selected for testing a control that consisted of the review of new contracts and certain changes to existing contracts. 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 revenue at a point in time. In its evaluation of the issuer's revenue recognition the firm did not evaluate the specifications of the issuer's products and contracts in determining if there were practical limitations on whether the products had an alternative use in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30) In connection with our review the issuer reevaluated its controls over the evaluation of the point in time method of revenue recognition 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 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 controls that consisted of the review of (1) journal entries to record revenue and (2) month-end reconciliations. The firm did not identify and test any controls over the accuracy and completeness of certain revenue reports that the control owners used in the operation of these controls. (AS 2201.39)

The sample size the firm used in certain of its substantive procedures to test revenue was 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 issuer recognized revenue from custom products at a point in time. In its evaluation of the issuer's revenue recognition the firm did not evaluate (1) the specifications of the custom products in determining if there were practical limitations on whether the products had an alternative use and (2) whether the issuer's customary business practice of not enforcing its contractual right to payment on cancelled orders renders this right to be unenforceable in conformity with FASB ASC Topic 606. (AS 2810.30)

The issuer used a service organization to process certain revenue. The firm selected for testing controls that consisted of the issuer's reviews of analyses supporting revenue deduction accruals for this revenue. The firm did not evaluate the specific review procedures that the control owners performed to assess the accuracy of the sales deduction rates used in the analyses. (AS 2201.42 and .44)

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's substantive procedures to test revenue included performing substantive analytical procedures which consisted of comparisons of monthly revenue to the prior-month revenue. These analytical procedures did not provide sufficient appropriate audit evidence because the firm did not (1) determine whether the prior-period amounts could be expected to be predictive of the current-period amounts and (2) include the first month of the year under audit in its analytical procedures. Further the firm used a threshold for investigation of differences that was inconsistent with the desired level of assurance because it did not consider the possibility that a combination of misstatements could aggregate to an unacceptable amount. (AS 2301.08; AS 2305.13 .14 and .20)

The issuer stored revenue data from its point-of-sale system in multiple databases including a primary database that was used to record data in the general ledger and a redundant database. The firm determined that certain change management and logical access information technology general controls over the primary database were ineffective. The firm identified a compensating control that consisted of a manual comparison of revenue data from the redundant database to the general ledger but the firm did not test beyond inquiry controls that addressed the accuracy and completeness of the revenue data in the redundant database. (AS 2201.68)

The firm selected for testing a control that consisted of the issuer's review of invoices for certain revenue. The firm did not evaluate the specific review procedures the control owners performed with respect to reviewing the accuracy and completeness of labor hours which were an input into the issuer's calculation of this revenue. (AS 2201.42 and .44)

The issuer used multiple information-technology (IT) systems to initiate process and record transactions. In its testing of controls over certain revenue and related accounts the firm tested various IT-dependent manual controls that used data and reports generated or maintained by certain of these IT systems. As a result of the following deficiencies in the firm's testing of IT general controls (ITGCs) the firm's testing of these IT-dependent controls was not sufficient. (AS 2201.46)

The issuer recognized certain revenue from contracts using a measure of progress method. The following deficiencies were identified: · The firm selected for testing controls over the review and approval of certain of this 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)

The issuer recognized certain revenue from contracts using a measure of progress method. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of these controls. (AS 2201.39)

The issuer recognized certain revenue from contracts using a measure of progress method. The following deficiencies were identified: · For certain of this revenue the firm did not identify and test any controls over the accuracy and completeness of labor hours that were an input into the issuer's calculation of this revenue. (AS 2201.39)

The issuer recognized certain revenue from contracts using a measure of progress method. The following deficiencies were identified: · For certain of this revenue the firm did not perform substantive procedures to test or sufficiently test controls over the accuracy of certain data it used in its substantive testing. (AS 1105.10)

The issuer recognized certain revenue from contracts using a measure of progress method. The following deficiencies were identified: · For this revenue at one business unit the firm did not perform any substantive procedures to evaluate the reasonableness of the estimated costs to complete open contracts. (AS 2501.07)

The issuer recognized certain revenue from contracts using a measure of progress method. The following deficiencies were identified: · For certain of this revenue at another business unit the firm did not obtain sufficient appropriate audit evidence regarding the accuracy of estimated total units to be completed. (AS1105.10; AS 2501.11)

The issuer recognized certain revenue from contracts using a measure of progress method. The following deficiencies were identified: · Fir certain other revenue at this business unit the firm did not perform any procedures to evaluate whether revenue was recorded in the appropriate period. (AS 2301.08)

The sample sizes the firm used in certain of its substantive procedures to test revenue and related accounts were too small to provide sufficient appropriate audit evidence because these procedures were designed based upon 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)

With respect to user access: · The firm selected for testing a control over the periodic review of user access for each of these IT systems. The firm did not evaluate whether items identified by the control owners for follow up were appropriately resolved. (AS 2201.44)

With respect to user access: · The firm did not identify and test any controls over the accuracy and completeness of certain reports used in the operation of this control. (AS 2201.39)

The firm's substantive procedures to test revenue consisted of performing a test of details for the first 11 months of the issuer's fiscal year and a substantive analytical procedure for the remaining month. The following deficiencies were identified: · The firm limited its test of details to a smaller number of selections than the sample size it calculated. (AS 2301.08)

The firm's substantive procedures to test revenue consisted of performing a test of details for the first 11 months of the issuer's fiscal year and a substantive analytical procedure for the remaining month. The following deficiencies were identified: · The firm did not perform procedures to test the accuracy and completeness of certain historical data used in its substantive analytical procedure. (AS 2305.16)

The firm selected for testing a control that included monthly reviews of certain revenue for four of the issuer's business units. 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 used multiple IT systems to initiate process and record transactions related to certain revenue at two of these business units. The firm tested controls over user access to these systems. The following deficiencies were identified: · The firm selected for testing a control over the granting or modification of user access. For the first business unit the firm did not test the operating effectiveness of this control. For the second the firm did not test the design and operating effectiveness of the aspect of this control related to the modification of user access. (AS 2201.42 and .44)

The issuer used multiple IT systems to initiate process and record transactions related to certain revenue at two of these business units. The firm tested controls over user access to these systems. The following deficiencies were identified: · The firm selected for testing a control over the periodic review of user access. For both business units the firm did not identify and test any controls over the accuracy and completeness of the user access lists that the control owner used in the operation of this control. (AS 2201.39)

The issuer used multiple IT systems to initiate process and record transactions related to certain revenue at two of these business units. The firm tested controls over user access to these systems. The following deficiencies were identified: · As a result of these deficiencies the firm's testing of the accuracy and completeness of data used in the performance of the monthly financial information review control discussed above for these two business units was not sufficient. (AS 2201.46)