Explorer

The component recognized revenue from a variety of sources. The following deficiencies were identified: · The firm selected for testing controls that consisted of management's review of certain financial results including the amount of revenue recognized during the period as compared to forecasted and/or budgeted amounts and investigation of variances. The firm the firm did not identify and test any controls over the accuracy of data used in the operation of these controls. (AS 2201.39)

The component recognized revenue from a variety of sources. The following deficiencies were identified: · The firm selected for testing another control that consisted of a comparison of data used in the determination of certain revenue from the component's source system to an external source. The firm did not identify and test any controls over the completeness of data used in the operation of this control. (AS 2201.39)

The component recognized revenue from a variety of sources. The following deficiencies were identified: · The firm selected for testing another control that consisted of management's monthly review of the status of projects to evaluate the appropriateness of the revenue recognized. 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 component recognized revenue from a variety of sources. The following deficiencies were identified: · The firm selected for testing another control that consisted of management's monthly review of the status of projects to evaluate the appropriateness of the revenue recognized. 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 component recognized revenue from a variety of sources. The following deficiencies were identified: · The firm did not sufficiently evaluate whether certain revenue was appropriately recognized because the firm did not perform procedures to test various factors and assumptions used by the issuer beyond inquiring of management inspecting internally-generated customer invoices (for certain revenue) and recalculating the revenue recognized. (AS 2301.08 and .13; AS 2501.09 .10 and .11)

The firm selected for testing controls that consisted of management's (1) review and approval of proposals and (2) monthly review of reports used to recognize revenue. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the appropriateness of certain assumptions in the proposals and monthly reports used to recognize revenue. (AS 2201.42 and .44)

The firm selected for testing a control that included monthly reviews of income statement accounts including a comparison of the actual results to forecasted amounts and the investigation of variances over a specified threshold. The firm did not evaluate the specific review procedures that the control owner performed to determine whether items identified for investigation were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control that included monthly reviews of income statement accounts including a comparison of the actual results to forecasted amounts and the investigation of variances over a specified threshold. The firm did not identify and test any controls over the accuracy and completeness of forecasted amounts used in the operation of this control. (AS 2201.39)

The sample size the firm used in 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 sample size the firm used in 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)

Deficiencies testing controls over sales agreements and sampling revenue transactions across the full year.

The firm selected for testing a control over certain revenue that consisted of the issuer's review of an accounting analysis to ensure that revenue was appropriately recognized. 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 recorded certain acquired intangible assets inventory and fixed assets. The firm did not test certain assumptions used by external specialists to estimate the fair values of the acquired intangible assets and inventory. (AS 2502.26 and .28)

The firm did not perform any procedures to evaluate whether certain transactions were appropriately presented as revenue in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13)

The firm did not identify and evaluate that the issuer's recognition of revenue was not in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30)

The firm did not identify and evaluate the issuer's omission of certain disclosures related to revenue required by FASB ASC Topic 606. (AS 2810.30 and .31)

The firm's approach for substantively testing revenue consisted primarily of performing software-assisted analyses to test the relationships among revenue deferred revenue accounts receivable and cash receipts. The firm's approach to addressing the reliability of the audit evidence obtained from this type of analysis was dependent upon the firm's testing of certain data underlying the analysis. The firm did not perform sufficient procedures to test the accuracy and completeness of this data because the sample sizes the firm used to test the data were smaller than the sample sizes the firm determined necessary for these procedures. (AS 1105.10)

Deficiency evaluating the economic substance and accounting treatment of certain revenue.

The firm's approach for substantively testing revenue consisted primarily of performing a software-assisted analysis to test the relationships among revenue accounts receivable 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. To test this data the firm selected a sample of cash receipts and compared the amounts to statements generated from the issuer's information technology application used to initiate bank transfers and control its bank accounts. The firm did not perform procedures to test or test any controls over the accuracy and completeness of the system-generated statements that it used to test the cash receipts data. (AS 1105.10)

The firm did not perform procedures to evaluate the reasonableness of a significant assumption used by the issuer to estimate the amount of revenue to recognize for certain sales agreements beyond inquiry of management. (AS 2501.16)

The firm did not perform any substantive procedures to test or in the alternative test any controls over the completeness of a report obtained from the issuer that it used in its substantive procedures to test revenue. (AS 1105.10)

The issuer entered into arrangements with its customers for cooperative promotion allowances that the issuer recorded as an operating expense. The firm did not evaluate whether recording these allowances as an operating expense was appropriate because it did not perform procedures beyond inquiry to evaluate whether these allowances were a distinct good or service in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30) In connection with our review the issuer reevaluated its accounting for cooperative promotion allowances and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

The firm did not identify and evaluate departures from GAAP related to the issuer's omission of certain disclosures required by FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30 and .31)

The firm did not perform substantive procedures beyond obtaining certain cash receipt evidence to evaluate (1) whether the performance obligations had been satisfied before revenue was recognized and (2) the accuracy of the transaction price used to record revenue. (AS 2301.08 and .13)

The firm's approach for substantively testing certain revenue consisted primarily of performing a software-assisted analysis which included performing procedures to test the accuracy of information used in this analysis. The software-assisted analysis was designed to test the relationships among revenue accounts receivable deferred revenue and cash that the issuer recorded through journal entries. The firm did not perform sufficient procedures to test the appropriateness of certain information used in this analysis because it did not test that all of the cash data was subject to the controls selected for testing. (AS 1105.10)

The firm's approach for substantively testing revenue consisted primarily of performing a software-assisted analysis to test the relationships among revenue accounts receivable 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. To test this data the firm took a controls reliance approach. The firm selected for testing a control over the application of cash receipts from the bank statements to outstanding sales invoices that included the matching of unallocated cash receipts to the corresponding customer receivable accounts. The firm did not perform any substantive procedures to test or in the alternative test any controls over the completeness of the population of transactions from which it made its selections to test this control. (AS 1105.10)

For certain revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue between two IT applications. The firm did not evaluate the specific review procedures that the control owner performed to investigate and resolve certain reconciling differences identified during the performance of the control. (AS 2201.42 and .44)

For certain revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue between two IT applications. The firm did not identify and test any controls over the accuracy and completeness of a manually generated spreadsheet used in the operation of this control. (AS 2201.39)

For certain other revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue and the generation and review of a system-generated exception report. The firm did not identify and test any controls over the accuracy and completeness of certain data used in the operation of this control. (AS 2201.39)

For certain other revenue the firm selected for testing a control that consisted of the reconciliation of data used to recognize revenue between two other IT applications. The firm did not perform procedures to test an IT application control over the accuracy and completeness of a system-generated exception report used in the operation of this control beyond manually reperforming a reconciliation and evaluating the reasonableness of certain differences it had identified between the exceptions listed in the system-generated report and the exceptions identified in its independently prepared reconciliation. (AS 2201.42 and .44)

The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not evaluate whether each automated control was configurable and if so whether each control was configured appropriately within the system and as a result the firm's testing of these automated controls using a sample of only one instance was not sufficient. (AS 2201.42 and .44)

The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not test all relevant scenarios of the automated controls to ensure the system processed transactions as designed for all scenarios. (AS 2201.42 and .44)

The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not perform any procedures to test the manual element of the controls. (AS 2201.42 and .44)

The firm selected for testing controls over revenue including certain automated controls related to the initiation processing and recording of revenue. The automated controls included (1) a three-way match between the customer purchase order bill of lading and invoice and (2) the generation of nightly exception reports. Certain of these automated controls included a manual element that consisted of the confirmation of shipment by warehouse staff. The firm's approach to testing these controls was to test a single transaction. The following deficiencies were identified: · The firm did not identify and test any controls over the review of the system-generated exception reports resulting from the three-way match control. (AS 2201.39)

The issuer entered into contracts with customers and recognized revenue based on the contractual terms of each contract entered into its accounting system. The issuer also prepared credit notes for adjustments to revenue. The following deficiency was identified: · The firm selected for testing a control over revenue that consisted of management's review of a selection of customer contracts including their respective contractual terms. The firm did not sufficiently evaluate the specific review procedures that the control owner performed to review the contractual terms of the selected contracts because the firm's procedures were limited to management's review of only one term within the contracts. (AS 2201.42 and .44)

The issuer entered into contracts with customers and recognized revenue based on the contractual terms of each contract entered into its accounting system. The issuer also prepared credit notes for adjustments to revenue. The following deficiency was identified: · The firm selected for testing a control over revenue that consisted of management's review of a selection of customer contracts including their respective contractual terms. The firm identified deviations in the operation of this control but did not determine the effect of these deviations on the operating effectiveness of the control. (AS 2201.48)

The issuer entered into contracts with customers and recognized revenue based on the contractual terms of each contract entered into its accounting system. The issuer also prepared credit notes for adjustments to revenue. The following deficiency was identified: · The firm did not identify and test any controls over the entry of contract information including contractual terms into the accounting system that were used to recognize revenue. (AS 2201.39)

The issuer entered into contracts with customers and recognized revenue based on the contractual terms of each contract entered into its accounting system. The issuer also prepared credit notes for adjustments to revenue. The following deficiency was identified: · The firm selected for testing another control over revenue that consisted of management's review of credit notes. The firm identified deviations in the operation of this control but did not determine the effect of these deviations on the operating effectiveness of the control. (AS 2201.48)

The principal auditor instructed the firm to test a control that consisted of the issuer's quarterly review of the gross margin by product for 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 principal auditor instructed the firm to test a control that consisted of the issuer's quarterly review of the gross margin by product for certain revenue. The number of quarters selected for testing did not provide sufficient appropriate audit evidence because the firm did not test the number of quarters that it determined necessary. (AS 2201.46)

The firm's substantive procedures to test certain revenue included testing a sample of transactions. The sample size the firm used to perform these substantive procedures was too small to provide sufficient appropriate audit evidence because the firm did not take into account the relevant factors in determining its sample size including the relationship of the samples to the relevant audit objective and the characteristics of the population. (AS 2315.16 .19 .23 and .23A)

The firm did not perform sufficient substantive procedures to test certain revenue because the firm did not subject all relevant revenue transactions to these procedures as it did not compile a complete population of transactions from which it made its selections for testing and the firm did not perform any other procedures to test the remaining revenue transactions. (AS 2301.08 and .13)

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

The firm's approach for substantively testing revenue consisted primarily of performing a software-assisted analysis to test the relationships among revenue accounts receivable 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. To test this data the firm agreed a sample of cash receipts to bank statements customer invoices and other documents such as packing lists delivery notes and transfer requests. The firm identified that certain cash receipts selected for testing did not relate to revenue and a corresponding receivable. The firm did not perform sufficient procedures to evaluate whether the cash receipts data was appropriate for use in the analysis because it did not evaluate the implications of these unrelated cash receipts on the sufficiency and appropriateness of the data. (AS 1105.10)

The firm's internal inspection program had inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The issuer used multiple IT systems to initiate process and record transactions related to revenue accounts receivable and long-lived assets. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to Revenue which was affected by the audit deficiencies related to user access and change management the following additional deficiency was identified: · The firm selected for testing a control that consisted of the issuer's review of price changes made in the accounting system as reflected in a customized system-generated report to determine whether they were properly approved. The firm did not identify and test any controls over the accuracy and completeness of the report used in the operation of the control. (AS 2201.39)

The firm's internal inspection program had inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The issuer used multiple IT systems to initiate process and record transactions related to revenue accounts receivable and long-lived assets. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to Revenue which was affected by the audit deficiencies related to user access and change management the following additional deficiency was identified: · The firm selected for testing a control that consisted of the issuer's review of price changes made in the accounting system as reflected in a customized system-generated report to determine whether they were properly approved. The firm did not test an aspect of the control related to the issuer's review of certain price changes. (AS 2201.42 and .44)

The firm's internal inspection program had inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The issuer used multiple IT systems to initiate process and record transactions related to revenue accounts receivable and long-lived assets. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to Revenue which was affected by the audit deficiencies related to user access and change management the following additional deficiency was identified: · The firm selected for testing an automated control that consisted of the configuration of the issuer's accounting system to automatically update invoiced sales prices to reflect those within the system's price list and used a 'test of one' approach to test the control. The firm did not perform sufficient procedures to support the use of such an approach because it did not test the configuration or programming of the control during the audit period or perform other procedures that would have provided sufficient appropriate audit evidence that the control was designed and operating effectively. (AS 2201.46)

The firm's internal inspection program had inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The issuer used multiple IT systems to initiate process and record transactions related to revenue accounts receivable and long-lived assets. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to Revenue which was affected by the audit deficiencies related to user access and change management the following additional deficiency was identified: · The firm selected for testing controls that consisted of management's review and approval of printed sales orders. The firm did not perform procedures to test or test any controls over the completeness of the population of certain sales orders from which it made its selections for testing. (AS 1105.10)

The firm's internal inspection program had inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The issuer used multiple IT systems to initiate process and record transactions related to revenue accounts receivable and long-lived assets. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to Revenue which was affected by the audit deficiencies related to user access and change management the following additional deficiency was identified: · The firm selected for testing controls that consisted of the reconciliation of revenue and inventory sold and management's review and approval of the reconciliations. The firm did not identify and test any controls over the accuracy and completeness of the reports used in the operation of these controls. (AS 2201.39)

The firm's internal inspection program had inspected this audit and reviewed certain of these areas but did not identify certain of the deficiencies below. The issuer used multiple IT systems to initiate process and record transactions related to revenue accounts receivable and long-lived assets. In its testing of controls over these accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to Revenue which was affected by the audit deficiencies related to user access and change management the following additional deficiency was identified: · The firm selected for testing an automated control that consisted of automatic interfaces between the issuer's accounting system and certain of its production and dispatch related systems and used a 'test of one' approach to test the control. The firm did not perform sufficient procedures to support the use of such an approach because it did not test the interface configuration or programming of the control or perform procedures to test the design of the control as it relates to each relevant interface. (AS 2201.46)