Explorer

The firm's internal inspection program inspected this audit reviewed the Revenue and Related Accounts area and also identified the deficiencies below. For the unbilled portion of this revenue the following additional deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of revenue journal entries and related support. 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's internal inspection program inspected this audit reviewed the Revenue and Related Accounts area and also identified the deficiencies below. For another business unit the issuer recognized certain revenue over time based on costs incurred to date relative to total estimated costs to complete these contracts. Certain of this revenue included revenue from contract modifications that had not yet been approved by customers. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of revenue recognition for certain contracts. 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 recorded revenue net of customer sales incentives and returns. The following deficiencies were identified with respect to one business unit: · The firm selected for testing a control that consisted of the issuer's review of the sales incentive reserve. The firm did not evaluate the specific review procedures that the control owner performed to assess the (1) reasonableness of the sales incentive reserve and (2) accuracy and completeness of certain information used to determine the sales incentive reserve. (AS 2201.42 and .44)

The issuer used multiple information technology (IT) systems to initiate process and record transactions related to revenue and related accounts and recognized revenue as the respective performance obligations were satisfied. The following deficiency was identified: 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 used multiple information technology (IT) systems to initiate process and record transactions related to revenue and related accounts and recognized revenue as the respective performance obligations were satisfied. The following deficiency was identified: The firm selected for testing a control that consisted of the issuer's review of the revenue recognition system logic. 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 revenue net of customer rebates and chargebacks. The issuer estimated its accrued rebates and chargebacks using significant assumptions that were based in part on forecasts of expected future sales rebates and chargebacks. The following deficiencies were identified: · The firm selected for testing various controls that included the issuer's reviews of the significant assumptions used to develop these accruals. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the underlying forecasts. (AS 2201.42 and .44)

The issuer used an IT system to initiate process and record transactions related to revenue and related accounts including accrued sales rebates and chargebacks. The firm selected for testing a control that included the issuer's reviews of changes made to this IT system through administrative user access. The firm did not evaluate the specific review procedures that the control owners performed to assess whether users performed appropriate actions when granted this access. (AS 2201.42 and .44)

The firm selected for testing a control over the review of accounts receivable collectability and the allowance for doubtful accounts. 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 generated certain revenues from the sale of products licenses and royalties collaborations and grants. The following deficiency was identified: · The firm selected for testing controls over the issuer's review of revenue and related accounts. 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 generated certain revenues from the sale of products licenses and royalties collaborations and grants. The following deficiency was identified: · The firm selected for testing a control over the issuer's review of the accounting treatment for certain revenue contracts to address a fraud risk associated with the related 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. Further the firm did not evaluate whether this control was designed to address the fraud risk it identified. (AS 2201.42 and .44)

With respect to Revenue and Related Accounts the firm selected for testing two controls that consisted of reviews of contracts and analyses for appropriate accounting treatment under FASB ASC Topic 606 Revenue from Contracts with Customers. The firm did not evaluate the specific review procedures performed by the control owners to ensure appropriate evaluation of revenue recognition criteria. (AS 2201.42 and .44)

With respect to the firm's testing of manual controls: · The firm selected for testing various controls related to the issuer's reviews of certain revenue and related accounts. 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 engaged an external specialist to assist in developing an estimate of a related account. The firm selected for testing a control that consisted of the issuer's review of the estimate including the company's specialist's report. 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 the time services were provided to its customers. The following deficiencies were identified: • The firm selected for testing controls that consisted of the issuer's verification with its customers of the services provided and amounts to be invoiced. 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 information technology (IT) systems to initiate process and record transactions related to revenue and related accounts. 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. The firm selected for testing controls that included the issuer's review of whether access was appropriate for transferred employees. The firm did not evaluate the specific review procedures that the control owners performed to assess this access. (AS 2201.42 and .44)

The firm selected for testing a control that consisted of the issuer's review of the method and certain significant assumptions that were used by the issuer to develop another estimate of a related account. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the appropriateness of the method and the reasonableness of certain significant assumptions that were used. (AS 2201.42 and .44)