Explorer

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 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 identify and test any controls over the accuracy and completeness of certain issuer-produced data and reports used in the operation of two of these controls. (AS 2201.39)

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's approach for substantively testing accrued rebates and chargebacks was to test the issuer's process. The firm did not perform sufficient procedures to evaluate the reasonableness of the significant assumptions used to develop these accruals because the firm did not evaluate the reasonableness of the underlying forecasts. (AS 2501.16)

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 used certain issuer-produced data and reports in its testing of accrued rebates and chargebacks but did not test or test any controls over the accuracy and completeness of these data and reports. (AS 1105.10)

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)

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 this IT system. As a result of the above deficiency 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 sample size that the firm used in certain of its substantive procedures to test accrued rebates was too small to provide sufficient appropriate 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 ITGC testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm's approach for substantively testing revenue and related accounts was to review and test management's process. The following deficiencies were identified: - The firm did not perform sufficient procedures to evaluate the reasonableness of the assumptions used by the issuer to estimate revenue and related accounts because its procedures were limited to reading the memorandum prepared by the issuer and comparing certain assumptions to those used by the issuer in the previous year. (AS 2501.16)

The firm's approach for substantively testing revenue and related accounts was to review and test management's process. The following deficiencies were identified: - The firm did not perform any procedures to test or in the alternative test any controls over the accuracy and completeness of certain disaggregated information generated from the issuer's system and used to estimate revenue and related accounts. (AS 1105.10)

The firm selected a sample of transactions to test revenue and performed cut-off testing. The following deficiency was identified: • The firm determined that the issuer was unable to support whether or not it had satisfied its performance obligations for several revenue transactions selected for testing. As a result the firm identified adjusting entries that the issuer recorded. The firm did not perform procedures to obtain further audit evidence to address whether the adjusting journal entries were appropriate or if the firm was unable to obtain sufficient appropriate audit evidence to have a reasonable basis to conclude about whether the financial statements as a whole were free of material misstatement the firm should have expressed a qualified opinion or a disclaimer of opinion. (AS 2810.35) In connection with our review the issuer reevaluated its accounting for certain revenue and related accounts 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 selected a sample of transactions to test revenue and performed cut-off testing. The following deficiency was identified: • The firm did not perform sufficient procedures to evaluate whether two additional journal entries that it identified to reverse revenue which the issuer recorded were appropriate because it did not evaluate the appropriateness of the offsets to the reversed revenue. (AS 2301.08 and .13) In connection with our review the issuer reevaluated its accounting for certain revenue and related accounts 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 perform sufficient procedures to evaluate whether the issuer recognized certain revenue in accordance with FASB ASC Topic 606 Revenue from Contracts with Customers because it did not evaluate the issuer's conclusions about collectability and satisfaction of performance obligations beyond obtaining confirmations from certain customers. (AS 2301.08 and .13)

The firm did not perform procedures to test the issuer's conclusion that an allowance for doubtful accounts was not necessary beyond testing the issuer's accounts receivable aging report for clerical accuracy and completeness and testing certain subsequent cash receipts. (AS 2501.07)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any procedures to evaluate the relevance and reliability of external information it used to test revenue and accounts receivable. (AS 1105.04 and .06)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any procedures to test an estimate related to revenue. (AS 2501.07)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the issuer was acting as either a principal or agent for certain revenue. (AS 2301.08 and .13)

The issuer recognized revenue from different sources. For one source of revenue the following deficiencies were identified: · The firm did not perform any substantive procedures to test the allowance for doubtful accounts. (AS 2501.07)

For another source of revenue the firm did not perform any procedures to test or identify and test controls over the accuracy and completeness of a system-generated report it used to test the issuer's satisfaction of a performance obligation. (AS 1105.10)

The firm did not perform any substantive procedures to examine material adjustments the issuer made to both sources of revenue during the course of preparing the financial statements. (AS 2301.41)

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 revenue and related accounts the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. As a result of the audit deficiencies related to the firm's testing of IT general controls (ITGCs) the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46).

The firm identified control deficiencies related to change management for one of the issuer's IT systems. The firm did not evaluate the severity of these control deficiencies individually or in combination to determine whether they represented a material weakness beyond identifying a mitigating factor that did not address the risk that changes could be migrated into production without appropriate approval and testing. (AS 2201.62)

The firm used certain system change reports to select its samples for testing certain ITGCs for these systems but did not test or test any controls over the completeness of these reports. (AS 1105.10)

The firm designed certain of its substantive procedures to test certain revenue as dual-purpose tests. The firm performed its substantive procedures using the sample size it determined for its control testing. This sample size was too small to provide sufficient appropriate audit evidence for the substantive procedure because the firm did not use the larger of the sample sizes that would otherwise have been designed for the two separate purposes. (AS 2315.44)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm did not test the accuracy and completeness of information used in testing controls over access rights and removals. (AS 1105.10)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm selected for testing an automated control that was designed to calculate and record revenue. The firm did not obtain an understanding of or test how the control was configured. (AS 2201.34)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm did not identify and test controls over (1) the accuracy and completeness of information that was used in the performance of a control to verify standard terms in customer agreements; (2) superuser/administrative access to revenue systems in which various automated IT-dependent manual controls resided; (3) the accuracy and completeness of certain inputs used to recognize revenue; and (4) the determination of the units of accounting and allocation of total contract consideration to each performance obligation for contracts with multiple performance obligations. (AS 2201.39)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm did not perform sufficient procedures to test controls over program changes for certain systems because its procedures were limited to inquiry. (AS 2201.42 and .44)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The issuer used a service organization to support many of the activities of its financial reporting system. The firm did not identify and test any complementary user controls over the use of parameters over passwords. (AS 2201.B22)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm selected for testing an automated control over segregation of duties. The firm however did not directly test the control because its procedures were limited to evaluating whether the functions assigned to employees were consistent with effective segregation of duties. (AS 2201.42 .44 and .B9)

In the revenue process the firm selected for testing certain information technology general controls ('ITGCs') automated controls and information technology ('IT') dependent manual controls. The following deficiencies were identified: · The firm identified deficiencies related to controls over reviewing user access and complementary user controls. The firm did not evaluate these deficiencies to determine if the deficiencies individually or in combination constituted material weaknesses. (AS 2201.62)

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 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 firm's internal inspection program had inspected this audit and reviewed the Revenue and Related Accounts area and also identified certain of the deficiencies below. The firm did not perform any test of details to address the fraud risk related to the occurrence of certain revenue. (AS 2301.08 and .13)

The firm's internal inspection program had inspected this audit and reviewed the Revenue and Related Accounts area and also identified certain of the deficiencies below. The firm did not perform procedures to test or test controls over the accuracy and completeness of certain system-generated reports that it used to test certain other revenue. (AS 1105.10)

The firm's internal inspection program had inspected this audit and reviewed the Revenue and Related Accounts area and also identified certain of the deficiencies below. The firm did not perform any substantive procedures to test deferred revenue. (AS 2301.08)

The issuer disclosed that it recognized revenue in accordance with FASB ASC Topic 606 Revenue from Contracts with Customers. For certain revenue transactions the firm did not (1) take into account certain contradictory audit evidence and (2) perform procedures to evaluate whether (a) performance obligations were appropriately identified (b) the determination of transaction prices was appropriate (c) the issuer was acting as either a principal or agent for goods or services and (d) it was appropriate to recognize revenue at a point in time or over time. (AS 2301.08 and .13; AS 2810.03)

The issuer disclosed that it recognized revenue in accordance with FASB ASC Topic 606 Revenue from Contracts with Customers. The firm did not perform any procedures to test or test any controls over the accuracy and completeness of data and reports produced by the issuer that the firm used in its testing of revenue. (AS 1105.10)

The firm did not perform any substantive procedures to test a portion of a revenue related account. (AS 2301.08)

The issuer disclosed that it recognized revenue from contracts with multiple customers in compliance with FASB ASC Topic 605 Revenue Recognition. The firm's substantive procedures to test revenue included testing certain transactions and customer contracts. The following deficiency was identified: · The firm did not identify and evaluate a departure from GAAP related to the issuer's application of FASB ASC Topic 605 which was superseded by FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2810.30 and .31)

The issuer disclosed that it recognized revenue from contracts with multiple customers in compliance with FASB ASC Topic 605 Revenue Recognition. The firm's substantive procedures to test revenue included testing certain transactions and customer contracts. The following deficiency was identified: · The firm did not perform substantive procedures to test selected transactions beyond obtaining the related invoice from the issuer. (AS 2301.08)

The issuer disclosed that it recognized revenue from contracts with multiple customers in compliance with FASB ASC Topic 605 Revenue Recognition. The firm's substantive procedures to test revenue included testing certain transactions and customer contracts. The following deficiency was identified: · The firm did not perform any substantive procedures to test revenue cut-off. (AS 2301.08)

The firm did not perform any procedures to test the issuer's conclusion not to record an allowance for doubtful accounts. (AS 2501.07)

For certain subsidiaries the firm did not (1) obtain a sufficient understanding of the likely sources of potential misstatements associated with revenue processes and (2) identify and test controls over revenue recognition. (AS 2201.34 and .39)

The issuer's main information technology ('IT') system processed revenue transactions and maintained revenue related data. A service organization provided data center hosting services related to the IT system. The firm did not identify and test any relevant complementary user controls described in the service auditor's report. (AS 2201.B22)

The issuer's main information technology ('IT') system processed revenue transactions and maintained revenue related data. A service organization provided data center hosting services related to the IT system. The service organization used several sub-service organizations to host the issuer's IT system and the controls for the sub-service organizations were not addressed in the service auditor's report. The firm did not (1) obtain an understanding of how the use of sub-service organizations affected the issuer's revenue process; and (2) evaluate whether it was necessary to obtain an understanding of or test any relevant controls at the sub-service organizations. (AS 2201.B19 and .B21)

The issuer's main information technology ('IT') system processed revenue transactions and maintained revenue related data. A service organization provided data center hosting services related to the IT system. The service organization used several sub-service organizations to host the issuer's IT system and the controls for the sub-service organizations were not addressed in the service auditor's report. The firm did not evaluate the effect of exceptions identified in the service auditor's report on the issuer's revenue process. (AS 2201.B25)

The firm identified a material weakness related to an employee having responsibilities for financial statement review controls and administrator access to the issuer's IT system discussed above. The firm selected for testing an automated control that restricts the recording of sales to authorized customers. The firm did not evaluate whether its test of one approach for this control was appropriate in light of the identified material weakness. (AS 2201.65)

The firm determined that a control over management's assessment of the effect on revenue recognition of FASB ASC Topic 606 Revenue from Contracts with Customers was deficient. The firm concluded that this represented a significant deficiency after identifying and testing two compensating controls. The firm did not sufficiently evaluate the severity of the control deficiency because the firm did not evaluate whether and if so how either of the controls identified as compensating controls addressed the effect of ASC Topic 606 on revenue recognition. (AS 2201.68)

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 firm did not sufficiently evaluate the reasonableness of the allowance for doubtful accounts because its procedures were limited to testing the subsequent collection of certain accounts receivable without obtaining an understanding of how the issuer developed the allowance and evaluating whether the allowance was reasonable. (AS 2501.09 .10 and .13)

The firm did not test the accuracy of the accounts receivable aging report that was used in testing the subsequent collection of certain accounts receivable. (AS 1105.10)