Explorer

The issuer recognized revenue as services were provided and accrued revenue and recorded accounts receivable for services provided but not yet billed. The firm identified an elevated inherent risk related to certain revenue that was recognized over time. The following deficiency was identified: · The firm selected for testing controls over certain revenue and accounts receivable and tested the controls through the second quarter of the year under audit. The firm did not perform procedures to update the results of its testing from this interim date to year end beyond inquiry of management. (AS 2201.55)

The issuer recognized revenue as services were provided and accrued revenue and recorded accounts receivable for services provided but not yet billed. The firm identified an elevated inherent risk related to certain revenue that was recognized over time. The following deficiency was identified: · The sample sizes the firm used in certain of its substantive procedures to test revenue and accounts receivable 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 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 as services were provided and accrued revenue and recorded accounts receivable for services provided but not yet billed. The firm identified an elevated inherent risk related to certain revenue that was recognized over time. The following deficiency was identified: · The firm did not perform procedures to test or test any controls over the accuracy and completeness of certain issuer-produced system generated information it used to test unbilled revenue and accounts receivable. (AS 1105.10)

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

The firm did not identify and test any controls over the (1) approval of prices (2) entry of customer orders for both domestic and export sales into the general ledger (3) accuracy of the bills of lading information entered into the general ledger used to initially recognize revenue for export sales and (4) deferral of revenue at year end related to certain export sales. (AS 2201.39)

At the end of each year the issuer calculated and recorded an adjustment to defer a portion of revenue related to domestic and certain export sales for which the revenue recognition criteria had not been met. The firm did not identify and test any controls over the accuracy and completeness of the reports used by the issuer to identify sales transactions related to domestic and certain other export sales for which the revenue recognition criteria had not been met. (AS 2201.39)

The firm used certain data derived from the issuer's system in its substantive testing of revenue and related accounts. The firm did not perform any substantive procedures to test or in the alternative identify and test any controls over the completeness and/or accuracy of this data. (AS 1105.10)

For revenue from certain services the firm's testing of revenue consisted primarily of vouching cash receipts. The firm however did not evaluate whether revenue was appropriately recognized under FASB IFRS 15 Revenue from Contracts with Customers. (AS 2301.08; AS 2810.30)

The issuer had a contract dispute with a vendor who provided certain services to the issuer's customers on behalf of the issuer. The firm did not perform procedures to (1) understand and evaluate the nature of the dispute and (2) obtain evidence to support the issuer's conclusion on recognizing revenue based on its assessment that the vendor continued to provide the underlying service to the issuer's customers even though the issuer had stopped paying the vendor for such services due to the dispute. (AS 2301.08)

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)

The issuer used a service organization to initiate and process certain of its revenue transactions related to the sale of products. The firm did not perform any procedures to evaluate whether the issuer implemented the appropriate complementary user controls as described in the service auditor's report. (AS 2201.39 and .B22)

The issuer used another service organization to ship the products and record these transactions. The firm did not perform any procedures to obtain evidence regarding the controls over the activities performed by this service organization. (AS 2201.39 and .B19)

The issuer recognized revenue from certain contracts related to the development and sale of real estate. In conjunction with these contracts the issuer received deposits from customers that were recorded as deferred revenue. The following deficiencies were identified: · The firm did not identify and evaluate the issuer's omission of certain disclosures required under FASB ASC Topic 606 related to unsatisfied (or partially unsatisfied) performance obligations and when the issuer expects to recognize this revenue. (AS 2810.30 and .31)

The issuer recognized revenue from certain contracts related to the development and sale of real estate. In conjunction with these contracts the issuer received deposits from customers that were recorded as deferred revenue. The following deficiencies were identified: · The firm did not evaluate the appropriateness of the issuer's classification of deferred revenue associated with these contracts as a current liability. (AS 2301.08)

With respect to Revenue and Related Accounts to test certain revenue the firm selected sales transactions for testing. The number of transactions the firm used in its substantive procedures to test revenue was too small to provide sufficient appropriate audit evidence because it used a proprietary accept/reject methodology that did not consider factors relevant to determining sample size for substantive testing. (AS 2301.37 and .42; AS 2315.16 .19 .23 and .23A)

With respect to Revenue and Related Accounts the firm selected for testing certain automated application controls related to revenue. The firm's testing of these controls was not sufficient because the procedures performed were substantive in nature and did not directly test the controls. (AS 2201.42 .44 and .B9)

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 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 engagement team did not identify and test any controls over the completeness of the population of new and amended contracts used in the operation of one of the controls. (AS 2201.39)

With respect to Revenue and Related Accounts to test certain revenue the firm selected sales transactions for testing. The firm did not perform sufficient procedures to test this revenue because its procedures were limited to (1) verifying that contracts were approved and (2) reading the issuer's technical accounting memorandums regarding the implementation of ASC Topic 606 for certain contracts that were entered into in years prior to the year under audit. (AS 2301.08)

The firm did not evaluate the appropriateness of the issuer's presentation of certain accounts related to revenue. (AS 2301.08 and .11)

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

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. As a result of deficiencies in the firm's testing of IT general controls (ITGCs) the firm's testing of these automated and IT-dependent controls was not sufficient. (AS 2201.46)

The firm selected for testing controls over the automated transfer or reconciliation of data between systems. The following deficiencies were identified: · For certain other of these controls the firm did not identify and test any controls over the investigation and resolution of identified variances. (AS 2201.39)

The firm selected for testing controls over the automated transfer or reconciliation of data between systems. The following deficiencies were identified: · For certain of these controls which operated across multiple systems the firm's approach of testing one instance of the controls was based on an unsupported assumption that all systems were configured the same way. (AS 2201.46)

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)

With respect to the firm's testing of manual controls: · The firm selected for testing controls that consisted of the issuer's reviews of certain contracts. The firm did not perform procedures beyond inquiry to test or test any controls over the completeness of the population of contracts from which it made its selections for testing. (AS 1105.10)

With respect to the firm's testing of manual controls: · For certain other contracts the firm did not identify and test any controls that addressed whether relevant terms and conditions were identified and evaluated for appropriate revenue recognition. (AS 2201.39)

With respect to the firm's testing of manual controls: · For one type of revenue the firm did not identify and test any controls that addressed whether the performance obligation was satisfied before revenue was recognized. (AS 2201.39)

With respect to the firm's substantive testing: · The firm performed tests of details for a sample of certain revenue and related accounts. The firm did not perform any procedures to verify that each of the individual transactions from the respective revenue and related accounts had the opportunity to be selected for testing. (AS 2315.24)

With respect to the firm's substantive testing: · 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 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 the firm's substantive testing: · For certain revenue the firm did not perform procedures to evaluate the validity of the inputs used by the issuer to recognize revenue beyond identifying the source of the inputs. Further the firm did not perform procedures to test the prices the issuer used to recognize this revenue beyond testing whether the price charged was below a maximum allowed price. (AS 2301.08 and .13)

With respect to the firm's substantive testing: · For certain other revenue the firm did not test whether revenue was recognized in accordance with relevant contract terms and conditions. (AS 2301.08)

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 over administrative access and monitoring but did not perform procedures beyond inquiry to test (1) certain of these controls and (2) an aspect of another of these controls. (AS 2201.42 and .44)

With respect to the firm's substantive testing: · For certain other revenue the firm obtained the issuer's revenue recognition schedule and recalculated a sample of items. The firm did not consider the different revenue recognition methods when recalculating its sample. (AS 2301.08)

With respect to the firm's substantive testing: · The firm did not perform any procedures to test certain related accounts. (AS 2301.08)

With respect to the firm's substantive testing: · The firm did not perform procedures to test or (as discussed above) sufficiently test controls over the accuracy and completeness of certain system-generated data or reports that (1) the firm used to make its selections for testing and (2) the firm used in its substantive testing. (AS 1105.10)

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 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 identify and test any controls over the accuracy and completeness of certain data used in developing the estimate. (AS 2201.39)

The firm did not perform procedures to test the estimate beyond performing certain recalculations and obtaining the company's specialist report. Further the firm did not perform any procedures to use the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2501.07)

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 did not identify and test any controls over certain automated functionality related to change management and user access. (AS 2201.39)

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 recognized revenue at the time services were provided to its customers. The following deficiencies were identified: • The firm did not identify and test any controls over (1) the accuracy and completeness of reports generated from the issuer's IT systems and (2) the relevance and reliability of information obtained from external sources that the control owners used in the operation of these controls. (AS 2201.39)

The issuer recognized revenue at the time services were provided to its customers. The following deficiencies were identified: • The firm did not identify and test any controls over the application of cash receipts to customer accounts. (AS 2201.39)

To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · For one response returned without exception in which the customer indicated its agreement to the amounts invoiced by the issuer during the year the firm did not perform any procedures to test whether the issuer had satisfied its performance obligations for the amounts invoiced. (AS 2301.08 and .13)

To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · The firm did not evaluate the relevance and reliability of information obtained from external sources it used in its testing. (AS 1105.04 and .06)

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)

To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · The firm did not perform procedures to test or (as discussed above) test any controls over the accuracy and completeness of reports generated from the issuer's IT systems that it used in its testing. (AS 1105.10)

To test revenue and related accounts the firm sent positive confirmation requests to the issuer's customers and performed certain other substantive procedures. The following deficiencies were identified: · The firm did not perform any procedures to evaluate certain selected revenue transactions. (AS 2301.08 and .13)

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 the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)