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The issuer engaged a specialist to determine the fair value of certain warrants at year end. The firm did not perform substantive procedures to test the fair value of these warrants beyond obtaining and reading the valuation report prepared by the company's specialist. Further the firm did not perform any procedures with respect to its use of the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2501.07)

The issuer engaged a specialist to determine the fair value of certain warrants it reported as equity. The firm's approach for substantively testing the fair value of these warrants was to test the issuer's process. The firm did not evaluate the relevance of certain data the company's specialist used to develop a significant assumption. (AS 1105.A8a)

In its restated financial statements the issuer recorded these warrants as liabilities and engaged a specialist to determine the fair value for the warrants. The firm's approach for substantively testing the fair values of these warrants was to test the issuer's process. The firm did not evaluate the relevance and reliability of data the company's specialist obtained from an external source and used to develop a significant assumption. (AS 1105.A8a)

During the year the issuer issued warrants that were recorded as liabilities. The firm's approach for substantively testing the fair value of these warrants at issuance was to develop an independent expectation of the estimate using an auditor-employed specialist. The following deficiencies were identified: · The firm did not identify that the auditor-employed specialist did not perform procedures to demonstrate it had a reasonable basis for the method it used to develop its independent expectation. (AS 1201.C6 and .C7; AS 2501.22)

During the year the issuer acquired a business. The issuer assumed a liability related to certain warrants as a result of this acquisition and recorded a gain related to the change in the fair value of this liability between the acquisition date and year end. The firm did not sufficiently test this gain because it did not perform any procedures to evaluate the reasonableness of the fair value of the liability recorded at the acquisition date beyond reading the valuation report that was prepared by the company's specialist. (AS 2501.07)