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During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of the significant assumptions related to revenue growth projections used in the recoverability test including taking into account the issuer's intent and ability to achieve the assumed revenue growth rates beyond inquiry obtaining and reviewing certain customer proposals and performing a sensitivity analysis. (AS 2501.16 and .17)

During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of a company-specific risk premium included as a part of the significant assumption related to the discount rate used by the issuer in its recoverability test. (AS 2501.16)

During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform any procedures to evaluate the reasonableness of the significant assumption related to the terminal growth rate used by the issuer in its recoverability test. (AS 2501.16)

During the year the issuer identified indicators of possible impairment for certain of its goodwill and intangible assets and performed a quantitative assessment using a discounted cash flow model to test the associated reporting unit for recoverability. The firm's approach for substantively testing goodwill and intangible assets for impairment was to test the issuer's process used to assess the recoverability of the reporting unit. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the issuer's method to assess its goodwill and intangible assets for impairment was in conformity with FASB ASC Topic 350 Intangibles — Goodwill and Other. (AS 2501.10)

The issuer entered into an agreement with an external party pursuant to which it was to among other things make certain advance payments including common stock and preferred shares to the external party prior to the completion of the transaction which occurred after the year under audit. The following deficiency was identified: · The firm did not perform any procedures to test the fair value of common stock and preferred shares that had been transferred and recorded as a part of the advance payments including consideration of certain contrary evidence regarding the trading value of the issuer's common stock. (AS 2501.07; AS 2810.03)

The issuer entered into an agreement with an external party pursuant to which it was to among other things make certain advance payments including common stock and preferred shares to the external party prior to the completion of the transaction which occurred after the year under audit. The following deficiency was identified: · The firm did not perform procedures to evaluate whether the presentation and disclosure of the advance payments was in conformity with GAAP. (AS 2301.08)

The issuer entered into an agreement with an external party pursuant to which it was to among other things make certain advance payments including common stock and preferred shares to the external party prior to the completion of the transaction which occurred after the year under audit. The following deficiency was identified: · The firm did not evaluate the business purpose (or lack thereof) of the transaction including whether it may have been entered into to engage in fraudulent financial reporting or conceal misappropriation of assets. (AS 2401.67)

The issuer recognized certain revenue pursuant to contracts with new customers. The firm did not perform procedures to evaluate whether these customer contracts met the collectability criteria required to recognize revenue. (AS 2301.08 and .13)

The firm selected a sample of transactions to test revenue. The firm did not perform procedures to evaluate whether the issuer met its performance obligations before revenue was recognized. (AS 2301.08 and .13)

The firm observed physical inventory counts on various dates prior to year end. The firm did not perform any procedures to test the appropriateness of costs recorded by the issuer for certain inventory. (AS 2301.08)

The firm did not identify and test any controls over journal entries and other adjustments made in the period-end financial reporting process. (AS 2201.39)

The firm did not identify and select journal entries and other adjustments for testing to address the potential for material misstatement due to fraud. (AS 2401.58)

The firm communicated certain identified control deficiencies to the principal auditor as material weaknesses; however the firm did not evaluate the severity of each identified control deficiency to determine whether the deficiencies individually or in combination with other deficiencies constituted a material weakness. (AS 2201.62)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The firm did not perform any procedures to test the remaining population of accounts receivable. (AS 1105.27; AS 2301.08)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · The issuer sent the confirmation requests on behalf of the firm. The firm did not maintain control of the confirmation requests through direct communication with the intended recipients of the confirmation requests. (AS 2310.28)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · The firm received electronic responses to confirmation requests. The firm did not consider performing procedures to address the risks associated with electronic responses such as verifying the source and contents of the confirmation responses. (AS 2310.29)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · For the confirmation requests that were not returned the firm did not perform alternative procedures that provided sufficient appropriate audit evidence that the recorded amounts of the accounts receivable were accurate as of the confirmation date. (AS 2310.31)

To test accounts receivable the firm sent positive confirmation requests to certain customers as of an interim date. The firm selected accounts receivable for testing that exceeded a monetary threshold. The following deficiency was identified with respect to the firm's confirmation procedures: · The firm did not perform procedures beyond inquiry of management to extend its conclusions regarding the existence of accounts receivable from the interim date in which the audit procedures were performed to year end. (AS 2301.45)

The firm observed physical inventory counts on various dates prior to year end. The firm did not perform procedures to test intervening transactions between the dates of its inventory observations and the issuer's year end beyond obtaining a reconciliation of inventory balances from the count dates to year end. (AS 2510.12)

The firm observed physical inventory counts on various dates prior to year end. The firm did not perform any procedures to test the existence of certain inventory. (AS 2510.09)

The firm observed physical inventory counts on various dates prior to year end. The firm did not perform any procedures to test the valuation of inventory reserves. (AS 2501.07)

The issuer recognized revenue on a straight-line basis over an estimated performance period. The firm did not sufficiently evaluate the appropriateness of recognizing revenue on a straight-line basis because it did not evaluate whether the issuer's efforts or expected inputs were expended evenly throughout the estimated performance period. (AS 2301.08) In connection with our review the issuer reevaluated its accounting for revenue 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 issuer recognized revenue on a straight-line basis over an estimated performance period. The firm did not evaluate the reasonableness of the estimated performance period. (AS 2301.08) In connection with our review the issuer reevaluated its accounting for revenue 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 issuer incurred costs related to software development and capitalized certain of these costs using a percentage. The firm did not evaluate the reasonableness of this percentage. (AS 2501.07) [This citation refers to AS 2501 Auditing Accounting Estimates which was in effect for this audit. This standard was replaced by AS 2501 Auditing Accounting Estimates Including Fair Value Measurements which became effective for audits of financial statements for fiscal years ending on or after December 15 2020.]

The issuer incurred costs related to software development and capitalized certain of these costs using a percentage. The firm did not evaluate whether certain software costs met the criteria for capitalization. (AS 2301.08)

The firm did not evaluate whether the issuer considered certain events or changes in circumstances including the issuer's operating losses negative cash flows negative working capital and substantial doubt about the issuer's ability to continue as a going concern in determining that the carrying value of the capitalized software was recoverable. (AS 2301.08)

The firm did not perform any substantive procedures to evaluate whether the issuer recognized revenue in conformity with FASB ASC Topic 606 Revenue from Contracts with Customers. (AS 2301.08 and .13)

The firm did not perform any procedures to evaluate the relevance and reliability of the external information it used to test revenue. (AS 1105.04 and .06)

The issuer held certain inventory at external warehouses. The firm did not perform sufficient procedures to test the existence of this inventory because it limited its procedures to confirming the quantities of this inventory with the external warehouses. (AS 2510.14)

The issuer reported a reserve for excess and obsolete inventory. The firm did not perform procedures to test this reserve beyond performing recalculations of certain amounts. (AS 2501.07)

The firm did not perform any procedures to identify and select journal entries and other adjustments for testing. (AS 2401.58)

The firm selected for testing a control that consisted of the issuer's review of the fair market value of common stock issued for (1) private placement shares and (2) commitment shares. The firm did not test the operating effectiveness of this control for commitment shares. (AS 2201.44)

The firm selected for testing a control that consisted of the issuer's review of equity schedules. 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 developed the qualitative component of the general reserve of the ALL by applying certain qualitative factors to each of its classes of loans. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the ALL including the development and review of the qualitative factors. In evaluating the design of this control the firm did not assess the effect of the same individuals both developing and reviewing the qualitative factors. (AS 2201.42)

The issuer developed the qualitative component of the general reserve of the ALL by applying certain qualitative factors to each of its classes of loans. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the ALL including the development and review of the qualitative factors. 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 developed the qualitative component of the general reserve of the ALL by applying certain qualitative factors to each of its classes of loans. The following deficiencies were identified: · With respect to the firm's substantive procedures to test the qualitative component of the reserve the firm did not evaluate the reasonableness of certain adjustments that the issuer made to the qualitative factors beyond reading the issuer's ALL memorandum and comparing the current year's general reserve to the prior year's. (AS 2501.07)

The issuer used an information technology ('IT') application to record revenue and inventory. The firm selected for testing certain automated and IT-dependent manual controls over revenue and inventory that used information generated or maintained by this application. The accuracy and completeness of this information depended on effective IT general controls ('ITGCs'). The firm's testing of ITGCs was not sufficient because it did not identify and test a complete population of operating system changes that could potentially affect change management controls over the application. As a result the firm's testing of the automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

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

The firm's substantive procedures to test revenue included analytical procedures. The firm used the information generated from this revenue application to develop its expectations but did not test or (as discussed above) sufficiently test controls over the accuracy and completeness of this information. (AS 2305.16)

The issuer held a note receivable from a related party that was collateralized by shares of the issuer's stock and guaranteed by other parties. The issuer recognized interest payments received from the borrower as income. On various occasions the issuer extended the maturity date and modified certain payment terms rather than enforcing the guarantees by either requiring the (1) redemption of the collateral or (2) repayment of the receivable when it was due and payable. The firm did not identify and appropriately address that the issuer's accounting treatment for the receivable and related interest payments was not in conformity with FASB ASC Topic 310 Receivables. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for the receivable and related interest payments and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently restated its financial statements and the firm revised and reissued its report on the financial statements. The issuer also reevaluated its controls over the note receivable and concluded that a material weakness existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect this material weakness.

The issuer used two information-technology (IT) systems to process and record transactions related to revenue accounts receivable and inventory for this business unit. The following deficiencies were identified: • With respect to the first system the issuer maintained separate instances of this system at each of its locations; each instance represented a separate occurrence of the system that could be configured differently. The firm selected for testing certain automated controls over this system. The firm's approach to testing only one instance of the operation of these automated controls was inappropriate because it was based on an unsupported assumption that all instances of this system were configured the same way and that the automated controls for each instance were designed and operated the same way. (AS 2201.46)

During the year the issuer acquired a business. The firm did not sufficiently test the fair value of certain consideration transferred by the issuer because its procedures were limited to recalculating this consideration based on the terms of the purchase agreement without evaluating certain relevant available market information. (AS 2502.26 .28 .31 and .36)

During the year the issuer recorded revenue from a bill-and-hold arrangement with one of its customers. The firm did not perform any procedures to evaluate whether the issuer met certain revenue recognition criteria for bill-and-hold arrangements beyond reading a memorandum prepared by the issuer and inquiring of management. (AS 2301.08)

The issuer used two information-technology (IT) systems to process and record transactions related to revenue accounts receivable and inventory for this business unit. The following deficiencies were identified: • The firm identified control deficiencies related to certain controls over access to the second system. The firm did not sufficiently evaluate the severity of these control deficiencies because its procedures were limited to evaluating whether the changes made to the system in the current year were appropriate without evaluating the magnitude of the potential misstatement that could have resulted from inappropriate access to this system. (AS 2201.62)

The issuer used two information-technology (IT) systems to process and record transactions related to revenue accounts receivable and inventory for this business unit. The following deficiencies were identified: • The firm selected for testing certain automated and IT-dependent manual controls that used information generated or maintained by the second system. The accuracy and completeness of this information depended on effective IT general controls (ITGCs). Due to the deficiency in the firm's evaluation of the ITGC control deficiencies discussed above the firm's testing of these automated and IT-dependent manual controls was not sufficient. (AS 2201.46)

The firm selected for testing a control that consisted of the issuer's review of invoices to determine whether revenue was appropriately recorded. The firm did not identify and test any controls that addressed the accuracy and completeness of the price and quantity data that the issuer used in the operation of this control. (AS 2201.39)

The sample sizes the firm used in certain of its substantive procedures to test this 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)

The issuer performed cycle counts of inventory held at certain locations. The following deficiencies were identified: · The firm did not identify and test any controls over the issuer's monitoring of its cycle-count program. (AS 2201.39)

The issuer performed cycle counts of inventory held at certain locations. The following deficiencies were identified: · The firm selected for testing certain cycle-count controls that it assessed as having a higher risk of failure. To test the design and operating effectiveness of these controls the firm selected a sample of cycle counts. The firm observed a small number of these counts and for certain of the remaining counts inquired of the issuer's personnel and inspected cycle-count documentation. The firm's procedures for the unobserved counts did not provide sufficient appropriate audit evidence given the assessed higher risk associated with these controls. (AS 2201.46)

The issuer performed cycle counts of inventory held at certain locations. The following deficiencies were identified: · The firm did not perform any substantive procedures to test the existence of inventory held at certain of these locations. (AS 2301.08)