Explorer

The firm selected for testing a control over the review of revenue. The firm did not identity and test any controls over the accuracy and completeness of data and reports used by the control owner in this control. (AS 2201.39)

The firm selected for testing a control over the review of property and equipment. The firm did not evaluate the specific review procedures that the control owner performed to evaluate the reasonableness of depreciation expense. (AS 2201.42 and .44)

The issuer recorded stock compensation expense on the vesting date rather than recognizing it ratably over the vesting period and incorrectly calculated forfeiture estimates for issued stock options by applying estimated forfeiture adjustments to vested stock options. The issuer's accounting for stock compensation was not in conformity with FASB ASC Topic 718 Compensation — Stock Compensation but the firm did not identify and evaluate this departure from GAAP. (AS 2810.30) Unrelated to our review the issuer reevaluated its accounting for stock compensation 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's approach for testing labor and overhead costs that the issuer allocated to inventory was to review and test management's process for estimating the amounts to capitalize in inventory. The firm did not test the accuracy and completeness of the data the issuer used to allocate these costs. (AS 1105.10)

In addition the firm's approach for testing labor and overhead rates was to develop an independent estimate. The firm did not test the accuracy and completeness of the system-generated reports used to develop its independent estimate. (AS 1105.10)

The firm did not sufficiently test whether inventory was stated at the lower of cost or net realizable value at year end because it limited its procedures to testing certain inventory that was sold during the two months after year end. (AS 1105.27)

The issuer identified certain impairment indicators and performed an assessment of intangible assets for impairment at year-end. The firm did not perform sufficient substantive procedures to evaluate the issuer's conclusions regarding these potential indicators of impairment as its procedures were limited to inquiry of management reading a memorandum and other information prepared by the issuer reviewing unsigned memoranda of understanding related to the intangible assets and obtaining legal confirmations regarding any potential litigation related to the intangible assets. Further although the firm identified a potential indicator that was excluded from the issuer's assessment the firm inappropriately concluded that it was not applicable and did not evaluate how the issuer considered it in its assessment. (AS 2301.08 and .11; AS 2810.03)

The firm did not identify and evaluate departures from GAAP related to the issuer's related party transactions. (AS 2410.17; AS 2810.30 and .31)

The firm did not consider the characteristics of potentially fraudulent journal entries when identifying and selecting journal entries for testing at one of the issuer's components and instead haphazardly selected entries for testing. Further the firm did not perform sufficient procedures to test certain of the selected journal entries because it did not examine the underlying support for the entries and limited its procedures to inquiry of management for one of these entries. (AS 2401.61)

The firm did not perform any procedures to identify and select journal entries and other adjustments for testing at another one of the issuer's components without having an appropriate rationale for excluding that component. (AS 2401.61)

The firm selected for testing a control that consisted of management's review of data that the issuer used to record revenue including the related revenue journal entries. In testing the operating effectiveness of this control the firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the data. (AS 2201.44)

The firm selected for testing a control that consisted of management's review of the long-lived assets impairment analysis. The firm did not evaluate the specific review procedures that the control owner performed to assess the reasonableness of the significant assumptions used in the impairment analysis. (AS 2201.42 and .44)

The firm selected for testing a control that included management's review of financial statement disclosures related to long-lived assets that were based on a report prepared by an external specialist engaged by the issuer. The firm did not identify and test any controls over the accuracy and completeness of the issuer-provided data that the external specialist used to prepare this report. (AS 2201.39)

The issuer used an information-technology (IT) system that was hosted by a service organization to initiate process and record transactions related to (1) revenue and (2) rental properties. In its testing of controls over these accounts the firm selected for testing various automated and IT-dependent manual controls that used data and reports generated by this IT system. The firm obtained the service auditor's report and identified for testing certain complementary user entity controls (CUECs) that the service auditor's report described as necessary. As a result of the following deficiencies in the firm's testing of the CUECs the firm's testing of these automated and IT-dependent controls was not sufficient. (AS 2201.46)

The firm selected for testing a control over the review of revenue by property. The firm did not identify and test any controls over the accuracy and completeness of certain issuer-prepared information used in the operation of this control. (AS 2201.39)

The firm did not identify and test any controls over the recognition of the amount of straight-line rent and related revenue. (AS 2201.39)

The firm selected for testing a control over the review of lease classifications. The firm did not identify and test any controls over the accuracy of certain issuer-prepared information used in the operation of this control. (AS 2201.39)

The firm did not identify and test any controls over the calculation of depreciation expense. (AS 2201.39)

The firm selected for testing controls over the review of the acquisition of rental properties and the evaluation of impairment. 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 selected for testing controls over the review of the acquisition of rental properties and the evaluation of impairment. The firm did not identify and test any controls over the accuracy and completeness of certain issuer-prepared information used in the operation of these controls. (AS 2201.39)

During the year the issuer acquired certain rental properties that it accounted for as asset acquisitions. The issuer allocated the purchase price in each acquisition primarily to land and buildings. The following deficiency were identified: · The firm did not perform substantive procedures beyond obtaining and reading an issuer memorandum to evaluate the appropriateness of the issuer's accounting for these transactions. (AS 2301.08)

During the year the issuer acquired certain rental properties that it accounted for as asset acquisitions. The issuer allocated the purchase price in each acquisition primarily to land and buildings. The following deficiency was identified: · The firm did not perform any substantive procedures to evaluate the issuer's conclusions that these acquisitions did not result in any intangible assets. (AS 2301.08)

During the year the issuer acquired certain rental properties that it accounted for as asset acquisitions. The issuer allocated the purchase price in each acquisition primarily to land and buildings. The following deficiency was identified: · The firm did not evaluate whether the method used by the issuer to allocate the purchase price and estimate the fair value for the acquired land and buildings was in conformity with the requirements of the applicable reporting framework and appropriate for the nature of the account taking into account the firm's understanding of the issuer and its environment. (AS 2501.10)

During the year the issuer acquired certain rental properties that it accounted for as asset acquisitions. The issuer allocated the purchase price in each acquisition primarily to land and buildings. The following deficiency was identified: · The firm did not evaluate the relevance and reliability of information that was used to determine the fair value of the acquired land and buildings. (AS 1105.04 and .06)

The issuer used an information-technology (IT) system that was hosted by a service organization to initiate process and record transactions related to (1) revenue and (2) rental properties. In its testing of controls over these accounts the firm selected for testing various automated and IT-dependent manual controls that used data and reports generated by this IT system. The firm obtained the service auditor's report and identified for testing certain complementary user entity controls (CUECs) that the service auditor's report described as necessary. · The firm selected for testing a control that included the periodic review of user access. The firm did not evaluate the specific review procedures that the control owners performed to determine whether access granted was and continued to be appropriate. (AS 2201.42 .44 and .B22)

The issuer performed certain quantitative analyses to evaluate whether there were events or changes in circumstances that indicated that its rental properties' carrying values may not be recoverable. The following deficiency was identified: · The firm did not perform substantive procedures to test the accuracy of certain data the issuer used in these analyses. (AS 1105.10)

The issuer performed certain quantitative analyses to evaluate whether there were events or changes in circumstances that indicated that its rental properties' carrying values may not be recoverable. The following deficiency was identified: · The firm did not perform substantive procedures to evaluate the reasonableness of certain significant assumptions that the issuer used in these analyses beyond comparing them to the assumptions used in the prior year analyses. (AS 2501.16)

The issuer performed certain quantitative analyses to evaluate whether there were events or changes in circumstances that indicated that its rental properties' carrying values may not be recoverable. The following deficiency was identified: · The firm did not perform substantive procedures to evaluate the reasonableness of certain other significant assumptions beyond comparing certain information used in the issuer's analyses to determine these assumptions to an external source. (AS 2501.16)

The issuer engaged an external specialist to determine the fair value of certain assets. The company's specialist used discounted cash flow models in its valuation. The following deficiency was identified: · The firm did not evaluate the relevance and/or reliability of certain data from sources external to the issuer that the company's specialist used to develop significant assumptions. (AS 1105.A8a)

The issuer engaged an external specialist to determine the fair value of certain assets. The company's specialist used discounted cash flow models in its valuation. The following deficiency was identified: · The firm did not perform substantive procedures to evaluate the reasonableness of significant assumptions related to the time periods that were developed by the company's specialist and used in the discounted cash flow models beyond comparing them to certain issuer documentation that indicated shorter time periods and concluding that the shorter time periods were more conservative. (AS 1105.A8b)

The issuer engaged an external specialist to determine the fair value of certain assets. The company's specialist used discounted cash flow models in its valuation. The following deficiency was identified: · The firm did not perform any substantive procedures to evaluate the reasonableness of certain other significant assumptions developed by the company's specialist. (AS 1105.A8b)

The issuer engaged an external specialist to determine the fair value of certain assets. The company's specialist used discounted cash flow models in its valuation. The following deficiency was identified: · The firm did not perform any substantive procedures to evaluate the reasonableness of the significant assumptions developed by the issuer. (AS 2501.16)

The firm did not perform any procedures to test an estimate related to these assets including consideration of certain contrary evidence that was included in the firm's work papers. (AS 2501.07; AS 2810.03)

To test certain other assets the firm selected balances that exceeded a monetary threshold and then selected one item for each of the selected balances for testing. The firm did not perform procedures to test the remaining population. (AS 1105.27; AS 2301.08)

The firm did not perform any substantive procedures to test an estimate related to these assets. (AS 2501.07)

The issuer used an information-technology (IT) system that was hosted by a service organization to initiate process and record transactions related to (1) revenue and (2) rental properties. In its testing of controls over these accounts the firm selected for testing various automated and IT-dependent manual controls that used data and reports generated by this IT system. The firm obtained the service auditor's report and identified for testing certain complementary user entity controls (CUECs) that the service auditor's report described as necessary. · The firm did not identify and test any controls over change management that addressed changes to automated controls or system-generated reports. (AS 2201.39 and .B22)

The issuer used an information-technology (IT) system that was hosted by a service organization to initiate process and record transactions related to (1) revenue and (2) rental properties. In its testing of controls over these accounts the firm selected for testing various automated and IT-dependent manual controls that used data and reports generated by this IT system. The firm obtained the service auditor's report and identified for testing certain complementary user entity controls (CUECs) that the service auditor's report described as necessary. · The firm did not identify and test any controls over the accuracy and completeness of the asset acquisitions recorded into this IT system. (AS 2201.39 and .B22)

The issuer also used an IT system that was hosted by a service organization to perform account reconciliations using data manually uploaded from the IT system discussed above. The firm selected for testing the automated control over these account reconciliations. As a result of the following deficiencies in the firm's testing of CUECs the firm's testing of this automated control was not sufficient. (AS 2201.46)

The issuer also used an IT system that was hosted by a service organization to perform account reconciliations using data manually uploaded from the IT system discussed above. The firm selected for testing the automated control over these account reconciliations. · The firm did not identify and test any controls over user access that addressed newly hired and terminated employees. (AS 2201.39 and .B22)

The issuer also used an IT system that was hosted by a service organization to perform account reconciliations using data manually uploaded from the IT system discussed above. The firm selected for testing the automated control over these account reconciliations. · The firm did not identify and test any controls over change management. (AS 2201.39 and .B22)

The issuer also used an IT system that was hosted by a service organization to perform account reconciliations using data manually uploaded from the IT system discussed above. The firm selected for testing the automated control over these account reconciliations. · The firm did not identify and test any controls over the accuracy and completeness of the data uploaded into this IT system. (AS 2201.39 and .B22)

The firm selected for testing a control over the review of revenue by property. 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 selected for testing certain controls that included the review of revenue. The following deficiency was identified: · For certain revenue the firm did not identify and test any controls over the timing of the revenue recognition. (AS 2201.39)

The issuer used multiple information-technology (IT) systems to initiate process and record long-lived assets and related transactions including certain systems maintained by external service organizations. In its testing of controls over long-lived assets the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: · The firm selected for testing a change management control over one of the IT systems. The firm did not perform procedures to test or test any controls over the completeness of the population of changes from which it made its selections to test this control. (AS 1105.10)

The issuer used multiple information-technology (IT) systems to initiate process and record long-lived assets and related transactions including certain systems maintained by external service organizations. In its testing of controls over long-lived assets the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: · The firm selected for testing a change management control over one of the IT systems. The firm did not identify and test any controls over certain configuration changes to the system. (AS 2201.39)

The issuer used multiple information-technology (IT) systems to initiate process and record long-lived assets and related transactions including certain systems maintained by external service organizations. In its testing of controls over long-lived assets the firm tested various automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. With respect to change management: · The firm did not identify and test any change management controls over one of the other IT systems. (AS 2201.39)

The firm obtained service organization reports on internal controls related to certain of the issuer's IT systems. The firm did not sufficiently test the relevant complementary user entity controls given the deficiencies identified above in testing ITGCs. (AS 2201.42 .44 and .B22)

The firm also selected for testing certain review controls over long-lived assets and related transactions. The following deficiency was identified: · For a control over impairment testing the firm used the results of its substantive testing as evidence that this control was operating effectively. The firm's procedures did not provide sufficient appropriate audit evidence because the firm did not directly test the review procedures that the control owner performed. (AS 2201.42 .44 and .B9)

The firm also selected for testing certain review controls over long-lived assets and related transactions. The following deficiency was identified: · The firm did not identify and test any controls over the accuracy and completeness of data used in the operation of the control. (AS 2201.39)

The firm also selected for testing certain review controls over long-lived assets and related transactions. The following deficiency was identified: · For a control over the allocation of purchase price for long-lived assets acquired as a group the firm used the results of its substantive audit procedures as evidence of the effectiveness of the control. The firm did not evaluate the specific review procedures performed by the control owner to evaluate the methods and assumptions used by the issuer-engaged specialist in the purchase price allocation. (AS 2201.42 .44 and .B9)