Explorer

The component reported revenue from multiple revenue types and for purposes of the audit the firm grouped revenue into three categories. The following deficiencies were identified: · For another category of revenue the firm did not perform sufficient substantive procedures to test a portion of revenue because it did not select its sample in a manner that was representative of the entire population and as such the results of testing performed could not be projected to the entire population. (AS 2315.24)

The component reported revenue from multiple revenue types and for purposes of the audit the firm grouped revenue into three categories. The following deficiencies were identified: · In addition for certain sales transactions selected for testing related to sales arrangements in which the firm concluded had a single performance obligation the firm did not perform any procedures to evaluate the appropriateness of the component's recognition of revenue in different periods for the respective arrangements. (AS 2301.08; AS 2810.03)

The component reported revenue from multiple revenue types and for purposes of the audit the firm grouped revenue into three categories. The following deficiencies were identified: · The firm did not evaluate the effect of the (1) differences identified between the shipping dates and dates in which revenue was recognized and (2) inconsistencies in the component's revenue recognition practices for sales arrangements with a single performance obligation both as described above on the effectiveness of the component's ICFR or report such matters to the principal auditor for its evaluation. (AS 2201.B8)

The component held inventory at multiple locations. For one location the firm selected for testing two controls over inventory that consisted of periodic cycle counts and management's review and approval of adjustments to the perpetual inventory records resulting from those counts. The firm did not identify and test any controls over the accuracy and completeness of the data derived from the component's inventory system that was used in the operation of these controls. (AS 2201.39)

The firm's substantive procedures to test inventory at this location utilized certain data from the component's inventory system. The firm did not test or in the alternative identify and test controls over the accuracy and completeness of these data as discussed above. (AS 1105.10)

The firm selected for testing a control consisting of a review of forecasts used in the issuer's impairment analysis including an evaluation of the revenue growth and earnings assumptions underlying these forecasts. The firm did not evaluate the review procedures that the control owner performed including the procedures to identify items for follow up. (AS 2201.42 and .44)

In addition the firm did not identify and test any controls over the accuracy and completeness of a reporting package used in the operation of this control. (AS 2201.39)

The firm's approach for testing the fair value measurement of goodwill was to review and test management's process. The following deficiencies were identified: · The firm did not perform any procedures to test the accuracy of a report that was used to support certain assumptions. (AS 2502.26 .28 and .39)

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 firm selected for testing controls that consisted of the issuer's review of the reasonableness of certain significant assumptions used by the issuer in developing an estimate related to this significant account. 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's approach for substantively testing the above estimate related to this significant account was to test the issuer's process. The firm did not sufficiently evaluate the reasonableness of certain significant assumptions because it did not evaluate whether the Issuer had a reasonable basis for the assumptions. Further in evaluating the reasonableness of these significant assumptions the firm did not take into account the issuer's ability to carry out its intended courses of action beyond observing that the assumptions were directionally consistent with the issuer's historical information and other information. (AS 2501.16 and .17)

The firm selected for testing a control that consisted of the issuer's review of an aspect of the accounting treatment for this significant account. The firm did not evaluate the specific review procedures that the control owner performed to evaluate whether the accounting treatment was in accordance with GAAP. (AS 2201.42 and .44)

The firm did not perform any procedures to evaluate the issuer's conclusion that this aspect of the accounting treatment was in accordance with GAAP. (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 did not identify and test any controls over certain automated functionality related to change management and user access. (AS 2201.39)

The firm selected for testing a control that consisted of the issuer's review of the initial accounting treatment of significant transactions. 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 a control that consisted of the issuer's review of the initial accounting treatment of significant transactions. The firm did not identify and test any controls over the review of the subsequent accounting treatment of these significant transactions. (AS 2201.39)

The firm did not perform procedures to test the issuer's conclusion regarding the subsequent accounting treatment of the significant transactions beyond reviewing contractual agreements and certain issuer information. (AS 2301.08)

In performing procedures to evaluate the accounting treatment of these transactions the firm used the work of the company's specialist as audit evidence. The firm did not perform any procedures to use the work of the company's specialist as audit evidence. (AS 1105.A1 - .A10; AS 2301.08)

The firm identified certain deficiencies in the control environment. The firm however did not consider the effect of these deficiencies in other areas of the audit in (1) forming conclusions about the design and operating effectiveness of the controls in those areas and (2) determining the level of control reliance used in the design of its substantive procedures in those areas. (AS 2201.42 .44 and .B6; AS 2301.34)

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)

The firm did not identify and test any controls over the issuer's estimates of variable consideration included in the transaction price. (AS 2201.39)

The firm did not perform procedures to test the issuer's estimates of variable consideration that it expects to ultimately include in the transaction price beyond testing the amounts the issuer invoiced to its customers during the year. (AS 2501.07)

The firm selected for testing a control that consisted of the issuer's review of the method and certain significant assumptions that were used by the issuer to develop another estimate of a related account. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the appropriateness of the method and the reasonableness of certain significant assumptions that were used. (AS 2201.42 and .44)

The firm did not perform any procedures to evaluate whether the method used by the issuer to develop this other estimate was (1) in conformity with the requirements of the applicable financial reporting framework and (2) appropriate for the nature of the related account taking into account its understanding of the issuer and its environment. (AS 2501.10)

The firm's approach for substantively testing certain significant assumptions related to this other estimate was to develop an expectation using model analyses and information provided by an auditor-employed specialist for comparison to the issuer's significant assumptions. The firm did not demonstrate that it had a reasonable basis for its expectation of the significant assumptions because it did not evaluate the relevance and reliability of certain external data obtained and used by the auditor-employed specialist in developing its expectations. (AS 1105.04 and .06; AS 2501.16)