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The issuer manually entered sales order quantities into the issuer's revenue system. This system was programmed to convert the quantities entered into weight sold to determine the customer invoice amount. The following deficiencies were identified: · The firm selected for testing controls over the accuracy of sales prices that consisted of a review of sales order prices below a minimum price and above certain maximum prices. The firm did not identify and test any controls over the accuracy of prices that did not meet these criteria. (AS 2201.39)

The issuer manually entered sales order quantities into the issuer's revenue system. This system was programmed to convert the quantities entered into weight sold to determine the customer invoice amount. The following deficiencies were identified: · For certain other revenue the firm identified a control deficiency related to a lack of controls over the accuracy of quantities shipped to customers and recorded as revenue. The firm identified various controls that it believed would compensate for this deficiency but its conclusion that these controls had a mitigating effect was inappropriate because these controls did not address the risk of potential misstatement related to inaccurate quantities. (AS 2201.68) As a result of our inspection procedures the firm reevaluated the issuer's controls over this revenue and concluded along with the issuer that certain control deficiencies existed that constituted a material weakness that had not been previously identified. The issuer subsequently filed a Form 8-K and disclosed that the firm's opinion related to the effectiveness of the issuer's ICFR should no longer be relied upon due to this material weakness and the material weakness discussed above.

The issuer's processes related to loans receivable the ALL investments derivatives and investment and brokerage services income were highly automated with transactions being initiated processed and recorded by numerous information-technology (“IT”) systems. The firm tested certain automated and IT-dependent manual controls that used data and reports generated or maintained by these IT systems. The accuracy and completeness of these data and reports depended on effective IT general controls (“ITGCs”). The firm's sampling approach for testing ITGCs was inappropriate because it was based on an unsupported assumption that the population of ITGCs was homogeneous. As a result the firm's testing of these automated and IT-dependent manual controls over these areas was not sufficient. (AS 2201.46 and .47)

The issuer held certain inventory at numerous warehouses that were subject to cycle counts. The issuer's cycle-count program required this inventory to be counted at specific frequencies during the year. The following deficiencies were identified: The firm did not identify and test any controls that addressed whether all locations in each of these warehouses were counted during the year and whether each location was counted with sufficient frequency in accordance with the issuer's cycle-count program. (AS 2201.39) In addition the firm did not identify and test any controls over the accuracy and completeness of the system-generated reports the issuer used in the operation of its cycle-count controls. (AS 2201.39). In connection with our review the issuer reevaluated its controls over its inventory cycle-count program 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 and the material weakness discussed below and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The firm selected for testing a control that consisted of a review of past-due loans performed by the issuer to determine whether these loans would be individually or collectively evaluated for impairment. The firm did not identify and test any controls over the accuracy and completeness of a report that was used in the operation of this control. (AS 2201.39)

To determine the qualitative reserve component of the ALL for loans that were collectively evaluated for impairment the issuer assigned a loss factor to each loan based on certain qualitative considerations. The following deficiencies were identified: · The firm selected for testing controls that included the issuer's reviews of the qualitative reserve component of the ALL and the corresponding loss factors. The firm did not evaluate the specific review procedures that the control owners performed to assess whether the loss factors assigned to each loan were appropriate. (AS 2201.42 and .44) In connection with our review the issuer reevaluated its controls over the ALL 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 and the material weakness discussed below and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

To determine the qualitative reserve component of the ALL for loans that were collectively evaluated for impairment the issuer assigned a loss factor to each loan based on certain qualitative considerations. The following deficiencies were identified: · The firm did not evaluate the reasonableness of the loss factors beyond comparing the factors to those used in the prior year inquiring of management about changes to those factors and the effects on the ALL and recalculating the qualitative reserve component by loan type. (AS 2501.11)

The issuer identified a control deficiency related to unauthorized access to customer accounts that resulted in two fraudulent wire-transfer requests that occurred at one of its locations. The firm did not sufficiently evaluate the severity of the control deficiency because it limited its evaluation of the magnitude of the potential misstatement to one of the fraudulent wire-transfer requests at the affected location without considering the issuer's other locations that were subject to the same controls. (AS 2201.62) In connection with our review the issuer evaluated its controls over wire transfers 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 and the material weakness discussed above and the firm modified its report on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

In response to this control deficiency the issuer made changes to the design of one of its wire-transfer controls. The firm did not perform any procedures to evaluate the changes made to the design of this control. (AS 2201.68) In connection with our review the issuer evaluated its controls over wire transfers 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 and the material weakness discussed above and the firm modified its report on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The firm identified control deficiencies in the issuer's sales process related to segregation of duties conflicts and individuals having inappropriate access to the issuer's revenue system that provided these users with the ability to create and modify customer accounts enter sales orders and record adjustments to accounts receivable. The firm identified and tested various compensating controls including controls that the issuer implemented in response to these control deficiencies. The following audit deficiencies were identified: For the compensating controls the firm did not evaluate the implications of certain control owners having segregation of duties conflicts and/or inappropriate access to the revenue system. (AS 2201.68).

The firm identified control deficiencies in the issuer's sales process related to segregation of duties conflicts and individuals having inappropriate access to the issuer's revenue system that provided these users with the ability to create and modify customer accounts enter sales orders and record adjustments to accounts receivable. The firm identified and tested various compensating controls including controls that the issuer implemented in response to these control deficiencies. The following audit deficiencies were identified: · One of the controls that the issuer implemented consisted of the review of a report of all users who created or modified sales orders during the year. In testing this control the firm did not evaluate the specific review procedures that the control owners performed to identify users with inappropriate access and assess whether the sales orders these users created or modified were appropriate. (AS 2201.68) In connection with our review the issuer reevaluated its controls over segregation of duties and access to the revenue system and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect these material weaknesses and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The firm identified control deficiencies in the issuer's sales process related to segregation of duties conflicts and individuals having inappropriate access to the issuer's revenue system that provided these users with the ability to create and modify customer accounts enter sales orders and record adjustments to accounts receivable. The firm identified and tested various compensating controls including controls that the issuer implemented in response to these control deficiencies. The following audit deficiencies were identified: · One of the controls that the issuer implemented consisted of the review of a report of all users who created or modified sales orders during the year. The firm did not identify and test any controls over the accuracy and completeness of the report used in the operation of this control. (AS 2201.68) In connection with our review the issuer reevaluated its controls over segregation of duties and access to the revenue system and concluded that material weaknesses existed that had not been previously identified. The issuer subsequently revised its report on ICFR to reflect these material weaknesses and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The sample size the firm used in certain of its substantive procedures to test revenue was 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)

During the audit the firm did not identify that the issuer's recognition of compensation expense associated with certain equity awards that contained both service and performance conditions was not in conformity with FASB ASC Subtopic 718-10 Compensation - Stock Compensation - Overall. (AS 2810.30) In connection with our review the issuer reevaluated its accounting for compensation expense related to these equity awards 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 held certain inventory at numerous warehouses that were subject to cycle counts. The issuer's cycle-count program required this inventory to be counted at specific frequencies during the year. The following deficiencies were identified: In addition the firm did not identify and test any controls over the accuracy and completeness of the system-generated reports the issuer used in the operation of its cycle-count controls. (AS 2201.39). In connection with our review the issuer reevaluated its controls over its inventory cycle-count program 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 and the material weakness discussed below and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not identify and test any controls over the issuer's evaluation of the changes to the terms of the contract and the potential implications on the issuer's accounting for the contract in accordance with FASB ASC Topic 815. (AS 2201.39)

The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not identify and test any controls over the issuer's ongoing evaluation of whether its physical delivery of the contractually required volumes of oil to the customer would be probable. (AS 2201.39)

The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether considering the issuer's past production trends and expected future production the minimum monthly volumes per the contract could reasonably be met. (AS 2301.08)

The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The contract included a provision that required the issuer to make a partial payment if at any time the issuer's estimate of the volume payment at the end of the contract exceeded a certain amount. In the year under audit the issuer's estimate of future forecasted production indicated that the volume payment would exceed this amount in the following year. The firm did not perform any substantive procedures to evaluate whether this potential partial volume payment would contradict the issuer's assertion that it was probable that the contract would not result in a net settlement. (AS 2810.03)

The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether a change to certain terms of the contract that would allow the issuer to reduce any volume payment would be a form of net settlement. (AS 2301.08)

The issuer was party to a contract with one of its customers that required the issuer to provide a minimum monthly volume of oil produced from a defined area within one of its properties. The issuer determined that the contract represented a derivative contract and qualified for the scope exception for normal purchases and normal sales under FASB ASC Topic 815 Derivatives and Hedging. The contract included a provision that allowed the issuer to defer any payments owed to the customer for any production below the minimum monthly volumes over the life of the contract ('volume payment') until the end of the contract. Subsequent to year end but prior to the issuer filing its financial statements the issuer renegotiated certain terms of the contract and determined that these changes were enforceable as of year end. With respect to the firm's control testing over and substantive procedures related to whether the contract qualified for the derivative accounting scope exception for normal purchases and normal sales the following deficiencies were identified: · The firm did not evaluate whether the issuer's determination of the contract-end date was appropriate and whether the issuer's physical delivery of the contractually required volumes of oil to the customer by this date would be probable. (AS 2301.08)

With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm selected for testing certain controls over the issuer's evaluation of contracts including changes to existing contracts for revenue recognition under FASB ASC Topic 606 Revenue from Contracts with Customers. The firm concluded that these controls were designed and operating effectively but it did not identify that the issuer did not evaluate (1) the accounting implications of the changes to the terms of the contract and (2) whether the revenue derived from the contract included an element of variable consideration that may have required the issuer to constrain revenue and record a contract liability. (AS 2201.42 and .44)

With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm did not perform any substantive procedures to test the forecasted production that the issuer used to determine the estimated volume payment. (AS 2501.11)

With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm did not perform sufficient substantive procedures to evaluate the estimated volume payment at the end of the contract. Its procedures to test the forecasted production for the defined area were limited to (1) comparing the issuer's prior-year estimate of forecasted production for the overall property for the current year to the actual production and (2) comparing the forecasted production for the defined area to the total forecasted production for the overall property. (AS 2501.11)

With respect to the firm's control testing over and substantive procedures related to the consideration of the contract terms and the implications of these terms on revenue recognition the following deficiencies were identified: · The firm did not evaluate the accounting implications of the changes to the contract terms on revenue recognition and as a result did not identify that (1) the issuer used an incorrect contract-end date to determine the estimated volume payment that it used to evaluate revenue recognition and (2) the revenue derived from the contract included an element of variable consideration that may have required the issuer to constrain revenue and record a contract liability under FASB ASC Topic 606. (AS 2810.30)

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

The issuer recorded oil revenue based on volumes produced from each well; the issuer's ownership interest in each well varied from well to well. The firm did not identify and test any controls over the accuracy of the volume data by well used to record revenue. (AS 2201.39)

The firm used the volume data in its substantive testing of this revenue but did not perform any procedures to test or in the alternative test any controls over the accuracy of the data. (AS 1105.10)

During the year the issuer identified indicators of possible impairment for two of its oil- and gas-producing properties. The issuer developed undiscounted cash flows for its impairment analysis using various assumptions that included (1) oil and gas reserves including historical and forecasted production (2) future development costs and (3) product prices including adjustments to those prices. The issuer engaged an external specialist to estimate the issuer's oil and gas reserves. To test the forecasted production assumption the firm compared the issuer's prior-year estimate of forecasted production for the current year to the actual production and investigated any variances. The firm did not perform sufficient substantive procedures to evaluate the reasonableness of the forecasted production for both properties because its procedures were limited to inquiring of management about the variances. (AS 2501.11)

The issuer held certain assets that it planned to use to develop one of these properties. The firm did not evaluate whether the issuer should have grouped these assets with this property's assets for its analysis of this property for possible impairment. (AS 2501.11)

The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · The firm did not determine whether the historical development costs for one property could be expected to be predictive of the future development costs for both properties. (AS 2305.13 and .14)

The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · In testing the historical costs used to develop its expectations the firm did not identify that certain costs should have been excluded from those expectations. (AS 2305.16)

The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · For one of these properties the firm reduced the historical development costs based on an estimate of certain cost savings the issuer expected to achieve in future years. The firm did not perform any procedures beyond inquiring of management to test these expected cost savings. (AS 2305.16)

The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · The firm did not perform any procedures to test the accuracy of the number of wells drilled and completed during the year. (AS 2305.16)

The firm performed substantive analytical procedures to test the reasonableness of the future development costs for each of these two properties. The firm developed its expectations based on (1) historical development costs for one of these properties (2) the number of wells drilled and completed during the year and (3) the issuer's average ownership interest ('working interest') in the wells. These analytical procedures did not provide sufficient appropriate audit evidence because the following deficiencies were identified: · The firm did not identify that the working interest it used to develop its expectation for one of the issuer's properties was different than the working interest used by the issuer's specialist. (AS 2305.16)

The firm did not perform any procedures to test the accuracy and completeness of the development cost production and pricing data that the issuer provided to the external specialist and that the external specialist used to estimate the issuer's oil and gas reserves. (AS 1210.12)

The issuer used an information-technology ('IT') application to calculate its reserve for excess and obsolete ('E&O') inventory and then made manual adjustments to this calculation to determine the reserve. The following deficiencies were identified: The firm did not identify and test any controls over the application's calculation of the E&O reserve. (AS 2201.39).

The issuer used the forecasted production and future development costs to determine the depletion expense for these properties. As a result of the deficiencies in the firm's testing of this information as discussed above the firm did not perform sufficient substantive procedures to test the issuer's depletion expense. (AS 2301.08)

For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · The firm did not identify and test any controls that addressed whether the issuer's allocation of revenue to separate performance obligations was based on relative standalone selling prices in conformity with FASB ASC Topic 606. (AS 2201.39)

For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · For certain revenue recorded from these arrangements the firm did not identify and test any controls that addressed whether the individual prices for goods sold were agreed to by customers prior to recording revenue under FASB ASC Topic 606. (AS 2201.39)

For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · For certain of these revenue transactions the firm did not identify and test any controls that addressed whether the quantities shipped and invoiced by the issuer represented quantities ordered by customers. (AS 2201.39)

For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · For certain other revenue recorded from these arrangements the firm did not identify and test any controls that addressed whether certain of these revenue transactions were valid and accurate. (AS 2201.39)

For one of its business units the issuer entered into revenue arrangements with multiple performance obligations and allocated the total transaction price for each arrangement to the separate performance obligations on a relative standalone selling price basis. The following deficiencies were identified: · The firm did not perform any substantive procedures to evaluate whether the issuer's allocation of revenue to separate performance obligations was based on relative standalone selling prices in conformity with FASB ASC Topic 606. (AS 2810.30)

For another business unit the firm did not identify and test any controls that addressed whether the (1) quantities shipped and invoiced by the issuer represented quantities ordered by customers and (2) prices were agreed to by customers prior to recording revenue. (AS 2201.39)

The firm selected for testing a control that consisted of the issuer's review and approval of changes to the prices maintained in the pricing master file. 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 a control that consisted of the issuer's review and approval of changes to the prices maintained in the pricing master file. The firm did not identify and test any controls that addressed whether all approved price changes were made to the pricing master file. (AS 2201.39)

For a third business unit the firm identified control deficiencies related to the issuer's controls over the review and approval of sales orders and changes to prices maintained in the pricing master file. The firm identified and tested various controls that it believed would mitigate these deficiencies. The firm did not identify that these compensating controls did not address the risks of material misstatement related to fictitious sales orders and inaccurate prices. (AS 2201.68)

The firm selected for testing controls that included the issuer's reviews of the assumptions that were entered into the application and the manual adjustments that the issuer made to the calculation. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify matters for follow up and the procedures to determine whether those matters were appropriately resolved. (AS 2201.42 and .44). In connection with our review the issuer reevaluated its controls over its E&O inventory reserve 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 and the material weakness discussed above and the firm modified its opinion on the effectiveness of the issuer's ICFR to express an adverse opinion and reissued its report.

The sample size the firm used in certain of its substantive procedures to test revenue at two of these business units was 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)

For revenue from fixed-price contracts the firm performed substantive procedures to test a portion of this revenue but did not perform any procedures to test the remaining portion. (AS 2301.08)