Explorer

The issuer recognized certain revenue based on quantities and specified rates generally in exchange for noncash consideration. Any noncash consideration received at contract inception was recorded as a contract liability. The following deficiencies were identified: - The firm did not evaluate whether the method used by the issuer to determine the fair value of noncash consideration received was in conformity with FASB ASC Topic 820 Fair Value Measurement. (AS 2501.10)

The issuer earned revenue through cryptocurrency transactions and received digital assets in return. The following deficiency was identified: · The firm did not perform procedures to evaluate the relevance and/or reliability of external information it used to test revenue and digital assets. (AS 1105.04 and .06)

The firm did not perform procedures to test or identify and test controls over the accuracy and completeness of certain system-generated reports that it used to substantively test certain inventory. (AS 1105.10)

The firm did not perform procedures to evaluate whether the issuer's accounting for certain revenue as the principal rather than as an agent was appropriate beyond obtaining an issuer-prepared analysis. (AS 2301.08 and .13)

The firm did not perform sufficient procedures to test whether the issuer satisfied its performance obligations for a second type of revenue because it limited its procedures to (1) obtaining cash receipts and sales invoices and (2) sending negative confirmations to a respondent who was a related party without considering the respondent's objectivity and freedom from bias and whether the response that was received by the firm provided meaningful and appropriate evidence. (AS 2301.08 and .13; AS 2310.26 and .27)

The firm selected a sample of transactions to test a third type of revenue. For certain of the sampled transactions the firm did not perform procedures to test the quantity used to recognize revenue beyond obtaining a system-generated report without testing or identifying and testing controls over the accuracy and completeness of the report. (AS 1105.10; AS 2301.08 and .13)

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

In addition the firm performed a substantive analytical procedure to test this revenue. The firm developed its expectations for revenue using external data. The firm did not evaluate whether this data was sufficiently reliable for purposes of achieving its audit objective. (AS 2305.16)

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

The issuer earned revenue through cryptocurrency transactions and received digital assets in return. The following deficiency was identified: · The firm did not perform any procedures to establish that the issuer had control over the digital assets beyond viewing the digital asset wallets. (AS 2301.08 and .11)

The issuer earned revenue through cryptocurrency transactions and received digital assets in return. The following deficiency was identified: · The firm did not perform any procedures to evaluate the presentation of digital assets as either current or non-current assets. (AS 2301.08 and .11)

The issuer earned revenue through cryptocurrency transactions and received digital assets in return. The following deficiency was identified: · The firm did not evaluate the appropriateness of the issuer's accounting for certain of the digital assets. (AS 2301.08 and .11)

The firm identified fraud criteria for journal entries and obtained a listing of all journal entries that met the criteria. The firm did not perform sufficient substantive procedures to test those journal entries because it limited its procedures to certain journal entries without having an appropriate rationale. (AS 2401.61)

The issuer's revenue included revenue recognized from contracts over time based on costs incurred to date relative to total estimated costs to complete. The following deficiency was identified: · The firm did not perform sufficient procedures to test the accuracy and completeness of an issuer-prepared schedule it used to test this revenue because it limited its procedures to comparing it to a system-generated report. Further the firm did not perform sufficient procedures to test the accuracy and completeness of the system-generated report because it limited its testing to one item. (AS 1105.10)

The issuer's revenue included revenue recognized from contracts over time based on costs incurred to date relative to total estimated costs to complete. The following deficiency was identified: · The firm did not perform any procedures to test or identify and test controls over the accuracy and completeness of certain other issuer-prepared schedules it used to test this revenue. (AS 1105.10)

The issuer's revenue included revenue recognized from contracts over time based on costs incurred to date relative to total estimated costs to complete. The following deficiency was identified: · The firm did not perform sufficient procedures to evaluate the reasonableness of the significant assumption related to estimated labor costs to complete because it limited its procedures to inquiry and a comparison to a report that included costs incurred subsequent to year end. Further the firm did not perform any procedures to test or identify and test controls over the accuracy and completeness of the report of costs incurred subsequent to year end. (AS 1105.10; AS 2501.16)

The firm did not perform procedures to test the raw material costs in inventory at year end. (AS 2301.08 and .11)

The firm did not sufficiently evaluate whether the issuer's accounting for an income statement account was in conformity with US GAAP because the firm did not evaluate all relevant information. (AS 2810.30)

The firm did not identify and evaluate departures from GAAP related to the issuer's presentation of certain significant accounts in the issuer's financial statements. (AS 2810.30 and .31) In connection with our review the issuer reevaluated the presentation of these significant accounts and determined that misstatements existed that had not been previously identified. The issuer did not file an amended Form 10-K or a Form 8-K indicating that its previously issued financial statements should not be relied on. Instead the issuer corrected these misstatements in a subsequent filing by revising the presentation of these significant accounts.

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)

With respect to another significant account the following deficiency was identified: · The firm did not evaluate the appropriateness of the issuer's presentation of this account. (AS 2301.08)

With respect to another significant account the following deficiency was identified: · The firm did not perform procedures to test an adjustment to this account beyond tracing amounts to an issuer-prepared schedule. (AS 2301.08)

With respect to another significant account the following deficiency was identified: · The firm did not perform procedures to evaluate the reasonableness of a significant assumption related to this account that was developed by the issuer beyond certain limited procedures. (AS 2501.16)

With respect to another significant account the following deficiency was identified: · The firm did not perform any procedures to test certain other estimates related to this account. (AS 2501.07)

With respect to another significant account the following deficiency was identified: · The firm did not evaluate whether the issuer accounted for certain aspects of this account in conformity with GAAP including evaluating certain contradictory evidence. (AS 2301.08; AS 2810.03)

With respect to another significant account the following deficiency was identified: · The firm did not perform any procedures to evaluate the relevance and reliability of certain information that it used to test this account. (AS 1105.04 and .06)

The firm did not perform procedures to test certain transactions within an income statement account beyond obtaining an understanding of the issuer's accounting policy. (AS 2301.08 and .13)

The firm did not evaluate whether the issuer's accounting for these transactions was in conformity with GAAP. (AS 2301.08 and .13)

The issuer used various assumptions to estimate the value of a significant account. The firm's approach for substantively testing the value of this account was to test the issuer's process and develop expectations of certain significant assumptions which it compared to the respective assumptions used by the issuer. The following deficiencies were identified: · The firm did not identify and evaluate a departure from GAAP related to the method used by the issuer to estimate the value of the significant account which was not in conformity with the applicable financial reporting framework. (AS 2501.10; AS 2810.30 and .31)

The issuer used various assumptions to estimate the value of a significant account. The firm's approach for substantively testing the value of this account was to test the issuer's process and develop expectations of certain significant assumptions which it compared to the respective assumptions used by the issuer. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of certain significant assumptions. (AS 2501.16)

The issuer used various assumptions to estimate the value of a significant account. The firm's approach for substantively testing the value of this account was to test the issuer's process and develop expectations of certain significant assumptions which it compared to the respective assumptions used by the issuer. The following deficiencies were identified: · The firm did not perform sufficient procedures to evaluate the reasonableness of certain other significant assumptions because it did not evaluate significant differences between its expectations and the assumptions. Further for one significant assumption the firm did not demonstrate it had a reasonable basis for its expectation of the assumption. (AS 2501.16)

The issuer used various assumptions to estimate the value of a significant account. The firm's approach for substantively testing the value of this account was to test the issuer's process and develop expectations of certain significant assumptions which it compared to the respective assumptions used by the issuer. The following deficiencies were identified: · The firm did not perform procedures to evaluate the reasonableness of another significant assumption including taking into account the issuer's intent and ability to carry out the assumption. (AS 2501.16 and .17)

The issuer used various assumptions to estimate the value of a significant account. The firm's approach for substantively testing the value of this account was to test the issuer's process and develop expectations of certain significant assumptions which it compared to the respective assumptions used by the issuer. The following deficiencies were identified: · The firm did not perform any procedures to evaluate the relevance and/or reliability of certain external data and information used in its substantive testing of the significant assumptions. (AS 1105.04 and .06)

The firm used a positive confirmation request to test a related party transaction. The firm did not maintain control over the confirmation request and response through direct communication with the intended recipient of the confirmation request because the issuer sent and received the request. (AS 2310.28) [This citation refers to AS 2310 The Confirmation Process which was in effect for this audit. This standard was replaced by AS 2310 The Auditor's Use of Confirmation which became effective for audits of financial statements for fiscal years ending on or after June 15 2025.]

The issuer recognized certain revenue based on quantity and specified rates. The following deficiencies were identified: · The firm selected for testing a control over the completeness of reported quantities that consisted of management's comparison of the quantity reported by customers to information provided by external parties. The firm did not identify and test any controls over the relevance and reliability of the information provided by the external parties that was used in this control. (AS 2201.39)

During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair values of the acquired intangible assets. The issuer provided the specialist with financial projections and other data that were used in the valuations. The following deficiencies were identified: · The firm did not sufficiently evaluate the sales forecast that was provided to the specialist to value the trade name and customer relationship intangible assets because its procedures were limited to inquiring of management and comparing the forecast to the issuer's historical financial information without performing procedures to evaluate whether the issuer's historical growth rates would be representative of the issuer's future sales growth. (AS 1210.12)

During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair values of the acquired intangible assets. The issuer provided the specialist with financial projections and other data that were used in the valuations. The following deficiencies were identified: · The firm did not sufficiently evaluate the reasonableness of the royalty rate that the specialist used to value the trade name intangible assets because its procedures were limited to comparing the assumptions to industry information obtained by the specialist without evaluating the relevance and reliability of the source of that information. (AS 2502.26 .28 and .31)

During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair values of the acquired intangible assets. The issuer provided the specialist with financial projections and other data that were used in the valuations. The following deficiencies were identified: · The firm did not evaluate whether the attrition rates that the specialist used to value the customer relationships intangible assets reflected (1) future retention of the issuer's long-term relationships with its largest customers and (2) those customers' proportionate share of historical sales. (AS 2502.26 .28 and .31)

During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair values of the acquired intangible assets. The issuer provided the specialist with financial projections and other data that were used in the valuations. The following deficiencies were identified: · The firm did not evaluate the reasonableness of certain assumptions that the issuer provided to the specialist that the specialist used to estimate the fair value of other acquired intangible assets. (AS 1210.12)

During the year the issuer acquired certain businesses and engaged an external specialist to estimate the fair values of the acquired intangible assets. The issuer provided the specialist with financial projections and other data that were used in the valuations. The following deficiencies were identified: · The firm did not evaluate the issuer's conclusion that separately identifiable intangible assets did not exist related to the revenue expected to be derived from the existing user base of each acquired business in conformity with FASB ASC Topic 805 Business Combinations. (AS 2810.30)

The issuer recognized revenue from services provided to customers based on certain agreed-upon specifications (“service revenue”). The following deficiencies were identified: · The firm selected for testing certain automated controls that were designed to recognize one type of service revenue once certain information was manually entered into the issuer's system. The firm did not identify and test any controls over the accuracy and completeness of the information that was manually entered into the issuer's system. (AS 2201.39)

The issuer recognized revenue from services provided to customers based on certain agreed-upon specifications (“service revenue”). The following deficiencies were identified: · The firm selected for testing a control that included management's review of billing information for the service revenue discussed above. The firm did not evaluate the review procedures that the control owner performed including the criteria that the control owner used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer recognized revenue from services provided to customers based on certain agreed-upon specifications (“service revenue”). The following deficiencies were identified: · The firm did not identify and test any controls over another type of service revenue. (AS 2201.39)

The issuer recognized revenue from services provided to customers based on certain agreed-upon specifications (“service revenue”). The following deficiencies were identified: · The firm selected a sample of invoices to perform its substantive testing of both types of service revenue. For certain of the items selected the firm compared the invoice to a system-generated activity report of service by customer to determine whether the service had been provided in accordance with the customer's order specifications. The firm did not test or in the alternative test controls over the accuracy and completeness of the activity report. (AS 1105.10)

The issuer recognized revenue from services provided to customers based on certain agreed-upon specifications (“service revenue”). The following deficiencies were identified: · The firm selected a sample of invoices to perform its substantive testing of both types of service revenue. For the remaining items selected the system-generated activity report was not relevant to determining whether the service had been provided as it was a different type of service and the firm did not otherwise obtain support to test the occurrence of revenue for these selections. (AS 2315.25)

The issuer recognized certain revenue based on quantity and specified rates. The following deficiencies were identified: · The firm used the quantities reported by the issuer's customers in its procedures to test this revenue. The firm did not test or in the alternative (as discussed above) sufficiently test the control over the completeness of this data. (AS 1105.10)

The issuer recognized revenue from services provided to customers based on certain agreed-upon specifications (“service revenue”). The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test both types of service 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 deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The issuer also recognized revenue from fees associated with granting certain rights to its customers (“contract revenue”). The firm identified a control deficiency over this revenue related to a lack of segregation of duties and concluded that it was a significant deficiency based on the firm's testing of compensating controls that included management's review of contract revenue and financial reporting checklists. The firm did not evaluate the review procedures that the control owner performed including the criteria that the control owner used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.68)

During the year the issuer acquired certain businesses and engaged an external specialist to perform a valuation of the acquired intangible assets. The specialist determined that certain acquired agreements with the issuer's affiliates had no value. The firm did not sufficiently evaluate the reasonableness of the conclusions reached by the specialist because its procedures were limited to verifying that the issuer's accounting treatment was consistent with (1) the accounting treatment used in prior business combinations and (2) certain audit evidence from more than ten years prior to the current year's acquisitions. (AS 2502.26 .28 and .31)

The issuer used an information technology (“IT”) application to initiate process and record revenue. This IT application also generated information that the issuer used to estimate the ARO. The firm did not identify and test any controls over the accuracy of customer information that was manually entered into the application. (AS 2201.39)