Explorer

The firm selected for testing controls that consisted of management's review of system-generated reports used to recognize revenue. The firm did not test beyond inquiry any controls that addressed the accuracy and completeness of these system-generated reports used in the performance of these controls. (AS 2201.39)

The firm did not test or in the alternative test controls over the accuracy and completeness of data the firm used to develop the expectation used in the performance of its substantive analytical procedures to test revenue. (AS 2305.16)

The firm selected for testing controls that consisted of management's review of system-generated reports used to recognize ARO. The firm did not test beyond inquiry any controls that addressed the accuracy and completeness of these system-generated reports used in the performance of these controls. (AS 2201.39)

The firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The firm used the work of internal audit (“IA”) to test the CM control. The firm did not evaluate IA's identification of several instances in which borrower financial information obtained for use in the CM control was not analyzed by the control owners. (AS 2201.68)

The firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The firm selected loan relationships which had ACRs and independently tested the CM control. The firm did not perform procedures to determine whether the CM control operated for the selected loans after the ACRs were performed which would be the only way this compensating control could have mitigated the ACR deficiency identified. (AS 2201.68)

The firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The firm did not test whether the CM control operated effectively over the population of loans for which a required ACR was not performed. (AS 2201.68)

The issuer recognized certain revenue based on quantity and specified rates. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this revenue were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiency in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

The firm concluded that a control over the loan officers' annual credit review (“ACR”) of the reasonableness of assigned loan grades was deficient because certain of the ACRs were not completed as of the end of the year for commercial loan relationships. The firm concluded that it represented a significant deficiency after determining the percentage of noncompliance of ACRs and identifying and testing two compensating controls that consisted of a credit monitoring (“CM”) control and an independent loan review over certain commercial loan relationships. The firm did not sufficiently evaluate the severity of the control deficiency due to the following: · The sample size the firm used to test the second compensating control was designed assuming a certain level of evidence the firm planned to obtain from testing the ACR control over assigned loan grades. Due to the identified control deficiency in the ACR control the ACR control tested did not provide the planned level of evidence. As a result the sample size the firm used to test the second compensating control was too small to provide the necessary evidence about its operating effectiveness. (AS 2201.68)

The sample sizes the firm used in certain of its substantive procedures to test the ALL 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's ALL included a general reserve comprised of a quantitative component related to historical losses and a qualitative component related to various environmental factors. The firm selected for testing controls over the ALL that consisted of management's and a committee's review and approval of the ALL. The firm did not evaluate the specific review procedures that the control owners performed to evaluate the reasonableness of the assumptions used to determine the qualitative component of the ALL. (AS 2201.42 and .44)

During the year the issuer acquired a business. The firm selected for testing a control that consisted of management's review of the assumptions and related supporting documentation used in the valuation of assets acquired and liabilities assumed. The firm did not evaluate the review procedures that the control owners performed including the criteria that the control owners used to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

The firm selected for testing a control over the allowance for doubtful accounts that included management's review of the aging of accounts receivable and the calculations of the allowance. 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 engaged an external specialist to perform its annual goodwill impairment analysis. The analysis included projected cash flows for four revenue categories provided by the issuer and assumptions developed by the specialist. The following deficiencies were identified: · The firm selected for testing a control that consisted of management's review of the annual goodwill impairment analysis prepared by the specialist. 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 engaged an external specialist to perform its annual goodwill impairment analysis. The analysis included projected cash flows for four revenue categories provided by the issuer and assumptions developed by the specialist. The following deficiencies were identified: · The firm selected for testing a control that consisted of management's review of the annual goodwill impairment analysis prepared by the specialist. The firm did not identify and test any controls over the preparation of the projected cash flows that were provided to the specialist. (AS 2201.39)

The issuer engaged an external specialist to perform its annual goodwill impairment analysis. The analysis included projected cash flows for four revenue categories provided by the issuer and assumptions developed by the specialist. The following deficiencies were identified: · The firm did not sufficiently test the projected cash flows provided to the specialist because its procedures were limited to inquiring of management and comparing the projected cash flows for one revenue category to another company's historical revenue without performing procedures to evaluate whether that company's historical results would be representative of the issuer's future results. (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 selected for testing a control that included management's review of certain assumptions used in the valuations. 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)

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 selected for testing a control that included management's review of certain assumptions used in the valuations. The firm did not identify and test any controls over the preparation of the financial projections that were provided to the specialist. (AS 2201.39)

The firm selected for testing two review controls over the qualitative component of the ALL. The firm did not evaluate the review procedures that the control owners performed including the procedures used to identify items for follow up and the procedures to determine whether those items were appropriately resolved. (AS 2201.42 and .44)

The issuer processed and recorded transactions related to revenue inventory and sales commission expense and sales commission payable using several information-technology ('IT') systems including its enterprise resource planning ('ERP') system. The accuracy and completeness of the data and reports from the ERP system depended on effective IT general controls ('ITGCs'). The firm identified a significant deficiency in ITGCs related to user access to the ERP system. The firm selected for testing controls that consisted of the issuer's reviews of sales commission expense sales commission payable related adjustments exceptions and a reconciliation of data between certain systems. The firm did not identify and test any controls over the accuracy and completeness of the commissionable sales volume data that the control owners used in the operation of these controls. (AS 2201.39)

The firm's approach to substantively test the qualitative component of the ALL was to review and test management's process. The firm did not sufficiently evaluate the appropriateness of the issuer's ALL methodology and the reasonableness of the significant inputs and assumptions used because it limited its procedures to comparing the basis-point adjustments for economic and other factors that the issuer used at year end to those used in the prior period. (AS 2501.11)

The issuer recorded the fair values of available-for-sale securities based on the prices it obtained from an external pricing service. The firm selected for testing a control that consisted of the comparison of these prices to prices obtained from another external pricing service. In evaluating the design of this control the firm did not identify that the prices obtained from the other pricing service were derived from the same pricing source as the one the issuer used to record the fair value of the securities. (AS 2201.42)

The firm selected for testing a control that the issuer intended to be an objective review of assigned loan grades. The firm concluded that this control was deficient because the control owners were not independent of the department responsible for assigning the loan grades. The firm identified other controls over the review of assigned loan grades that it believed would compensate for this control deficiency. The firm did not identify that the control owners for these controls also were not independent of the department responsible for assigning the loan grades. (AS 2201.68)

The sample sizes the firm used in certain of its substantive procedures to test the reasonableness of assigned loan grades 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 processed and recorded transactions related to revenue inventory and sales commission expense and sales commission payable using several information-technology ('IT') systems including its enterprise resource planning ('ERP') system. The accuracy and completeness of the data and reports from the ERP system depended on effective IT general controls ('ITGCs'). The firm identified a significant deficiency in ITGCs related to user access to the ERP system. The firm selected for testing an automated control designed to recognize revenue when goods were shipped based on interfaces between various IT systems. The firm did not directly test this control because its procedures were substantive in nature. (AS 2201.42 .44 and .B9)

The issuer processed and recorded transactions related to revenue inventory and sales commission expense and sales commission payable using several information-technology ('IT') systems including its enterprise resource planning ('ERP') system. The accuracy and completeness of the data and reports from the ERP system depended on effective IT general controls ('ITGCs'). The firm identified a significant deficiency in ITGCs related to user access to the ERP system. The firm selected for testing a control that consisted of the issuer's review of revenue transactions for appropriate cut-off that used data and reports generated and maintained by the ERP system and an inventory management system. The firm's testing of this control was not sufficient because it did not consider the implications of the ineffective ITGCs over the ERP system as discussed above. Further the firm did not identify and test any controls over the accuracy and completeness of the data and reports from the issuer's inventory management system beyond determining that the control owner had reviewed the parameters of the reports generated by this system. (AS 2201.39 and .46)

The issuer processed and recorded transactions related to revenue inventory and sales commission expense and sales commission payable using several information-technology ('IT') systems including its enterprise resource planning ('ERP') system. The accuracy and completeness of the data and reports from the ERP system depended on effective IT general controls ('ITGCs'). The firm identified a significant deficiency in ITGCs related to user access to the ERP system. The firm selected for testing various controls over inventory that used data maintained by the ERP system. The firm's testing of these controls was not sufficient because it did not consider the implications of the ineffective ITGCs over this system as discussed above. (AS 2201.46)

The issuer processed and recorded transactions related to revenue inventory and sales commission expense and sales commission payable using several information-technology ('IT') systems including its enterprise resource planning ('ERP') system. The accuracy and completeness of the data and reports from the ERP system depended on effective IT general controls ('ITGCs'). The firm identified a significant deficiency in ITGCs related to user access to the ERP system. The firm selected for testing an automated control that consisted of the recording of inventory upon receipt. The firm did not obtain an understanding of how the system was configured to initiate process and record the receipt of inventory. As a result the firm did not test the configuration of this control or perform other procedures that would have provided sufficient appropriate audit evidence that the control was designed and operating effectively. (AS 2201.34 .42 and .44)

The issuer used various information-technology (IT) systems to initiate process and record transactions related to revenue for one business unit. The firm tested IT general controls (ITGCs) for these IT systems. The following deficiencies were identified · The firm identified a deficiency in ITGCs related to an individual's inappropriate administrative rights over user access to these systems but did not evaluate the severity of this control deficiency. (AS 2201.62)

The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not perform any procedures to evaluate whether the goodwill associated with any of the prior-year reporting units may have been impaired at the time of the issuer's change in the number of reporting units. (AS 2301.08)

The issuer changed the number of its reporting units in the current year for purposes of its annual goodwill impairment analysis. The following deficiencies were identified: · The firm did not identify and evaluate the significance to the financial statements of the issuer's omission of a required disclosure under FASB ASC Topic 250 related to its change in the number of reporting units. (AS 2810.30 and .31)

To test cash at one of the issuer's business units the firm performed confirmation procedures for a sample of cash accounts. The firm did not maintain control over the confirmation requests because the issuer sent the requests. (AS 2310.28)

To test cash at one of the issuer's business units the firm performed confirmation procedures for a sample of cash accounts. For the majority of the items in its sample the responses were returned by email. The firm did not perform substantive procedures that provided sufficient appropriate audit evidence to verify the source of these responses. (AS 2301.08)

The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · The firm did not identify and test any controls over the accuracy of these labor hours. (AS 2201.39)

The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · Certain of this revenue was generated from contracts that specified the maximum amount of revenue that could be earned under each contract. The firm did not identify and test any controls that addressed the risk that revenue may have been recognized in excess of these contractual maximums. (AS 2201.39)

The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · The firm used labor hours in its substantive testing of this revenue but did not perform any substantive procedures to test or in the alternative test any controls over the accuracy of these labor hours. (AS 1105.10)

The issuer recognized certain revenue from contracts based on labor hours recorded in the issuer's time system. The following deficiencies were identified: · The sample sizes the firm used in certain of its substantive procedures to test this revenue were too small to provide sufficient appropriate audit evidence because these procedures were designed based on a level of control reliance that was not supported due to the deficiencies in the firm's control testing discussed above. (AS 2301.16 .18 and .37; AS 2315.19 .23 and .23A)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm selected for testing controls that consisted of the issuer's reviews of the ALL including an assessment of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of the qualitative factors. (AS 2201.42 and .44)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the qualitative reserve component of the ALL because the firm's procedures to test the qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and (2) comparing the qualitative factors the issuer used at year end to those used in prior periods. (AS 2501.09 .10 and .11)

The issuer used various information-technology (IT) systems to initiate process and record transactions related to revenue for one business unit. The firm tested IT general controls (ITGCs) for these IT systems. The following deficiencies were identified · The firm selected for testing controls over user access to one of these systems. The firm did not evaluate the specific review procedures that the control owners performed to determine whether previously granted access continued to be appropriate. Further the firm identified users who had the ability to initiate process and record transactions but did not evaluate whether those rights represented a control deficiency. (AS 2201.42 and .44)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm selected for testing a control that consisted of the issuer's review of the qualitative factors for reasonableness. The firm did not evaluate the specific review procedures that the control owners performed to assess the reasonableness of certain qualitative factors. (AS 2201.42 and .44)

For loans that were collectively evaluated for impairment the issuer determined the qualitative reserve component of the ALL using certain qualitative factors. The following deficiencies were identified: · The firm's approach for substantively testing the ALL was to review and test management's process. The firm did not sufficiently evaluate the reasonableness of the qualitative reserve component of the ALL because the firm's procedures to test certain qualitative factors the issuer used to determine the reserve were limited to (1) reading the issuer's ALL memorandum and its analysis of the factors and (2) comparing the qualitative factors the issuer used at year end to those used in the prior year. (AS 2501.09 .10 and .11)

During the year the issuer entered into a lease amendment. The firm did not evaluate whether the issuer's accounting for certain terms of this amendment as a new lease commencing in the subsequent year was in conformity with FASB ASC Topic 842 Leases. (AS 2810.30)

The firm's substantive procedures to test certain revenue consisted of analytical procedures. To develop its expectation the firm used the quantities of units sold that had been recorded in the issuer's revenue system. The firm's testing of these quantities was not sufficient because its sample size was too small to assess whether the quantities recorded in this system were reliable. (AS 2305.16)

The issuer used a service organization to accumulate customer activity data initiated in and processed by the issuer's mobile or web-based applications and recorded certain revenue based on these data. The firm did not identify and test any controls over the accuracy and completeness of the customer activity data within the applications. (AS 2201.39)

The issuer used multiple service organizations to host and/or maintain and manage IT systems that the issuer used to initiate process and record transactions related to certain revenue for another business unit. The following deficiencies were identified: · The firm identified a control deficiency related to the issuer's evaluation of service auditor reports for certain service organizations. The firm identified and tested three compensating controls that it believed would mitigate this deficiency but did not sufficiently evaluate the effect of these controls because it (1) determined that one of these controls was ineffective and (2) did not identify that the control owner of the other two controls was an individual the firm had identified as having inappropriate access to the systems hosted by these service organizations. (AS 2201.68)

The issuer used multiple service organizations to host and/or maintain and manage IT systems that the issuer used to initiate process and record transactions related to certain revenue for another business unit. The following deficiencies were identified: · The firm did not perform any procedures to test controls at certain other service organizations or identify and test any other controls over the revenue processed by the systems maintained and managed by these service organizations. (AS 2201.39 and .B19)

In its testing of controls over certain revenue for both of these business units the firm selected for testing various IT-dependent manual controls that used data and reports generated or maintained by certain of these systems. As a result of the deficiencies in the firm's control testing over these systems as discussed above the firm's testing of these IT-dependent manual controls was not sufficient. (AS 2201.46)

The firm selected for testing certain other controls over this revenue for these business units. The firm did not identify and test any controls over the accuracy and completeness of the reports or data that the control owners used in the performance of these controls. (AS 2201.39)

The firm did not perform substantive procedures to test or sufficiently test controls over the accuracy and completeness of certain reports or data that the firm used in its substantive testing of certain revenue for both of these business units. (AS 1105.10)

The firm did not identify and test any controls over the issuer's review of its goodwill impairment analysis. (AS 2201.39)