Explorer

The issuer used certain information technology (IT) systems to initiate process and record transactions related to (1) fee and commission income and related receivables and (2) realized and unrealized gain and losses and interest income. The firm selected for testing certain IT change management controls over these IT systems that consisted of the review testing and approval of changes prior to their migration into production. The following deficiency was identified: · The firm did not test or in the alternative identify and test any controls over the completeness of information that it used to make its selections for testing a control over change management. (AS 1105.10)

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 used certain information technology (IT) systems to initiate process and record transactions related to (1) fee and commission income and related receivables and (2) realized and unrealized gain and losses and interest income. The firm selected for testing certain IT change management controls over these IT systems that consisted of the review testing and approval of changes prior to their migration into production. The following deficiency was identified: · The firm selected for testing a control over change management for one of these systems but did not perform any procedures to determine whether the population of changes from which it made its selections for testing represented the complete population of changes made to this system. (AS 1105.10)

The issuer used certain information technology (IT) systems to initiate process and record transactions related to (1) fee and commission income and related receivables and (2) realized and unrealized gain and losses and interest income. The firm selected for testing certain IT change management controls over these IT systems that consisted of the review testing and approval of changes prior to their migration into production. The following deficiency was identified: · The firm did not identify and test a control to address the review and approval of changes other than configuration for certain of these systems. (AS 2201.39)

For fee and commission income and related receivables the following additional deficiency related to the firm's testing of controls and substantive testing were identified: · The firm selected for testing controls over the reconciliation and/or review of information related to fee and commission income and related receivables. The firm did not evaluate the review procedures that the control owners performed including the procedures to identify items for follow up and whether those items were appropriately resolved. (AS 2201.42 and .44)

For fee and commission income and related receivables the following additional deficiency related to the firm's testing of controls and substantive testing were identified: · As a result of the firm's ITGC testing deficiencies discussed above for fee and commission income and related receivables the firm did not perform procedures to test or sufficiently test controls over the accuracy and completeness of certain system-generated data the firm used in its substantive procedures. (AS 1105.10)

For fee and commission income and related receivables the following additional deficiency related to the firm's testing of controls and substantive testing were identified: · The firm did not perform procedures to test fee and commission income from non-related parties beyond comparing the amounts to issuer-produced information. (AS 2301.08 and .13)

For fee and commission income and related receivables the following additional deficiency related to the firm's testing of controls and substantive testing were identified: · The firm did not perform procedures to test the occurrence of fee and commission income from related parties beyond comparing the amounts to issuer-produced information and obtaining customer commission agreements. (AS 2301.08 and .13; AS 2410.12)

For fee and commission income and related receivables the following additional deficiency related to the firm's testing of controls and substantive testing were identified: · The firm did not perform procedures to evaluate the relevance and reliability of securities pricing obtained from external sources that it used to test the accuracy of fee and commission income from related parties. (AS 1105.04 and .06)

The firm did not identify and evaluate the significance to the financial statements of the issuer's omission of certain required disclosures under GAAP. (AS 2810.30 and .31)

The issuer used an external specialist to determine the fair values of certain assets. With respect to one asset the firm did not sufficiently evaluate the forecasted increasing sales provided to the specialist because it did not evaluate how management's strategies could overcome continuous annual declines in revenues. (AS 1210.12; AS 2810.03)

With respect to other assets the firm selected a sample for testing. For certain items selected the firm did not obtain evidence to support certain information that was used by the specialist in determining their fair values. (AS 1210.12)

With respect to other assets the firm selected a sample for testing. The firm did not consider whether the lack of supporting documentation for certain assets represented a misstatement and if so the potential effect on the evaluation of its sample. (AS 2315.25)

For one category of revenue the firm did not evaluate whether all of the relevant revenue recognition criteria had been met for the sales transactions it selected for testing. (AS 2301.08)

For inventory at one subsidiary the firm did not make or observe any physical counts of the inventory. (AS 2510.12 and .13)

For inventory at another subsidiary the firm performed inventory observations subsequent to year end. The firm did not test or in the alternative test any controls over the accuracy and completeness of the system-generated reports it used to test intervening transactions between the dates of its inventory observations and year end. (AS 1105.10)

For inventory at a third subsidiary the firm performed inventory observations subsequent to year end. The firm did not test any intervening transactions between the date of its inventory observations and year end. (AS 2510.12 and .13)

For certain of the issuer's subsidiaries the firm did not evaluate whether the relevant revenue recognition criteria had been met for the sales transactions selected for testing. (AS 2301.08)

For one of the issuer's subsidiaries the firm did not perform any procedures to evaluate the reasonableness of the allowance for doubtful accounts. (AS 2501.07)

The firm did not identify and evaluate whether (1) the issuer's exclusion of certain assets from its impairment analysis of long-lived assets was appropriate and (2) the issuer's impairment analysis was performed at the appropriate level. (AS 2810.30)

The firm did not identify and appropriately address the issuer's omission of certain required disclosures. (AS 2810.30 and .31)

The firm did not identify and appropriately address the issuer's omission of certain required disclosures under FASB ASC Topic 606 Revenue From Contracts with Customers related to qualitative and quantitative information about (1) the issuer's existing contracts with customers; (2) the significant judgments and changes in the judgments made by the issuer in applying the guidance to those contracts; and 3) any assets recognized by the issuer from the costs to obtain or fulfill a contract with a customer. (AS 2810.30 and .31)

The firm's approach for substantively testing the issuer's impairment analysis for certain long-lived assets was to develop an independent expectation. The following deficiencies were identified: - The firm did not take into account (1) the requirements of certain elements of the applicable financial framework and (2) its understanding of the issuer's process so that its independent expectation considered the factors relevant to the estimate. (AS 2501.21)

The firm's approach for substantively testing the issuer's impairment analysis for certain long-lived assets was to develop an independent expectation. The following deficiencies were identified: - The firm did not perform any procedures beyond inquiring of management to demonstrate that it had a reasonable basis for certain of its assumptions used in its independent expectation. (AS 2501.22)

The firm did not identify and evaluate the significance to the financial statements of a departure from the issuer's applicable financial reporting framework related to the issuer's omission of certain required disclosures. (AS 2810.30 and 2810.31)

During the year the issuer reclassified certain long-lived assets due to a change in the intended use of these assets. The firm did not evaluate whether the reclassification met all of the requirements in accordance with the issuer's applicable financial reporting framework. (AS 2810.30)

The firm did not evaluate whether the issuer measured its allowance for doubtful accounts receivable ('allowance') using a probability-weighted amount that was determined by evaluating a range of possible outcomes as required by the issuer's applicable financial reporting framework. (AS 2810.30)

With respect to Accounts Receivable the firm's approach for substantively testing the allowance was to review and test the issuer's process. The firm did not perform any substantive procedures to evaluate the reasonableness of the significant assumptions that the issuer used to develop the allowance. (AS 2501.16)

The firm's approach for substantively testing the issuer's goodwill impairment analyses for certain reporting units was to develop independent expectations. The firm did not perform any procedures to demonstrate that it had a reasonable basis for certain assumptions that it used in its independent expectations. (AS 2501.22)

The firm's approach for substantively testing the issuer's goodwill impairment analyses for certain reporting units was to develop independent expectations. The firm did not identify and evaluate the significance to the financial statements of a departure from GAAP related to the issuer's omission of disclosures with respect to goodwill as required by FASB ASC Topic 350 Intangibles — Goodwill and Other. (AS 2810.30 and .31)

The firm did not perform sufficient procedures to test the issuer's investment securities at year end because its procedures to test these securities were limited to (1) inspecting certain bank statements at interim dates for transfer activity from the issuer's cash account to its investment account and (2) reading the investment contract. (AS 2301.08)

The firm did not identify and evaluate an error related to the presentation of a related party receivable in the issuer's balance sheet in accordance with FASB ASC Topic 210 Balance Sheet. (AS 2410.17; AS 2810.30 and .31) Unrelated to our review the issuer reevaluated its presentation of this related party receivable and concluded that a material misstatement existed that had not been previously identified. The issuer subsequently corrected this misstatement in a restatement of its financial statements and the firm revised and reissued its report on the financial statements.

The issuer engaged a valuation specialist to determine the fair value of convertible debt. The firm did not perform any procedures to evaluate the reasonableness of the significant assumptions developed by the issuer and the company's specialist. (AS 1105.A8b; AS 2501.16)

The issuer engaged a valuation specialist to determine the fair value of convertible debt. The firm did not perform any procedures to test the accuracy and completeness of issuer-produced data and evaluate the relevance and reliability of data from external sources that were used by the company's specialist. (AS 1105.A8a)

During the audit the firm became aware of information concerning possible illegal acts by the issuer. The firm did not evaluate the information concerning the possible illegal acts to obtain (1) an understanding of the nature of the acts and the circumstances in which they occurred and (2) sufficient other information to evaluate the effect on the financial statements. (AS 2405.07 and 10)

The firm did not perform procedures to test or identify and test controls over the accuracy of certain data used to determine the valuation of certain investment securities beyond testing the accuracy of the data in the prior year. (AS 1105.10)

The firm did not perform any procedures to evaluate the reliability of certain information it obtained from external sources and used in its substantive procedures to test certain sales. (AS 1105.04 and .06)

To test the existence of inventory the firm selected a sample of items biased towards high-dollar value individual items. The firm did not perform any procedures to test the remaining population of inventory. (AS 2315.24)

To test the existence of inventory the firm selected a sample of items biased towards high-dollar value individual items. The firm did not perform any procedures to test the cost of inventory. (AS 2301.08)

The firm did not perform any procedures to evaluate the terms and conditions of the issuer's arrangements with its customers. (AS 2301.08 and .13)

The firm did not perform any procedures to test whether the issuer satisfied its performance obligations prior to the recognition of revenue. (AS 2301.08 and .13)

The firm also did not perform any procedures to test or in the alternative identify and test controls over the accuracy and completeness of certain issuer-produced information it used in its substantive procedures. (AS 1105.10)

The firm did not perform any substantive procedures to test digital assets. (AS 2301.08)

The firm did not perform any substantive procedures to test certain liabilities. (AS 2301.08)

The firm did not identify and appropriately address a departure from GAAP related to the financial statement presentation and disclosures associated with the issuer's transactions with related parties. The issuer's financial statements did not disclose the nature of the relationships and a description and dollar amount of related party transactions as required by FASB ASC Topic 850 Related Party Disclosures. (AS 2410.17; AS 2810.30 and .31)

The firm did not perform any procedures to test the identified transactions with related parties including the amounts receivable at year end beyond sending confirmation requests to certain related parties. (AS 2410.12)

The firm did not apply alternative procedures to the nonresponses to the confirmation requests. (AS 2310.31)

The firm did not identify and appropriately address departures from GAAP related to the financial statement presentation and disclosures associated with the issuer's intangible assets. The issuer included an inaccurate disclosure in the notes to the financial statements that an impairment loss related to the intangibles had been recorded when in fact the issuer had not recorded an impairment. Further the issuer did not disclose the estimated aggregate amortization expense for each of the five succeeding fiscal years as required by FASB ASC Topic 350 Intangibles — Goodwill and Other and did not reflect the related amortization expense as part of the reconciliation of net income and net cash flow from operating activities in its statement of cash flows as required by FASB ASC Topic 230 Statement of Cash Flows. (AS 2810.30 and .31)

Apart from recalculating amortization expense the firm did not perform any procedures to test intangible assets. (AS 2301.08)

For the sales transactions selected for testing the firm did not perform procedures to test whether all of the relevant revenue recognition criteria had been met. (AS 2301.08)